Final Thoughts

June 13, 2023

Sometimes it seems the whole world is downstream of the steel industry. Now, that may be a side effect of spending my days immersed in lead times, steel buyers sentiment, and hot-rolled coil futures. That would be a fair assessment. However, looking into the testimonies from the Congressional Steel Caucus’ recent hearing on June 7 displays some of the complicated realities of 2023.

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What struck me about the hearing was how the steel industry is handling the post-pandemic phase of globalization.

For example, Roy Houseman, legislative director of the United Steelworkers (USW) union, spoke about the Caucus’ recent letter on “the surge of steel imports from Mexico.”

“As you outlined in a recent letter, it looks like the Mexican steel industry is using its duty-free status under the United States-Mexico-Canada Agreement (USMCA) to permit melted and poured steel products from countries like Brazil, South Korea, and Russia to enter the US through Mexico,” Houseman claimed.

Beyond the issue itself, what’s interesting to me is the interplay between union, industry, the branches of the federal government, trade agreements, and foreign governments. What seems at first glance a regional issue is essentially global in character. Globalization seems now less a good in itself as it was touted to be in the 1990s, but a complex web of negotiations, a necessity that needs to be sorted out.

Nowhere does this seem to be more evident than in decarbonization. Almost everyone is in agreement that it’s a good thing. How to get there is another story, and there’s not only one route.

For example, Cleveland-Cliffs’ chairman, president, and CEO Lourenco Goncalves touted a recent test of hydrogen in the company’s Middletown Works blast furnace in Ohio, while Nucor’s chair, president, and CEO Leon Topalian spoke of the benefits of electric-arc furnace (EAF) steelmaking.

In his testimony, Richard Fruehauf, SVP and chief strategy and sustainability officer at US Steel spoke of the Caucus’ recent focus as the US and European Union discuss a potential global arrangement on steel overcapacity and decarbonization. An agreement is hoped for by October. The US is at odds with the EU’s proposed carbon border adjustment mechanism (CBAM) that could see a carbon tariff placed on US exports to the union.

Here again is a meeting point for globalization that also takes in the threads of China and the developing world. Hammering out an agreement suitable to global players is not an abstract good, but a vital reality that needs the participation of everyone from the workers in a factory to the heads of state.

All of the witnesses’ testimonies can be found here.

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By Ethan Bernard, ethan@steelmarketupdate.com