UPDATE 1-US steelmakers seek protection against European imports
* US producers preparing an array of trade actions-source
* Record overcapacity boosts shipments to U.S.
* US steel trading at premium vs rest of the world
LONDON, Aug 2 (Reuters) - A U.S. steel industry group has asked the government trade representative to intervene to help protect domestic producers from growing imports of steel products from Europe.
U.S. steelmakers have grown increasingly worried over the last couple of years as the inflow of steel products from abroad has intensified due to rising global oversupply.
The Steel Manufacturers Association (SMA), which includes some of the world's largest steelmakers such as Nucor and ArcelorMittal, has urged the government to undertake a diplomatic initiative to curb imports of cut-to-length steel plate and other products.
The industry's latest move is an attempt to resolve the problem before it results in litigation.
"The European governments should be encouraged to take steps to curb their own excess steel capacity," the SMA said in a letter to Michael Froman, the chief U.S. negotiator and adviser to the president on trade.
"The United States cannot be the dumping ground for other countries' excess supply."
Officials at European steel lobby Eurofer could not immediately be reached for comment.
Last month a group of U.S. producers filed one of the biggest steel trade cases in years involving imports of steel pipe used by the energy industry.
Steelmakers are now preparing to launch more trade actions against imports of an array of steel products from various countries, two sources with knowledge of the situation said.
"The steel pipe case was simply the first one out of the gate," one of the sources said. "There are obviously a number of cases in the works. There is a massive excess capacity problem. The result of that is that you get trade actions getting filed."
In the past, dumping of steel has ended up costing U.S. consumers billions of dollars in the longer run, according to Michelle Applebaum of consultancy Steel Market Intelligence.
"There were three dozen bankruptcies of American steel companies, and that left the United States in a shortage position from 2003 to 2008 when Chinese steel demand was soaking up all the iron ore in the world," she said.
"If the U.S. had not closed a third of its domestic capacity in those years, consumers would have paid far lower prices for steel and not have had to import expensive steel in order to feed domestic demand."
MORE TRADE CASES TO COME
The steel market is structurally in better shape in the United States, where economic growth has been picking up, than in Europe, leading to an increase in U.S. imports in the past 18 months.
After a bleak first half of this year, prices in the United States and North America have risen in the last few weeks and are currently at a substantial premium over levels in other regions, attracting an even growing number of imports.
"The U.S. is trading at an unsustainable premium to the rest of the world," Colin Hamilton, Macquarie head of commodity research, said.
"At the moment what you are going to see is that any ship in the world that is carrying steel is going to point towards the U.S., and that is going to put the U.S. prices under pressure."
Although the record overcapacity has boosted shipments of many types of steel into the United States, the increase of imports of cut-to-length plate from Europe has been particularly harmful, the SMA said.
This is steel plate that is cut to order for the building of bridges, ships, shipping containers, skyscrapers, oil rigs, tanks, helicopters and other uses.
In 2012, imports of this product increased by 20 percent from Germany, 63 percent from France, 120 percent from Poland and 4,655 percent from Italy compared with 2011, data from the association showed.
"These increased imports are not being driven by demand in the U.S. market. Instead, they are largely fueled by significant steel overcapacity elsewhere in the world," the SMA said in the letter.
European steel producers have not taken the painful but necessary steps to cut plants and output, and some European governments have intervened to prevent or delay plant shutdowns, exacerbating the supply-demand imbalance, the U.S. group said.
The SMA includes 36 North American steelmakers, with about 75 percent of domestic output. They produce steel mainly in electric arc furnaces, which use scrap as a raw material.