Zekelman to close California steel conduit plant | S&P Global Commodity Insights

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Zekelman to close California steel conduit plant

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Zekelman Industries will close its steel conduit manufacturing facility in Long Beach, California, the company said Oct. 5, citing rising US conduit imports from Mexico as a contributing factor causing the closure.

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"According to the US Census Bureau, the expected volume of imported steel conduit from Mexico will increase to an estimated 69,641 mt in 2022 from 11,960 mt in 2017, an increase of 480%," Zekelman said in a statement.

Zekelman said steel conduit imports from Mexico have surged despite an understanding linked to the United States-Mexico-Canada Agreement that Mexico would be exempt from the US' 25% steel tariff imposed under Section 232 as long as steel product imports from Mexico, in general, would remain at historical norms.

"It was clearly understood that if volumes imported into the US from Mexico significantly exceeded (surged) historical norms, the US would have the right to reimpose the 25% tariff or institute some other measures to reduce the surge," the Chicago-based company said.

To address the initial steel conduit import surge, trade officials from the US and Mexico implemented a temporary permit control system from August 2020 to May 2021 to reduce volumes from Mexico.

"The desired outcome was self-regulation after May 2021," Zekelman said. "This obviously did not happen, as Mexican conduit imports continue to climb unabated and are up six-fold from pre-USMCA levels."

Zekelman said Mexican steel conduit producers have also misclassified products under alternative trade codes.

The Long Beach facility operates under Zekelman's Western Tube and Wheatland Tube brand names. The plant's customers will now be served by the company's facility in Rochelle, Illinois, and additional distribution centers on the West Coast.

Zekelman manufactures steel pipe and tube, hollow structural sections, and other downstream steel products through multiple operating divisions. It is the largest independent manufacturer of hollow structural sections and steel pipe, and the top producer of electrical conduit and elbows, couplings, and nipples in North America, according to the company.

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