The U.S. International Trade Commission opened an investigation into titanium sponge from Japan and Kazakhstan on Friday after Titanium Metals Corp. argued unfair trade practices threatened the lone remaining U.S. producer of the valuable metal’s initial processed form. Titanium Metals, or Timet, asked the U.S. government to impose anti-dumping duties of 31 to 69 percent on various producers in Japan and 33 percent on Kazakhstan’s lone producer, Ust-Kamenogorsk Titanium Magnesium Plant JSC. It also wants a countervailing duty on UKTMP over alleged government subsidies.
Timet says its lone domestic competitor, Allegheny Technologies Inc., stopped producing sponge in August 2016 under the same pressures it hopes new duties will address.
“Timet is the last operating producer of subject titanium sponge in the United States,” the company said in its petition. “Timet’s efforts to sell titanium sponge domestically have been universally rebuffed due to the availability of unfairly priced titanium sponge from Japan and Kazakhstan.”
The U.S. revoked an anti-dumping order on titanium sponge from Japan and the former Soviet states of Kazakhstan, Russia and Ukraine in 1998. The ITC said strong demand should prevent import price pressure from hurting the domestic production of the product, which is created during the first stage of processing a metal that is widely available naturally but sparsely mixed among other elements into a purified, expensive and usable form.
But Timet said prices from both Japan and Kazakhstan dipped more than 20 percent from 2014 to 2017; amid that slide, Allegheny Technologies idled its Utah plant, shelving 29 percent of U.S. production. Meanwhile, Timet says, Japan and Kazakhstan both ramped up production, especially in the first quarter of 2017. Japan, which accounts for 90 percent of U.S. imports, increased volume by 38 percent from the first quarter of 2016, and UKTMP imports exploded nearly 19-fold in that time to claim 5 percent of the U.S. import market, the domestic producer said.
Pennsylvania-based Timet, which produces titanium sponge in a Henderson, Nevada, factory, says Japan’s industry is “oriented particularly towards” the U.S., with more than 93 percent of its exports destined for the U.S. Meanwhile, UKTMP in 2016 abandoned a strategy of domestically using sponge to make titanium products, and now absent any home market sales has been “aggressively selling titanium sponge” to the U.S., Timet said.
Timet also says Kazakhstan’s government provides UKTMP subsidies in the form of preferential interest rates and waiving customs duties on raw material inputs, among other forms of aid.
A spokesperson for Timet said the dumping and subsidies that caused Allegheny Technologies to cease production of titanium sponge and instead buy from abroad to further process the metal could force the same “make or buy” decision on Timet.
“We’re the only ones left,” said the spokesperson, who asked to remain unnamed. “We think unfairly priced sponge could jeopardize our capital investment in Henderson.”
U.S. Magnesium LLC sued Allegheny Technologies over its closure of the Utah plant, alleging a breach of contract to buy input materials for the titanium sponge. But Allegheny, which said it legally invoked an out-clause in the contract due to substantially decreased prices, successfully had the case dismissed in March.
Titanium is highly valued for a high strength-to-weight ratio, resistance to corrosion and ability to bond with high-strength polymers, and it has a number of defense and aerospace applications.
Timet is represented by J. Kevin Horgan, Gregory S. Menegaz and Alexandra H. Salzman of Dekieffer & Horgan.
Counsel information for the foreign producers was not immediately available.
The case is Re: Titanium Sponge from Japan and Kazakhstan, investigation numbers 701-TA-587-588 and 731-TA-1385-1386, before the International Trade Commission.
–Editing by Aaron Pelc.