Steel Execs Give Trump Trade Policies High Praise

Burritt said the visit by Trump to U.S. Steel Granite City was “incredibly exciting” and he expects the president’s “unprecedented” support of the steel industry to continue.

“This trade situation requires a lot of courage,” said Burritt, “and we have courageous leadership that’s addressing it now rather than kicking the can down the road as has happened for so many years and years and years. And here we are. We’re finally seeing it take hold, and I expect it to continue. We don’t expect the president to blink.”

Burritt said he thinks Trump’s strategy of “getting people to the table” is the right one and “we’ll get to a more fair trade environment as a result of his leadership.”

Safeguards imposed by the EU as a result of the tariffs are not of great concern to U.S. Steel due to limited trade by the company between the EU and U.S., said Burritt. U.S. Steel’s Europe operation sells within the EU. “The way we look at it is the EU caring about free trade and caring about their market is probably good for everybody, just like it is here. So, we see that as a positive for our European business to the extent that they’re conscious of making sure free trade is what’s incentivized.”

• Nucor’s chief executive officer also praised the administration’s trade action. Said CEO John Ferriola: “We continue to be strong advocates of Section 232. We currently speak about whack-a-mole quite a bit. And the 232 provides a comprehensive trade remedy that eliminates that ability to go around with country and product substitution that drive us crazy, each case taking two years to prosecute. So, all-in-all, we’re very happy with tariffs, with the 232 action. We believe that the 232 is justified. We believe that the incredibly massive trade deficit needs to be addressed. And we think that 232 and tariffs will help trading partners come back to the table and reach a more reasonable balanced trade agreement, which I think is good for the steel industry, it’s good for our customers and it’s good for the American workers.”

Ferriola did admit that retaliatory tariffs will have some impact on Nucor’s rebar business. “If you look at our rebar business, we will be limited in what we can send out into Canada. But remember, rebar will not be coming into the country from other countries, so we actually see it as a net zero situation.”

Regarding the company’s business in Mexico, Ferriola said the mills down there will be serving the automotive market in Mexico and will avoid any negative impact from the tariffs.

Nucor has no plans to stop initiating antidumping and countervailing cases because of Section 232, said Ferriola. “We always are looking at that. We’re not going to stop prosecuting cases because of 232 or any other form of comprehensive transaction. We recognize that when you have a trade case that’s successful, that’s a minimum of five years with the ability to do a sunset review and extend it maybe another five years. So, that’s a very long-term success. We’re going to continue to looking at them.”

Added Ferriola, “As a general statement, we’ve been extremely successful in prosecuting the cases. That points to two things: the egregious nature of the violations that have been and in some cases still are occurring; and it points to the growing understanding by the ITC of the games that are being played as these violating countries continue to play whack-a-mole.”

• Steel Dynamics CEO Mark Millett said SDI supports the administration’s “attempt to create a more level playing field for the domestic steel producers, and we have seen positive change.” The industry is making investments and creating new jobs, he said, adding that there has been a marked increase in the utilization rates of existing steel facilities including an 80-85 percent utilization rate in flat rolled facilities. 

Trade restraints have caused steel prices to inflate and surpass the historical levels, said Millett. “We would imagine that over time, with again some control in imports, that historical spread would be restored.”

• ArcelorMittal has steelmaking facilities around the globe and its CFO says there has been a structural shift in the global steel industry. China has made progress on reducing capacity, although steel exports from its mills are still causing some market distortions that require trade action on a global basis, said Aditya Mittal, Group CFO and CEO of ArcelorMittal Europe. In addition, numerous antidumping and anti-subsidy cases have made a significant impact on imports.

“More recently, we have seen Section 232 in the U.S., as well as safeguarding actions in Europe,” said Mittal. “With 232 and safeguarding, it’s a question of the timing and how long they would last. But the anti-dumping measures and anti-subsidy measures typically last five years and typically get extended by another five years.”

Apparent steel demand is high in the U.S resulting in higher steel prices, and ArcelorMittal doesn’t see that changing in the second half of the year. “Demand elasticity is quite high normally in the steel business,” said Mittal. As suppliers are brought into the U.S. steel industry and possible steel tariff exemptions are carved out for Canada and Mexico, there should be “normalization which would reflect a more reasonable margin for the U.S. steel industry, reflecting their cost position.”

“The price change in HR is clearly greater than the price change in cold-roll and galvanized. That’s just a function of demand/supply balance and the way the 25 percent [tariff] impacts more of the downstream products. What you have to appreciate is that the margins in the U.S. for downstream products were higher than the global margin for downstream products. So, you see some of that correct itself based on how the 25 percent duties impact those product ranges.”

• AK Steel is supportive of the administration’s trade actions to address global steel overcapacity and unfair trade practices that have caused “critical manufacturing base and other key industries to move oversea,” said AK CEO Roger Newport, who noted that future threats remain, especially in the field of electrical steels.

“For example,” said Newport, “the United States is down to a single domestic producer of electrical steels, which are needed not only in the production of motors, but our high-efficiency electrical fields are also an essential component in the chain of power generation, transmission and distribution, which is the backbone of our nation’s power grid.

“We remain steadfast in our belief that the Section 232 relief must be extended to the downstream products in the electrical transformer supply chain in order to prevent circumvention and to protect our nation’s critical electrical infrastructures and national security. We will continue to work with the administration to ensure that the desired results of Section 232 action are achieved.”

Newport added, “We see material coming in through Canada and Mexico, for example. So, it’s really critical that we have a comprehensive resolution to all the trade negotiations going on and especially looking at the downstream products to make sure they are included from the electrical steel side. Otherwise, it will just be another avenue to circumvent our trade laws.”

• Cleveland Cliffs CEO Lourenco Goncalves said “it is unquestionable that Donald Trump brought back the resurgence of American manufacturing.”

“The actions taken by the Trump administration, mainly tax reform, have brought a massive positive impact to the economy in general and to the steel business, in particular,” said Goncalves. “Even without Section 232, the domestic steel market would be doing well. We are seeing American jobs being generated. Instead of generating jobs in China, in Taiwan, in Malaysia, in Thailand, we are generating jobs in Ohio, in Pennsylvania, in Indiana, even in Wisconsin.

“So, we are generating jobs in the Midwest thanks to tax reform, not Section 232, not anything else other than a pure play book of tax reform, long overdue. Countries are no longer taking advantage of the United States in trade thanks to Wilbur Ross, Peter Navarro—these guys who have been defending the United States out there, and we appreciate that. And I appreciate what President Trump did as far as supporting trade. And it’s not a Republican thing. Here in Ohio, we have Democrats, Sherrod Brown, his speech is exactly the same as Donald Trump, because he understands, he gets it.

“So, we are not at any risk or problem downstream. Logic will prevail at the end and we’ll continue to be geared toward more and more production in America.”

• Ryerson CFO Eddie Lehner is expecting the reduction of imports from trade actions to make aluminum and carbon steel supply tight in the coming quarters. “On the carbon side, it remains to be seen how tight that’s going to be. We really don’t know how much more domestic capacity is going to come into the market vis-a-vis maybe Granite City or Big River, or some of the other players that have come online with new capacity. [We don’t know] how much more the other mills are going to bring to market just to compensate for what isn’t being imported.”

Tightness in the slab market will depend on whether producers will continue to pay the tariff or get exemptions, said Lehner. If import levels continue to drop for a third and fourth month, he added, “I think the arithmetic tells you that it’s going to be a tighter market for our supply.”

The success of AD/CVD cases noted by Nucor and ArcelorMittal was echoed by Kevin Richardson, Ryerson president, South-East Region. Richardson commented that antidumping and countervailing duties have had the biggest supply-side impact on aluminum by taking China out of the market earlier this year. “The way that the aluminum market has been set up on the supply side is different than carbon and stainless, he said.

“And the other thing to take note in terms of those countervailing anti-dumping duties,” added Richardson. “Once those are set, that’s a five-year term, where tariffs could swing on relatively short notice.”