Significant Transformation & China Circumvention Investigation

We received a question from the financial community about “significant transformation” and the U.S. Department of Commerce initiation of an investigation into circumvention by China where hot rolled or cold rolled substrate is sent to Vietnam where it is then converted to cold rolled (from HRC) or coated steels. Their question was about the following comment SMU made in an article published on November 10, 2016, “…This “significant transformation” rule, recognized by the world community, has been in effect since the late 1980’s and may soon no longer be accepted by the United States Department of Commerce…” Their question to SMU was, “…May I ask what you saw or heard that makes you believe that this may soon no longer be accepted?”

On pages 10-13 of the cold rolled initiation document provided by the U.S. Department of Commerce discusses the process of converting cold rolled from hot rolled steel base substrate as being “Minor or Insignificant Process.”