An agreement in principle announced late last month by the U.S. Department of Commerce and Mexican government authorities calls for an end to antidumping
An agreement in principle announced late last month by the U.S. Department of Commerce and Mexican government authorities calls for an end to antidumping duties on Mexican cement imports to the U.S. by 2009; trade liberalization to open the Mexican market to U.S. cement imports; and, a resolution of outstanding cement import related litigation before U.S. and international courts. Pending a final agreement between the two governments Û subject to continuing meetings in the near future Û Mexican cement producers will be allowed to distribute 3 million metric tons annually throughout the Sun Belt states at a $3/ton duty over the next three years.
If U.S. officials determine that Mexican cement companies have complied with the agreement during that period, the Department of Commerce/International Trade Administration’s Antidumping Duty Order on Gray Portland Cement will be terminated.
Under the Antidumping Duty Order, Mexican cement imports would otherwise be subject to duties of about $25/ton Û a rate that applied to the approximately 1.7 million metric tons of Mexican powder that had been imported for the first 11 months of 2005. The order stems from a 1989 petition by powder producers organized as the Southern Tier Cement Committee (STCC), which spawned a Commerce investigation of Mexican cement import pricing. Commerce officials ordered antidumping duties effective August 30, 1990, after determining that Mexico’s largest producer, Cemex, had been dumping product at below-market rates in the U.S.
The STCC represents 23 companies operating 63 plants in 29 states. In a Jan. 19 statement on the Antidumping Duty Order agreement in principle, STTC noted that Mexico is committed to addressing barriers to cement imports. STCC members welcome fair competition and are confident Mexican producers will operate in the U.S. market in accordance with the agreement and international trade rules, said Ash Grove Cement Chairman Charles Sunderland. We fully expect that the settlement will become the first meaningful step towards opening the Mexican market to imports from other nations. Only when the Mexican cement market is opened to imports will there be free and fair cement trade between Mexico and the United States.
In the face of record cement consumption over the past two years, and strained domestic powder-milling capacity, the antidumping duties have been increasingly criticized by concrete and construction groups. Augmenting Mexican cement producers’ case has been the emergence of Cemex as lead player in Sun Belt state cement and ready mixed production. When the antidumpting duty order was effected, Cemex was a bit player domestically, operating a handful of cement terminals in the south.
Under the banner Sunbelt Enterprises, the company built a concrete and cement production and distribution network across the southern U.S. with acquisitions involving such companies as National Portland Cement in Florida; Eagle Concrete, Gulf Coast Portland, Houston Shell & Concrete, and Southern Materials in Texas; Blue Circle West in Arizona; and Pharris Trucking and Pacific Coast Cement in California. A mid-2000 takeover of Houston-based Southdown Inc. positioned Cemex as a major U.S. cement producer with strong integrated concrete businesses in Florida and southern California. Last year’s buyout of the global top gun in ready mixed, London-based RMC Group, provided Cemex a stake in many additional Sun Belt population centers and made it the largest U.S. ready mixed producer. With annual production exceeding 20 million yd., the company likewise became the country’s largest cement consumer.
Along with commending U.S. and Mexican government representatives on the duty sunset plan, Cemex noted that cement industries on both sides of the border will share unliquidated historical duties associated with the antidumping order. The company stands to receive approximately $100 million in cash and see elimination of about $65 million in liabilities. Another Mexican, Grupo Cementos de Chihuahua reported that the agreement would result in a cash reimbursement of about $40 million in antidumping deposits.