Final Thoughts

The remedies suggested would be added to any existing antidumping (AD) or countervailing (CVD) duties.

Secretary Ross did not mince words during the Q&A with reporters. He pointed out that higher steel prices would not impact workers’ jobs.  “If you look at the percentage of steel in the cost of a car, it is really quite small at the retail level. If you multiply that by the percentage of the tariff, it gets even smaller. If you look at the price of both aluminum and steel, they have varied greatly over the last several years, and there hasn’t been any noticeable dislocation coming from it. Auto sales and production have been very high, but steel prices were up quite a bit from their lows. Same with aluminum. As to other industries, it is even more trivial. In the case of cans, it is a fraction of a cent difference in cost that would come from any of these alternatives. We really don’t buy that argument [that it will affect consumer prices to a great degree] given the nature of these tariffs.”

Secretary Ross did not acknowledge that steel prices are already at a six-year high and are expected to climb even higher in the coming months.

The remedies are not aimed at any downstream products. So, for now, parts made of steel can continue to come in from foreign countries.

Secretary Ross was asked if the remedies covered semi-finished slabs, billets and blooms. He responded, “In steel, it does encompass flat products, long products, pipe and tube, semi-finished and stainless.”

If President Trump accepts one of the remedies as suggested by Secretary Ross, there could be some issues with conversion mills that have been relying on slabs coming from foreign sources. This would include California Steel Industries (CSI), NLMK USA and their Pennsylvania plants, Acero Junction, Evraz, JSW and ArcelorMittal Nippon Sumitomo (AMNS) Calvert.

On top of these mills, you could potentially have issues with other conversion mills in the United States that have been receiving foreign hot rolled or cold rolled steels in the past.

I spoke with numerous steel executives immediately after the announcement was made. I reached out to trade attorney Lewis Leibowitz and asked him to respond to some of the questions that arose (we have his response in a separate article in tonight’s issue).

We found out that foreign orders were already being cancelled by the trading companies to some of their customers. A manufacturing company in Texas told us, “Actually, I had two orders cancelled for imports during lunch. I have been told all offers are suspended until further notice. I am very worried how far the U.S. mills will push this. They cannot keep up with demand evidenced by the current situation, and the imports we do have left will go away immediately. This is a scary situation for U.S. manufacturers.”

A trading company told me they had suspended all quotes until they get clarification on how much risk they face.

Another buyer told me that the traders have language in most foreign steel purchase order acknowledgements that allows them to cancel orders should the U.S. government take a position against foreign steel.

Through all of this we must remember that President Trump has NOT made any final decisions on steel. Secretary Ross, responding to a question about whether the president will accept one of his recommendations, said, “He is the sole judge of that, it is not for me to speculate. He is not bound by these exact recommendations. He could do something totally different or do nothing if he so chooses.”

Asked when the decision would be made, Ross said, “He’ll decide when he decides. There’s quite a lot going on in Washington right now.”

Steel Market Update will be actively following the events surrounding the Section 232 recommendations and what will happen should the president lean one way or another. We will be reaching out to gather as many of your comments and suggestions as possible.

Our next flat rolled steel market trends survey will come out on Monday morning and we will have one or two questions on this subject in the survey.

I will be in Tampa at the Port of Tampa Steel Conference where I am sure this subject will be first on everyone’s lips. I know Lewis Leibowitz, John Anton and Philip Bell will be there, and I will be picking their brains looking for guidance and reaction.

I have not yet figured out how I am going to handle the topic during our SMU Steel Summit Conference at the end of August. Should this be a stand-alone agenda item or should it be packaged with the bigger topic of trade and the renegotiation of trade agreements with NAFTA, South Korea and others? If you know of a dynamite speaker on the topic, please let me know. You can reach me at John@SteelMarketUpdate.com.

We live in a very active and transitional time for the steel industry. Make your reservations (and registration) to attend our conference on Aug. 27, 28 and 29. The program will be packed with quality speakers on timely topics – plus there will be plenty of time to network with other executives from manufacturing, service centers, steel mills, trading companies, toll processors and suppliers to the industry. You can register on our website: www.SteelMarketUpdate.com/Events/Steel-Summit. Tell your friends, customers and suppliers Atlanta is where they need to head at the end of August.

As always, your business is truly appreciated by all of us here at Steel Market Update.

John Packard, Publisher