The price gap between US cold-rolled (CR) coil and offshore product has widened again. The premium has grown repeatedly since falling to a 10-month low in late July.
Domestic CR coil tags remain above offshore prices on a landed basis. Stateside prices have begun rising after falling to their lowest levels since last October. This is while offshore tags have been largely easing.
US CR coil prices averaged $945 per short ton (st) in our check of the market on Tuesday, Sept. 3, up $25/st vs. the prior week. Despite the steady improvement of late, CR tags are still down roughly $380/st from a year-to-date high of $1,325/st in January.
Domestic CR prices are, theoretically, are roughly 22.1% more expensive than imports. That’s up from 18.9% last week. While US CRC prices are still higher than offshore material, the US CR premium is down from a 31.5% premium in early January.
In dollar-per-ton terms, US CR is now, on average, $159/st more expensive than offshore product (see Figure 1). That compares to $131/st costlier on average last week. That’s still well below a recent peak of $311/st in mid-January.
The charts below compare CR coil prices in the US, Germany, Italy, South Korea, and Japan. The left-hand side highlights prices over the last two years. The right-hand side zooms in to show more recent trends.
This is how SMU calculates the theoretical spread between domestic CR prices (FOB domestic mills) and foreign CR prices (delivered to US ports): We compare SMU’s US CR weekly index to the CRU CR weekly indices for Germany, Italy, and East Asia (Japan and South Korea). This is only a theoretical calculation. Import costs can vary greatly, influencing the true market spread.
We add $90/st to all foreign prices as a rough means of accounting for freight costs, handling, and trader margin. This gives us an approximate CIF US ports price to compare to the SMU domestic CR price. Buyers should use our $90/st figure as a benchmark and adjust up or down based on their own shipping and handling costs. (Editor’s note: If you import steel and want to share your thoughts on these costs, please get in touch with the author at david@steelmarketupdate.com.)
As of Thursday, Sept. 5, the CRU Asian CR price was $508/st, flat week over week (w/w) but down $45/st over the past month. Adding a 71% anti-dumping duty (Japan, theoretical) and $90/st in estimated import costs, the delivered price to the US is $959/st. The theoretical price of South Korean CR exports to the US is $598/st.
As noted above, the latest SMU CR price is $945/st on average, which puts US-produced CR theoretically $14/st below CR product imported from Japan. But US tags are still $347/st more expensive than CR imported from South Korea.
Italian CR prices were down $5/st to roughly $695/st this week. After adding import costs, the price of Italian CR delivered to the US is, in theory, $785/st.
That means domestic CR is theoretically $160/st more expensive than CR coil imported from Italy. The spread is up $30/st from last week but still $293/st below a recent high of $453/st mid-December.
CRU’s German CR price was down just $7/st vs. last week. After adding import costs, the delivered price of German CR is, in theory, $803/st.
The result: Domestic CR is also theoretically $142/st more expensive than CR imported from Germany. The spread is up $32/st w/w but still well below a recent high of $431/st in the first week of 2024.
Notes: We reference domestic prices as FOB the producing mill, while foreign prices are CIF the port (Houston, NOLA, Savannah, Los Angeles, Camden, etc.). Inland freight from either a domestic mill or a port is important to keep in mind when deciding where to source from. It’s also important to factor in lead times. In most market cycles, domestic steel will deliver more quickly than foreign steel. Note also that, effective Jan. 1, 2022, the blanket 25% Section 232 tariff was removed from most imports from the European Union. It was replaced by a tariff rate quota (TRQ). Therefore, the German and Italian price comparisons in this analysis no longer include a 25% tariff. A similar TRQ with Japan went into effect on April 1, 2022. South Korea is subject to a hard quota rather than a tariff.
This month’s column on the markets could be a response to the question of last month, “Are the forward curve prices on Aug. 7 high enough to price in trade case risks?” The market’s answer has been a pretty resounding YES so far, I think. If you look at the curve month over month, the weaker spot price has been a much bigger factor in the pricing than the recent trade case. The risk of that case has been long thought of as a key driver of forward risk and thus contango in the futures curve.
That being said, the news brought us back up to some higher trading ranges, but that is only because buyers in the futures market for Comex HRC on Sept. 5 seemed to have hit the panic button on the initial news of the trade action that was announced on Thursday. Early day it got wild but the buying frenzies faded into the afternoon and we were mostly sideways on average to start the day Friday (at time of writing). The exception is October, which was back up to $728 per short ton (st) vs. $718/st settlement on Thursday. Here is how it looks month on month vs. our previous report a month ago, and this is even accounting for the rally on Thursday;
| Future Month | Settlement Price on 9/5/24 | Settlement Price on 8/7/24 | Change |
| September HRC | $699.00 | $724.00 | -$25.00 |
| October HRC | $718.00 | $744.00 | -$26.00 |
| December HRC | $774.00 | $779.00 | -$5.00 |
This is the third straight month in which spot price weakness has been felt both on the index level and the forwards, which overall have come off massively this year. Spot month September futures had a peak this year of $879/st. This itself was a nosedive from the start of the year as September had touched an amazing $1,149/st during late December of last year. With one print down and three to go, even if mills can make a move, we are still likely to average out in the $700-715/st range optimistically, perhaps lower if the index does not respond quickly to mills efforts to get prices up.
Farther forward, going into this month the October low was $723/st back on July 23, so we are trading right around that same level here in September now. (Actually, $723/st is the October bid on CME globex at the time of this writing.) December also is remarkably unchanged from a month ago even with the trade case news no longer a rumor but actually playing out in some ways as we would have expected. It’s now a broad ranging trade action that encompasses USMCA members Mexico and Canada. Additionally, there is a greater possibility of blocking the Nippon play for U.S. Steel deal with recent news from the White House.
It seems like from here we are going to need to see some real follow through on spot price increases before the market is willing to price in much additional premium over the current spot levels. But there was a certain uneasiness on Thursday that really had things crazy for a moment. October was trading above $745/st briefly, and markets were approaching $50/st day-over-day increases in some cases before eventually backing off and settling lower. It was still an extreme intraday move for HRC. Will we see more of that, or will the announcement now being made crystalize some things? Check back next month and we will sort out how it was priced in.
Source: data is from Comex HRC futures settlement prices as published by CME group.
The US Securities and Exchange Commission (SEC) has settled charges against Esmark and company founder, chairman, and former CEO James P. Bouchard regarding an offer to buy U.S. Steel.
Recall that the Sewickley, Pa.-based service center on Aug. 14 2023, proposed buying all outstanding shares of the Pittsburgh-based steelmaker for $35 each, or $7.8 billion.
“The following day, Bouchard appeared on a cable news program and said that Esmark had $10 billion available in cash committed to the deal and would not put up any of Esmark’s assets as collateral,” the SEC said in a statement on Friday.
Esmark didn’t have the cash to make the deal. And its public statements were therefore false, the SEC said.
“Bouchard and Esmark could not have completed the tender offer for U.S. Steel that they announced,” Antonia M. Apps, director of the SEC’s New York regional office, said in the statement.
“Investors should be able to trust companies’ and executives’ public statements,” she added.
The SEC found that Esmark and Bouchard violated Section 14(e) of the Securities Exchange Act of 1934 and Rule 14e-8 thereunder.
Esmark and Bouchard, without admitting or denying the SEC’s findings, agreed to cease and desist from future violations. They also agreed to pay civil penalties of $500,000 and $100,000, respectively.
Recall that Bouchard at the time of the proposed acquisition was chairman and CEO of Esmark. He stepped down from the CEO role last November but continues on as chairman.
A request for comment from Esmark was not returned by time of publication.
Cleveland-Cliffs Inc.’s $2.5-billion acquisition of Stelco, announced in July, may have come as a surprise to many. Even the CEO of the Canadian steelmaker wasn’t exactly expecting it. But after some consideration, he thinks the deal makes sense, believing it will set the stage for future growth in the North American steel industry.
In a candid fireside chat with SMU Senior Analyst/Editor David Schollaert, Stelco CEO Alan Kestenbaum opened up about Stelco’s pending sale to Cliffs and his business strategy, industry outlook, and plans for the future. The chat took place on Tuesday, Aug. 24, at the 2024 SMU Steel Summit in Atlanta.
Having overseen and turned around businesses worldwide, Kestenbaum said that Stelco has been one of the most efficiently run operations of his career.
“This is probably the easiest business I’ve ever had. It just runs so well,” he commented, emphasizing the company’s strong fundamentals, low-cost structure, and strategic investment plans.
Kestenbaum credited much of Stelco’s success to its focus on lowering production costs, reinvesting in its facilities, and maintaining operational excellence.
Focusing on being a low-cost producer in a highly capital-intensive industry has allowed the company to weather fluctuations in the business cycle, he said. And reinvesting more than $1 billion into Stelco’s two facilities has been pivotal in reducing conversion costs, even in an inflationary environment.
The CEO said that Stelco’s profitability stems not from chasing the highest-priced contracts but from focusing on cost efficiency in what may be less-glamorous areas of steel production – commodity-grade hot-rolled coil.
Although Stelco has the capability to produce high-grade automotive steel and does have some exposure to the auto market, Kestenbaum sees this as less profitable due to inconsistent demand and low margins.
After conducting various analyses, the company realized that its most profitable products were not the premium, high-cost offerings, but rather more basic products produced at a lower cost.
“Our biggest competitive advantage was on the old, boring stuff,” he commented, and so that is their focus.
“We continue to push our conversion costs lower and lower,” he said, noting the importance of technological upgrades and operational efficiencies.
Kestenbaum said securing a stable and affordable supply of iron ore in the early days of the Covid-19 pandemic was a critical move for the Canadian steelmaker.
He recounted how the company took advantage of the downturn to negotiate a favorable supply agreement with U.S. Steel, which includes the option to acquire a 25% share of the iron ore mine at a later date.
The deal has given Stelco long-term security in a key input for steel production. This further strengthens the company’s position as a low-cost producer, the CEO said.
Additionally, he noted that internal efficiency gains have helped to offset the pressure of rising raw material prices, including coal and iron ore.
Kestenbaum admitted he “wasn’t looking to sell the business” when approached by Goncalves and Cleveland-Cliffs.
Given Stelco’s strong financial performance, including high dividends, $600 million in cash, no debt, and industry-leading margins, “You don’t sell businesses like that,” he commented. But when considering Stelco’s shareholders, he said the responsible thing to do was to take the offer.
As for the deal’s impact on the wider market, Kestenbaum thinks it will be positive. “The feedback I’m getting from my customers has really been excellent and supportive,” he noted.
He expressed confidence in Cliffs’ ability to integrate Stelco’s operations and mentioned potential synergies in things like iron ore supply that will benefit customers on both sides of the US-Canada border.
Despite a bumpy year so far, Kestenbaum remains optimistic about broader market conditions.
With interest rates likely to fall and infrastructure projects expected to pick up, demand for steel should also pick up in the near future, he said.
“I see things very, very optimistically for the next number of years,” he stated.
He also praised Canada’s recent alignment of trade policies with those of the US, particularly the tariffs on Chinese steel, aluminum, and electric vehicles. He believes we’ll see more of Canada closely aligning itself with the US.
He pointed out that Canada and the US share a strong economic relationship, with Canada’s future closely tied to the US economy, which is the biggest in the world.
“We are blessed to be on the doorstep of the US economy,” he noted. “Our future is not with China. Our future is not with Europe. Our future is with our partners in the USMCA.”
When asked what keeps him up at night, Kestenbaum first said, “That I might invest in an EAF.”
“No, in all seriousness,” he continued, “The challenges that lie ahead on the decarbonization” front are what really energize him.
“Achieving that is something that keeps me up at night, not from the perspective of being fearful, but really being excited about the future,” he noted.
Even as he prepares to transition out of Stelco, Kestenbaum remains excited about future opportunities in this business.
He hinted that he remains deeply interested in the metals and mining sector, including base metals and battery metals. And he plans to reinvest the proceeds from Stelco’s sale back into these industries, noting that “these are basic products and are never going to go out of style.”
“I love this business, and why I’m going to continue to stay in it is exactly that – it’s identifying opportunities, coming up with a strategy, and executing,” he stated.
Kestenbaum is confident in Stelco’s future under Cliffs’ leadership. While the sale will mark the end of an era for the Canadian company, he also believes it will set the stage for future growth and transformation in the North American steel industry.
Global crude steel production fell by 4% month over month (m/m) in July, led by a major drop in Chinese output, which fell 9% m/m. The decline in global production was larger year over year (y/y), decreasing by 5%. With the seasonal summer slowdown coming on top of underlying weak demand, Chinese mills are competing aggressively on price, keeping margins negative and now causing significant output cuts. In the rest of the world, small increases in crude steel production were seen, driven by a strong 3% m/m rise in output from Asia outside China.
Chinese crude steel output decreased by 9% y/y to 83 million metric tons (mt) but this has not significantly affected prices. The short-lived growth in domestic production following the May Day holidays was the last sign of steel industry life, but cuts only began to accelerate this month, prolonging the oversupply issue. Prices have yet to see any upwards pressure from lower supply as domestic demand falters, due to the weak property market, less government support than hoped and a bearish macroeconomic outlook. A change to the rebar quality standard increased supply pressure as sellers try to destock. Rebar prices in China are at their lowest level since 2017.
In Asia outside of China, the mild but steady production growth of the past few years was reinforced by a 3% m/m increase, bringing the July total to 32 million mt. There was broad-based growth throughout the APAC region, with all the major regional steel producers seeing some level of monthly increase. The standouts were Taiwan and South Korea, with a number of South Korean mills restarting to drive 7% m/m growth. In y/y terms, Vietnam and Turkey continue to increase steel production. Output in Asia outside of China grew 2% y/y.
European output is down to 11 million mt as maintenance shutdowns continue in the face of low and weak demand – weaker than the usual summer slowdown. However, this still represents a 5% y/y increase, and margins are not yet at Chinese levels. A large decline in import availability was no match for the continued downwards price pressure. Overall, Europe saw a 5% m/m decrease in crude steel production.
Both longs and sheet prices were more stable in the US than elsewhere, though price declines still occurred. With mills running up against costs, a potential bottom is in sight. North American crude steel production rose by 3% m/m, but fell 2% y/y because of a severe drop in Mexican output over 2024. This was due in part to the Biden administration’s recent strengthening of US tariffs against Mexican steel. The US, Mexico, and Canada have each announced increased tariffs on Chinese output, further limiting good export options for Chinese producers.
To learn more about CRU’s services, visit www.crugroup.com.
New York state-based aluminum extrusions manufacturer Keymark Corp. has recently added a new coating facility in its plant in Lakeland, Fla. This expansion aligns with the company’s strategy to enhance its offerings in the US architectural and residential fenestration markets. The newly inaugurated 76,000-square-foot facility features a cutting-edge chrome conversion-free, 25-foot vertical powder coating line. This addition complements Keymark’s existing 40-foot horizontal wet/powder coating line, expanding its capacity and capabilities to meet growing market demands.
With this new facility, Keymark’s total production space in Lakeland will exceed 330,000 square feet with the expansion bringing 40 new jobs. Keymark services include die engineering design, aluminum extrusion finishing, powder and wet painting, anodizing, and custom packaging.
According to local media, Novelis should restart its aluminum rolled products production the week starting Sept. 9. This follows the recent floods in Sierre in Switzerland at the end of June. The company has carried out a number of tests in recent weeks to check its equipment. In particular, it took pumping, draining, cleaning and restoring power to reconnect thousands of electrical components, reports said.
A meeting is also planned for Wednesday between Novelis and the Valais State Council over the financial responsibilities for the floods, which forced the company to shut down. The management’s objective is to review the urgent measures announced by the Council of State to specify the deadlines for this work and assess its efficiency, according to the reports.
Gränges has officially joined the First Movers Coalition (FMC) – a strategic move aimed at accelerating the decarbonization of the aluminum industry. The move comes as Gränges seeks to secure access to low-carbon primary and recycled aluminum – a key factor in minimizing the environmental impact of its products and achieving its 2040 net-zero target.
The FMC – an initiative spearheaded by the World Economic Forum – represents a global coalition of companies committed to leveraging their purchasing power to drive down carbon emissions in heavy industries. This includes sectors such as aluminum, aviation, cement and concrete, steel, shipping, trucking, and advancements in carbon dioxide removal technologies. By consolidating the purchasing power of its members, the coalition aims to generate the largest private-sector demand for cutting-edge decarbonization technologies.
Gränges is the 100th member to join the coalition. “Not only is Gränges the 100th member of FMC, but as a global leader in aluminum rolling and recycling, Gränges brings valuable knowledge of the sector and purchasing power that will help to accelerate FMC’s mission to scale low-carbon primary and secondary aluminum,” said Rob van Riet, Interim Head of the First Movers Coalition.
Vimetco Extrusion, Romania’s largest extruder, has completed the implementation of a project worth over €3.8 million (USD$4.2 million), the company reported on its website. The project involved the purchase of an automatic packaging line for finished products – an investment that will lead to a reduction in CO2 emissions and in the amount of waste generated in the production process.
The project was financed with the support of grants from the Norwegian Financial Mechanism 2014–21 within the program “SME Development in Romania.” It was carried out in partnership with International Development Norway, a Norwegian consulting company specializing in green innovation. The project ran from July 2021 to April 2024 and had a total value of €3,849,311, of which €1,851,000 was grant funding.
Constellium announced the results of its collaborative research project Aluminum Intensive Vehicle Enclosures (ALIVE). Constellium’s University Technology Center (UTC) at Brunel University London was the lead partner of the project, focused on developing structural aluminum battery enclosures for electric vehicles. The £15m (USD$19.7-million) project, half funded by UK government subsidies through its Advanced Propulsion Center (APC), began in 2020.
The consortium is made up of six industrial partners (BMW, Constellium, EXPERT Technologies Group, Innoval Technology, Powdertech and Volvo) and two university technology partners (BCAST (Brunel University London) and WMG (University of Warwick). The project enabled the creation of a full-scale battery enclosure prototyping line. The team also demonstrated the superior performance of coated aluminum solutions for fire resistance. ALIVE furthermore supported the development of cost models to quantify manufacturing costs and minimize capital expenditures to support future industrialization decision-making processes.
The Constellium team is already adapting the design philosophies to other enclosure types, such as chest battery packs for trucks and SUVs, as well as validating the use of high-recycled content alloys in such demanding aluminum product forms to further improve their carbon footprint.
To learn more about CRU’s services, visit www.crugroup.com.
Sheet prices didn’t roar back after Labor Day. But steel market news sure came out of the gate strong (or maybe chaotically is the better way to put it).
First, the nearly $15-billion proposed sale of U.S. Steel to Nippon Steel exploded into the news. And when I say exploded, I mean that all sides seem to be escalating things now.
Here is a quick recap:
That’s an interesting thing that Nippon said about legality. Where exactly does the CFIUS process stand now? How might the US government break its own laws? And what would the consequences of that be (if any)?
Let’s not forget that there is a $565-million breakup fee if the U.S. Steel deal is terminated, according to the terms of the merger agreement. Was Nippon trying to get ahead of that one?
Oh, and it might seem like ancient history now. But remember that Nippon Steel just last week promised to invest nearly $3 billion in U.S. Steel’s union-represented mills. That was significant. And I think there were hopes the USW might have had a more positive response.
But the union said basically that a press release isn’t a contract. Recall bad blood over a $1-billion investment initially planned for Mon Valley going to Big River Steel instead several years ago. And around the closure of other union plants over the years. What might help the union turn a new page? Do executive heads have to roll?
Also, Cliffs has publicly thrown its hat back in the ring. Is anyone else considering doing so – but maybe more quietly?
Finally, why is Japan such a target? Big Japanese companies – Honda, for example – have had significant operations in North America for decades. Even investment from Nippon Steel is hardly new. Think AM/NS Calvert and Wheeling-Nippon, as well as I/N Tek and I/N Kote. (The latter before the 2020 sale of ArcelorMittal USA to Cliffs).
That would normally be enough news for a month or two. And that’s only one of two big stories this week. The other is a trade case filed by US mills and the USW against coated flat-rolled steel from 10 (!!!) countries.
You might recall initial speculation that the case might be filed against Vietnam. Perhaps a few more countries as well. I didn’t expect a filing as sprawling as the one we got. And I was surprised to see Canada and Mexico, our USMCA partners, targeted along with allies like Australia. Ditto countries such as Brazil and the Netherlands that were already subject to quotas.
And that’s just the latest turn of the screw as far as trade cases go. Over the summer, more stringent Section 232 requirements were announced against Mexico. That followed calls by some in the US steel industry to take the ‘M’ out of USMCA.
What comes next? As Barry Zekelman noted at this year’s Steel Summit, Mexican exports of conduit to the US are up significantly. That’s a big concern for his business. But where is the substrate for that conduit coming from? My understanding is that it’s in no small part from US mills.
To be fair, domestic mills might have been filling the void left by AHMSA. But in this tense trade environment, could Mexico turn around and argue that the US is surging sheet into the Mexican market?
What also strikes me is the speed at which all of this is happening. We’re making changes to trade policy almost overnight in some cases. That’s not new. We saw Trump, at times, overhaul trade policy via tweet and for political considerations not entirely related to steel.
The new wrinkle might be that we seem to be treating foreign investment from allies in the same way. What does Japan think of the circus/political football the Nippon-U.S. Steel deal has become?
We’ve written a lot in the past about port and supply chain chaos. We’ve generally decided that those problems have faded into the rearview mirror as the initial shocks of the pandemic and Russia’s invasion of Ukraine have passed. But are we unleashing a new round of chaos – this one self-inflicted and exacerbated by election-year politics?
Election-year politicking with steel and trade policy is hardly new. I’m old enough to remember when the Bush administration imposed Section 201 tariffs in the early 2000s. The rumor then was that it was intended to shore up votes in West Virginia, then a purple state whose electoral votes mattered. (West Virginia’s Democratic Senator at the time, Jay Rockefeller, was a big proponent of domestic steel and of Section 201.)
The difference then? The World Trade Organization (WTO) objected to those safeguard measures. And George W. Bush, a Republican president, terminated Section 201 in 2003 as a result. It is hard to see the US backing down now to a foreign interest or a multinational organization. And that’s true, whether we ultimately see a Harris administration or a Trump administration sworn in next year.
Also, I can’t help but wonder what all this means for steel consumers and end users. It can take years to build up supply chains, to certify suppliers – whether foreign or domestic – and to grow constructive relationships. How do you maintain reliable supply chains when the rules of trade are constantly shifting underneath you – and when the landscape of the domestic industry is as well?
You knew I was going to pivot to a bit of self-promotion at this point in Final thoughts! Seriously, though, we’ll be discussing trade issues, the election’s results, and more at the Tampa Steel Conference. So mark your calendars for Feb. 2-4, 2025, and register here before everyone else floods in. (Real question: Why does everyone wait until after Thanksgiving?)
How are service centers handling inventories in today’s less-than-stellar business conditions, and what are service centers’ views on mill consolidation?
SMU Senior Analyst and Editor David Schollaert sat down with leading service center executives at the SMU Steel Summit 2024 in Atlanta to discuss these issues and more affecting the industry. Participating in the panel were Pam Heglund, CEO of Mill Steel Co.; Geoff Gilmore, president and CEO of Worthington Steel; and Thad Solomon, president and CEO of Steel Technologies.
Speaking for a second year in a row, Gilmore pointed out that a lot has changed for his company since the 2023 Steel Summit. Most notably, Worthington Steel became a standalone company, separating from Worthington Industries in December.
He said that while demand has been stable, there has been a lot of uncertainty.
”I think we’ve all felt a bit of slowness in our end markets, which certainly is the cause of maybe a short-term spike in inventory,” he commented.
However, he noted that Worthington’s inventory is in “very good shape at this point.”
One thing the company has done to reduce risk is to embrace analytics, Gilmore said, which helps to spot trends.
He added that Worthington’s business is more than 90% contractual, which aids in managing inventory levels as well.
Solomon joked that the volatility coming out of the Covid-19 pandemic resembled his mood, “or my EKG, perhaps.”
He said Steel Technologies is also a strongly contract-driven, program-driven business.
“We do a lot of work to manage our inventories, keep them under control, and be responsive to our customers,” Solomon remarked.
He said using futures, managing buys, and working efficiently through all operations are just some of the strategies Steel Technologies employs.
Heglund described Mill Steel a little differently.
“We tend to have contract and then when the timing’s right, we do make opportunistic buys, which really help us to manage our inventories and help our customers,” she said.
She also cited giving her team autonomy and monetarily incentivizing them to keep inventories and costs low. “So that’s been a real bright spot for us,” she noted.
While consolidation within the service center industry is always a topic, the panel also touched on the subject of mill consolidation. This topic is ripped from the headlines, especially with the recent news that the Biden administration could block Nippon Steel’s acquisition of U.S. Steel. (That news occurred after the conference concluded.)
Solomon said mill consolidation has been “very healthy” for the steel industry.
“I think some of those possibilities become fewer and fewer (over time), but, generally speaking, when you pair up strong companies together, good things can happen,” he added.
Heglund agreed. “When you look at Nippon, for example, these are well-financed companies. Having them make some acquisitions into our North American market is a good thing,” she said.
She cited steel as the “backbone of the country,” and said that “ensuring that we have the infrastructure behind those really important steel mills is good for us.”
Gilmore quipped that he had vowed never to talk about the matter again after the previous Steel Summit.
But he said Cliffs’ offer for Stelco was “good for the industry” and noted that Worthington has great relationships with both Japan’s Nippon and U.S. Steel.
For those worried about mill consolidation, Gilmore pointed out there’s still strong competition between all the mills.
“There’s still imports, and there’s still market dynamics and market forces,” he added.
Another timely issue is the possibility of a strike by the International Longshoremen’s Association (ILA) on Oct. 1 if an agreement is not reached with the United States Maritime Alliance (USMX). This could affect 85,000 workers along the Gulf and Atlantic Coasts.
Solomon said there was an obvious concern that it could lead to some turmoil in supply chains.
While Gilmore echoed that concern, he said that he was perhaps overly optimistic.
“Every year, we seem to have some strike or something, and they seem to work themselves out,” he said, with Heglund shrugging off the prospect of a work stoppage as well.
Construction spending in the US in July was slightly lower than June. Despite the decline, it increased notably year on year (y/y).
The US Census Bureau reported July construction spending to be an estimated $2.168 trillion on a seasonally adjusted annual rate (SAAR). While this was 0.3% below June’s revised spending rate, it was 6.7% higher than spending in July 2023.
Residential construction spending, at $941.6 billion in July, was off 0.4% month on month (m/m) but 7.7% higher y/y.
July spending on nonresidential construction projects was also marginally down vs. spending in June but was 5.9% higher than July 2023.
Within the nonres category, spending was highest on educational construction. Spending in this subcategory rose 0.9% m/m to $100.8 billion in July. State and local government spending slipped 0.1% and outlays on federal government projects jumped 2.1%.
Commenting on July’s data, the Associated General Contractors of America (AGC) noted, “Nearly all spending categories show increases from a year ago but have fluctuated in recent months.”
AGC added that while demand for construction remains elevated, demand for workers remains even stronger.
Census figures show total construction spending has been rising notably in recent years (see Figure 1). Spending on residential projects has more or less leveled out over the past year after peaking in 2022. At the same time, spending on nonresidential projects has been surging in recent years.
US mills and the United Steelworkers (USW) union on Thursday filed a sprawling trade petition against imports of coated flat-rolled steel from 10 countries.
The scope of the case appears to include not only galvanized material but also Galvalume and aluminized sheet.
The petition seeks anti-dumping margins against Canada, Mexico, Brazil, the Netherlands, Turkey, the United Arab Emirates, Vietnam, Taiwan, Australia, and South Africa. It also seeks countervailing duty margins against Canada, Mexico, Brazil, and Vietnam.
The US petitioners are Steel Dynamics Inc. (SDI), Nucor, U.S. Steel, Wheeling-Nippon Steel, and the USW union.
That’s according to government documents dated Sept. 4-5. Some are addressed to Commerce Secretary Gina Raimondo and International Trade Commission (ITC) Secretary Lisa Barton.
Recall that the ITC decides whether imports from targeted countries have “injured” domestic producers. If the ITC decides that imports have hurt US producers, Commerce then determines duty margins.
Coated steels – which can be made with either hot-rolled coil or cold-rolled coil substrate – are used in industries as diverse as automotive, appliance, and construction.
The case covers flat-rolled steel clad, plated, or coated with corrosion-resistant materials such as zinc or aluminum, as well as aluminum-, nickel-, or iron-based alloys, according to government documents. It excludes flat-rolled steel coated with tin, lead, or chromium (tin mill products) as well as clad stainless flat-rolled products.
Commerce is expected to decide whether to initiate the case within 20 days. The ITC will then make a preliminary injury determination within the next 45 days. Preliminary decisions from Commerce on duties are expected later this year and early next.
Final rulings in the antidumping cases are expected in October 2025. Those in the countervailing duty cases might not come until December 2025.
SDI President and COO Barry Schneider said the case was necessary because of a sharp increase in imports of corrosion-resistant products (CORE) in the first half of 2023 and again in the first half of 2024.
“Imports of CORE from the ten subject countries surged from less than 1.25 million tons to almost 2 million tons, a significant 57% increase. The surge of unfairly traded imports of CORE has had a significant negative impact on the domestic steel industry’s volume, prices, and profits, necessitating these cases,” Schneider said in a statement on Thursday.
SDI estimated the total coated market in the US to be approximately 20 million short tons (st). The company also noted that it has invested $3.7 billion since June 2019 into its new sheet mill in Sinton, Texas, in addition to four galvanizing lines with Galvalume capability as well as three flat-rolled paint lines.
“Corrosion-resistant flat rolled steel is a strategically important product to the domestic steel industry, and the restoration of fair trade is critically important,” Christopher A. Graham, senior vice president of SDI’s Flat Roll Steel Group, said.
The USW said imports from Vietnam were of particular concern, noting that the Southeast Asian nation nearly quadrupled shipments of coated products from 122,000 st to 468,000 st.
“Vietnam is ramping up its steel industry and exports at the expense of US workers, and we can’t repeat the mistakes with Vietnam that we’ve made with China in the past,” USW President David McCall said in a statement.
He also noted that the US steel industry is operating at only 77% capacity utilization amid sharply lower profits compared to 2022 and 2023.
“Once again, the US has become the dumping ground for excess steel capacity, and the USW will stand up against any unfair trade that hurts American workers,” McCall said.
SMU has previously reported that the filing hinged on the Commerce Department finding that Vietnam remained a “non-market economy” (or NME). That allowed for the calculation of higher duty margins. Domestic mills got the NME ruling they wanted last month.
It also hinged on domestic mills being able to show lower earnings to help justify claims of injury. They did that with Q2 earnings.
SMU has, in addition, reported that the case – which initial rumors said would be targeted at Vietnam – could be much larger. We noted that the coated case might more closely resemble a tinplate case filed in January 2023. That case targeted eight countries. (That case was ultimately not successful.)
US hot-rolled (HR) coil prices were largely flat over the past week, remaining higher than tags for offshore material on a landed basis for a second consecutive week.
After pulling ahead last week, domestic prices, improving on the heels of firmer US mill offers, still have a slight premium over import prices. Both stateside and offshore tags were flat to slightly down from the week prior.
SMU’s check of the market on Tuesday, Sept. 3, put domestic HR tags at $690 per short ton (st) on average, down $10/st from last week. While prices slipped slightly w/w, stateside hot band is still $55/st above July’s 20-month low.
Domestic HR is now theoretically 2% more expensive than imported material. US prices were 2.7% more expensive last week and nearly 12% cheaper just last month.
In dollar-per-ton terms, US HR is now, on average, $13/st more expensive than offshore product (see Figure 1), compared to $19/st more expensive on average last week. This is an $85/st shift from just a month ago when US tags were roughly $72/st cheaper than offshore material.
The charts below compare HR prices in the US, Germany, Italy, and Asia. The left-hand side highlights prices over the last two years. The right-hand side zooms in to show more recent trends.
This is how SMU calculates the theoretical spread between domestic HR coil prices (FOB domestic mills) and foreign HR coil prices (delivered to US ports): We compare SMU’s US HR coil weekly index to the CRU HR coil weekly indices for Germany, Italy, and East and Southeast Asian ports. This is only a theoretical calculation. Import costs can vary greatly, influencing the true market spread.
We add $90/st to all foreign prices as a rough means of accounting for freight costs, handling, and trader margin. This gives us an approximate CIF US ports price to compare to the SMU domestic HR coil price. Buyers should use our $90/st figure as a benchmark and adjust up or down based on their own shipping and handling costs. If you import steel and want to share your thoughts on these costs, please get in touch with the author at david@steelmarketupdate.com.
As of Thursday, Sept. 5, the CRU Asian HRC price was $435/st, up just $1/st vs. the week prior. Adding a 25% tariff and $90/st in estimated import costs, the delivered price of Asian HRC to the US is approximately $634/st. As noted above, the latest SMU US HR price is $690/st on average.
The result: US-produced HRC is theoretically $56/st more expensive than steel imported from Asia. That’s down $12/st vs. last week as stateside prices slipped a bit during a slower holiday week. But it’s still a far cry from late December when US HR was $281/st more expensive than Asian product.
Italian HR coil prices were down $8/st to $595/st this week. After adding import costs, the delivered price of Italian HR coil is, in theory, $685/st.
That means domestic HR coil is theoretically $5/st more expensive than imports from Italy. That’s down $2/st from last week. Just five months ago, US HR was $297/st more expensive than Italian hot band.
CRU’s German HR price moved to $622/st, which is $6/st lower than last week. After adding import costs, the delivered price of German HR coil is, in theory, $712/st.
The result: Domestic HR is theoretically $22/st cheaper than coil imported from Germany, down from a $18/st discount last week. At points in 2023, in contrast, US HR was as much as $265/st more expensive than imported German hot band.
Notes: Freight is important when deciding whether to import foreign steel or buy from a domestic mill. Domestic prices are referenced as FOB, the producing mill, while foreign prices are CIF, the port (Houston, NOLA, Savannah, Los Angeles, Camden, etc.). Inland freight, from either a domestic mill or from the port, can dramatically impact the competitiveness of both domestic and foreign steel. It’s also important to factor in lead times. In most markets, domestic steel will deliver more quickly than foreign steel. Effective Jan. 1, 2022, Section 232 tariffs no longer apply to most imports from the European Union. It has been replaced by a tariff rate quota (TRQ). Therefore, the German and Italian price comparisons in this analysis no longer include a 25% tariff. SMU still includes the 25% Section 232 tariff on prices from other countries. We do not include any antidumping (AD) or countervailing duties (CVD) in this analysis.
Great Lakes-area mills have entered the September ferrous scrap market in a surprisingly prompt manner.
Mills in Detroit have reportedly bought scrap sideways from August, with the exception of shredded scrap, which fell $20 per gross ton.
The prices aligned with various trade projections, except for plate and structural (P&S) and HMS, which appeared to be undervalued given their stronger performance.
In speaking with a large scrap seller in the Midwest, he said Chicago has not officially bought yet and since mills there are going to buy scrap at a near-normal level, the prices Detroit paid may not play well in Chicago.
There is doubt shredded can go down very much in the Midwest, even with upcoming outages. The next several days will determine whether prices can drop at all.
Editor’s note: This column appeared first in Recycled Metals Update (RMU), SMU’s new sister publication. RMU is devoted entirely to the ferrous and nonferrous recycled metals markets. If you’d like to learn more, visit RMU’s homepage and register for a free 30-day trial.
Nucor intends to keep plate prices unchanged with the opening of its October order book, according to a letter to customers dated Wednesday, Sept. 4.
The Charlotte, N.C.-based steelmaker said it would maintain prices set in its July 1, 2024, price letter.
The announcement indicates that Nucor will keep plate prices at $1,075 per short ton (st), the price it specified in early July. Nucor has now held plate tags unchanged since slashing prices by $125/st on July 1.
There had been speculation that Nucor might lower plate prices, especially given bearish sentiment and lower demand. But following steady sheet price gains, some wondered if Nucor would instead seek to keep plate tags flat, especially given that most sources agree lower tags would not entice buying.
SMU’s plate price stands at $960/st on average, down $20/st from a week ago. Our HR price is at $690/st on average, down $10/st from a week earlier – but up $55/st from a recent low of $635/st in late July. That information comes from our pricing archives, which you can find here.
Also, you can track mill price announcements here.
Growth in the US economy continues to struggle in most districts. The Federal Reserve’s Beige Book report for August shows two-thirds of reporting districts flat or declining economic activity.
The Fed’s Sept. 4 Beige Book report said economic growth was flat or declining in nine of its 12 districts. That’s up from five districts that reported weak conditions in the mid-July report.
In the manufacturing sector, activity declined in most districts, with two reporting that “declines were part of ongoing contractions in the sector.”
Some districts mentioned lower auto sales due to high interest rates, while others noted increases in sales despite elevated rates.
The employment rate across all districts held steady but consumer spending ticked down in most districts, the survey found.
Prices increased modestly and wage growth was modest, according to the report. And increases in nonlabor input costs and selling prices were tame.
The Beige Book is a summary report of commentary on current economic conditions across the Federal Reserve’s 12 districts. It really is a book—it includes a ton of information. You can access the report for a deeper dive into economic activity in specific regions across the country.
Below is a summary of three of the districts, with a focus on manufacturing.
In the Philadelphia district, business activity declined slightly after rising modestly last period. Employment appeared to decline slightly, while consumer spending edged down.
Nonmanufacturing activity held steady. Wage growth continued at a modest pace, as did reported rises in input costs and prices. Expectations for future growth remained slightly positive overall, especially in manufacturing.
In the Chicago district, which includes northern Illinois and Indiana, southern Wisconsin, Michigan, and Iowa, the economic activity increased slightly with a slight gain in employment and business spending.
Manufacturing activity and consumer spending were flat, and nonbusiness contacts saw little change in activity. Construction and real estate activity edged down, but prices were up modestly and wages rose moderately. Financial conditions were little changed, though.
San Francisco, the Fed’s 12th District, encompasses the states of California, Oregon, Washington, Idaho, Nevada, Utah, Arizona, Alaska, and Hawaii.
Economic activity remained stable, while employment levels and prices rose slightly.
Wages grew modestly, and retail sales were stable, while activity in consumer services and manufacturing ticked down a bit.
Conditions in the agriculture, residential, and commercial real estate markets continued to soften slightly. Activity in the financial services sector remained muted.
Trade is always front and center in an election year. And 2024 is no different. There is no shortage of issues, with questions like the sale of U.S. Steel to Japan’s Nippon Steel, potential cracks in the USMCA, and Chinese overcapacity dominating the headlines. What should participants in the steel industry and all along the supply chain be keeping their eyes on?
Last week, four industry experts with diverse perspectives sat down with SMU Managing Editor Michael Cowden at Steel Summit 2024 in Atlanta. On hand were Kevin Dempsey, president and CEO of the American Iron and Steel Institute (AISI); Philip K. Bell, president of the Steel Manufacturers Association (SMA); Alan Price, partner and International Trade Group Practice co-chair at Wiley Rein LLP; and Lewis Leibowitz, trade attorney at the Law Office of Lewis E. Leibowitz.
The topic was Steel for Change: What Shifting Trade Policies and Nov. 5 Mean for Your Business. And the discussion was lively. Here are some snippets of the panelists’ views on a host of issues.
With tension in the air with Mexico regarding steel imports, and how manufacturing will be situated in the USMCA area, SMA’s Bell laid out a three-point plan for better relations with the States’ southern neighbor.
First, the US should make sure all parties are cooperating with the spirit of the USMCA. An important aspect of that is transparency, he said.
“We have to monitor our imports from Mexico,” commented Bell. They need to comply with USMCA requirements, including being “melted and poured” within the USMCA area. This will help make the area an even more powerful trading bloc.
Bell also spoke about “maquiladoras,” the factories that line the US/Mexico border on the Mexican side. The US should make sure that “the parts they use and the skills they use come from the USMCA region.“
The US steel industry is the cleanest in the world, AISI’s Dempsey said. But a threat to its progress could be dumped steel from China and other less environmentally friendly nations.
He pointed out that, notwithstanding the overcapacity today, there are almost 100 million tons of new capacity coming online in the next couple years in Southeast Asia and India, “most of which is very high in carbon emission, so there’s a real threat.”
“That’s why we think it’s really important to incorporate climate policy into trade policy, and to begin looking at how can we develop a carbon tariff system that accounts for the differential carbon emissions between steel made in the US and made in other parts of the world,” Dempsey said.
The Commerce Department recently ruled that Vietnam has retained its status a “non-market economy.” Wiley Rein’s Price was asked what this meant for the US steel industry. (He also wrote a column on this topic in SMU here.)
Price said that Vietnam’s economy has grown a lot over the last decade, “and a lot of that growth has been, frankly, a product of China.”
“And as we impose tariffs on China, you see Chinese industries relocate their manufacturing processes to Vietnam,” he said.
Additionally, he noted that Vietnam doesn’t work on “standard, conventional Western market principles, and has really just become a satellite of China in many, many economic respects.”
The Commerce ruling affects the way dumping margins are calculated. Price said the ruling is important because it won’t encourage China to move further productive capacity into Vietnam.
“So it’s quite important. It’s important for US manufacturers. It’s important for maintaining useful and viable trade laws with Vietnam,” Price added.
As a trade attorney, Leibowitz pointed out that he takes a consumer angle on many issues, rather than a mill perspective. He emphasized that it’s important to consider that side of the coin.
“I may be alone up on the stage. … But I think I have a lot of friends out there who are the rest of the economy, besides steel production, and they get inadequate consideration, at least lately, in terms of the specific remedies that are that we’re going to discuss,” he said.
Leibowitz remarked that trade issue are very complex. He said it’s important to balance the interests of steel producers, steel consumers, steel processors, and general manufacturers “so they don’t move offshore and reduce the demand for steel.”
Of course, November 2024 is just a couple of months away.
Regarding the two candidates, Leibowitz said there seems to be more “flexibility” with Democratic nominee, and current vice president, Kamala Harris. Recall that it was President Trump who put in place Section 232 tariffs in 2018. (This was before Harris came out against the U.S. Steel/Nippon deal.)
Both Bell and Dempsey pointed out that between the Trump and Biden administrations there was a lot of continuity when it came to trade policy and steel.
Dempsey said the continuity is “driven by the problems these policies are designed to address.” He thinks the Section 232 tariffs will be maintained no matter who is elected for that reason.
Price broadly agreed with both Bell and Dempsey. He pointed out there is an “unknown” factor with Harris because she hasn’t said a lot about trade, and it’s not one of her cornerstone issues.
Still, Price added, “You see a continued recognition that these problems are far broader than industry-specific problems, and and that’s really building out now.” The same issues confronting steel, for example, are echoed in industries as diverse as honey and seafood, he said.
Domestic steel shipments remained nearly flat in July month over month but fell from a year earlier.
The American Iron and Steel Institute (AISI) said US mills shipped 7,160,731 short tons (st) in July vs. 7,152,135 st in June. Still, this marks a 4.1% decrease from the 7,467,446 st shipped in July 2023.
Year to date (YTD) through July, shipments stood at 50,920,412 st, off 3.9% from 52,983,292 st in the first seven months of last year.
Comparing YTD shipments through July in 2024 vs. the same period a year earlier shows the following: cold-rolled sheet, up 4%; corrosion-resistant steel, down 2%; and hot-rolled steel, off 5%.
President Joe Biden could block the nearly $15-billion sale of U.S. Steel to Japan’s Nippon Steel by citing national security concerns.
That’s according to reporting in the Washington Post and the Financial Times. Those initial reports were later picked up by other media outlets.
The news came on Wednesday just hours after U.S. Steel President and CEO David Burritt said in a statement that the Pittsburgh-based steelmaker might close plants, cut thousands of jobs, and move its headquarters if the deal did not go through.
U.S. Steel’s shares fell more than 20% on the news before recouping some of those losses later in the day and on Thursday.
The media reports indicated that Biden might stop the deal following recommendations from the Committee on Foreign Investment in the Untied States (CFIUS). CFIUS is chaired by Treasury Secretary Janet Yellen and includes representatives from across the federal government.
The committee “hasn’t transmitted a recommendation to the president, and that’s the next step in this process,” the New York Times quoted a White House official as saying.
Secretary Yellen declined to comment on whether the Biden administration might block the deal, according to a report in Reuters on Thursday afternoon.
Nippon Steel said in a statement to SMU that it was aware of “rumors” about its proposed acquisition of U.S. Steel. It also criticized the idea that a steelmaker based in Japan, a key US ally, might pose national security concerns.
“We have not received any update related to the CFIUS process. Since the outset of the regulatory review process, we have been clear with the administration that we do not believe this transaction creates any national security concerns,” Nippon Steel said.
The Japanese steelmaker said the deal would put both U.S. Steel and the American steel industry on firmer footing. The company also said it was “the only willing and able party” to invest billions in U.S. Steel.
“Nippon Steel strongly believes that the US government must appropriately handle procedures on this matter in accordance with the law,” the company added.
U.S. Steel sounded a similar note in a statement to SMU.
“We have not received any update or executive order in relation to the CFIUS process. We continue to stand by the fact that there are no national security issues associated with this transaction, as Japan is one of our most staunch allies,” the company said.
“We fully expect to pursue all possible options under the law to ensure this transaction, which is the best future for Pennsylvania, American steelmaking, and all of our stakeholders, closes,” it added.
Cleveland-Cliffs President and CEO Lourenco Goncalves said that the Ohio-based steelmaker had the financial firepower to acquire any mills U.S. Steel might close.
“With the continued exclusive and unwavering support of the United Steelworkers union, and with ample financing support available from our bank group led by J.P. Morgan and Wells Fargo, Cleveland-Cliffs stands ready to immediately acquire and invest in any and all union-represented assets that U.S. Steel shuts down,” Goncalves said in a statement on Thursday.
Recall that Cliffs was among the suitors for U.S. Steel. It’s bid was narrowly bested by Nippon Steel.
Goncalves also cheered Biden’s reported decision to block the acquisition by Nippon. “President Biden’s courageous move affirms our view that our industry is best served by American companies that are committed to the long-term prosperity of domestic manufacturing,” he said.
Goncalves has been trolling U.S. Steel since it announced Nippon was the winning bidder. He continued to do so.
“The last-minute threats by U.S. Steel to shut down integrated steelmaking production, fire union workers, and move their headquarters from Pittsburgh if their deal does not close, is just a pathetic blackmail attempt on the United States government and the Commonwealth of Pennsylvania,” he said.
Josh Spoores, head of steel America analysis at CRU, said the USW had been able to influence the sales process more than most had expected. And the benefits the union has been able to negotiate include the nearly $3 billion in new investments at U.S. Steel’s unionized mills.
“Truly the union is on the verge of an incredible win,” Spoores said. “The risk is that they may be playing a game of brinksmanship – one where they have pushed the total cost of this acquisition by Nippon close to a point where the overall deal may fall through.”
And the risks to the USW if U.S. Steel ends up being a standalone coming are huge. “We will see union-run assets permanently close instead of being supported by new investments,” he said.
President Biden potentially blocking the deal is also a concern. But there is one important caveat: “The CFIUS application was pulled so, in effect, there is nothing for the president to block – yet,” Spoores said.
Even so, “USS may now act to start preparing for this sale to be blocked, and we may see WARN notices being prepared as the domestic steel prices remain well below levels of the last few years,” he noted.
SMU’s hot-rolled coil price stands at $690 per short ton (st) on average. That’s roughly on par with $710/st a year ago. But it’s down from $785/st in early September 2022 and down from $1,935/st in early September 2021, according to our pricing records.
There is also the possibility that former President Donald Trump, who has previously opposed the deal, could come back into the picture. “He may see just how well the union did in negotiating with Nippon, that this is a win for rebuilding American manufacturing, and he could endorse this as a win for the union,” Spoores said.
Note that SMU is a subsidiary of CRU. You can read more of CRU’s market analysis here.
We had a wonderful time at last week’s Steel Summit Conference, seeing so many familiar faces and catching up with friends in the industry.
This year marked my 14th year attending or involved in the Summit. Watching the event transform from barely 100 attendees in 2010 to over 1,500 this year has been amazing. Everyone was excited to be there in Atlanta this year. The camaraderie was evident all around the convention center and hotel lobbies. From the exceptional speakers to the impressive exhibition hall to the photogenic lattes, this year’s Summit was one of the best.
On the heels of the event, we polled steel buyers earlier this week on an array of topics, from steel price expectations and demand to inventories and evolving market events. Many of these comments echo remarks made by steel executives last week, both on stage and amongst the crowd. Rather than summarizing the comments we collected this week, we are sharing some of them in each buyer’s own words.
Want to share your thoughts? Contact david@steelmarketupdate.com to be included in our bi-weekly market questionnaires.
“I believe pricing will increase slowly. Reasons: October mill outages, threatened ILA strike, Vietnam AD situation.”
“Slightly higher.”
“Slight uptick until after the election.”
“Very small increases – no demand.”
“Slowly continue to rise through the end of the year/election. Very few imports.”
“I am expecting increases through October.”
“I would expect near term to maybe increase a bit more, but then ultimately pricing will be under pressure again after the outages finish up.”
“They will move up another 10% then stabilize due to offshore pricing is lower and demand is still weak vs major run-up of demand shorter term.”
“We honestly don’t think they’ll move higher for much longer. This ‘rally’ will be short lived.”
“Coil will slowly rise, plate will slowly fall.”
“Plate may have a little room to dip buy very little, then gradually creep up in Q4.”
“Flat – low volumes, automotive taking units out of their schedules.”
“Demand is declining, stable on contract but spot buying is dead and we are seeing some reductions in automotive and a level of destocking.”
“Demand seems stable to down for most folks we talk to. Some of that is just late ‘summer doldrums,’ of course.”
“Stable, due to interest rates starting to fall and construction is increasing.”
“Stable but lackluster.”
“Stable at best, plate buyers are mostly sidelined due to uncertainty of the market. People are sitting on their hands.”
“While a mixed bag, overall real demand appears to be slightly on the decline. Major market moving segments are slow to recover, perhaps awaiting the outcome of Fed decisions and election.”
“Demand is weak – high interest rates, lousy economy and election year instability.”
“No, still sluggish.”
“Slower, as demand remains soft.”
“I think slower because of most industries being down year-over-year.”
“Slower due to slowed demand and high interest rates.”
“Slower – slowing economy, high interest rates.”
“Maybe a bit slower.”
“Slower.”
“Inventory continues to move faster for us, but we continue taking market share, so we’re not a true representation.”
“Yes, import pricing is 10% lower than domestic on sheet.”
“Yes, but we aren’t taking the bait.”
“Not really – with an upward market, too much uncertainty with imports.”
“No, lead time & spread too soft & unpredictable domestic market.”
“No.”
“Is there an immediate upturn depending on what the election brings?”
“The potential ILA strike- it’s a real threat.”
“How much of ‘big steel’s’ optimism for 2025 is tied up in government subsidized projects? And will they truly materialize at the levels of optimism?”
“It seems less likely that AHMSA will be a factor, for better or for worse. Evraz-NA is still puzzling. I do expect more service center consolidation ahead too.”
“Evraz potential sale of North American operations.”
“Stelco sale.”
U.S. Steel could slash thousands of jobs, shift away from integrated steelmaking, and move its headquarters out of Pittsburgh if its acquisition by Nippon Steel isn’t completed, the company’s top executive said.
“We want elected leaders and other key decision makers to recognize the benefits of the deal as well as the unavoidable consequences if the deal fails,” company President and CEO David Burritt said in a statement on Wednesday.
Burritt made the remarks after Vice President Kamala Harris, also the Democratic nominee for president, signaled her opposition to the $15-billion deal at a speech in Pittsburgh on Labor Day.
Former President Donald Trump, the Republican nominee, has said he would block the deal if elected. Likewise, President Joe Biden has criticized the sale of U.S. Steel to Japan’s largest steelmaker.
“Without the Nippon Steel transaction, U.S. Steel will largely pivot away from its blast furnace facilities, putting thousands of good-paying union jobs at risk,” Burritt said.
“In addition to moving away from integrated steelmaking, the lack of a deal with Nippon Steel raises serious questions about U.S. Steel remaining headquartered in Pittsburgh,” he added.
Burritt noted that Nippon Steel last week pledged to invest more than $2.7 billion at U.S. Steel’s two union-represented integrated mills: Mon Valley Works in Pennsylvania and Gary Works in Indiana.
Those two facilities are U.S. Steel’s only remaining active blast furnace operations. Recall that furnaces at its Granite City Works near St. Louis have been idled as has the company’s Great Lakes Works near Detroit. (You can keep tabs on the status of North American blast furnaces here.)
“A stand-alone U.S. Steel would not make the same financial commitments,” Burritt said.
Nippon Steel is much larger than U.S. Steel and has deeper pockets. It produced 43.7 million metric tons (mt) of steel in 2023, making it the fourth-largest steelmaker in the world and the largest in Japan, according to data from the World Steel Association.
In contrast, U.S. Steel made 15.8 million mt of steel last year, making it the 24th largest steelmaker in the world. It was also behind competitors Nucor (21.2 million mt) and Cleveland-Cliffs (16.8 million mt).
The United Steelworkers (USW) union blasted Burritt’s statement and alleged that he was motivated by a potential $70-million bonus if the Nippon deal closes.
“He is making baseless and unlawful threats, saying if the transaction with Nippon is rejected, the future of U.S. Steel as a viable company is at risk,” the USW said in a letter signed by union president David McCall.
The USW also officially confirmed what SMU has noted in the past: Much of the bad blood between U.S. Steel and the union stems from a decision to shift planned investments away from Mon Valley to Big River Steel, a non-union EAF sheet mill in Osceola, Ark.
U.S. Steel has since announced more investments in Big River as well as plans to expand the mill’s capacity and product offerings.
The USW said the expansions at Big River resulted in the idling of Granite City Works and Great Lakes Works, both union-represented integrated mills.
And the union cast doubt on Nippon Steel’s announcement about big investments in Mon Valley and Gary Works. “A press release is not a contract,” the union said.
The USW also said it has “every reason to believe” that Nippon would use U.S. Steel’s finishing mills to roll slabs imported from Japan instead of slab melted and poured in the US. The USW in addition called on U.S. Steel’s board to “hold Burritt accountable” for much of the time last year on a “failed” merger.
Recall that the sale of U.S. Steel became public in August 2023, when a bid by rival steelmaker Cleveland-Cliffs spilled out into the open. U.S. Steel announced that Nippon Steel was the winning bidder in December 2023.
U.S Steel stockholders approved the deal in April 2024. And the sale had received all foreign regulatory approvals by May. But the deal remains under anti-trust review in the US as well as under review by the powerful Committee on Foreign Investment in the US (CFIUS).
SSAB plans to spend $12 million to boost production capacity at its electric-arc furnace (EAF) plate mill in Mobile, Ala.
The Sweden-based steelmaker will do that by expanding the existing furnace there. Shot blast equipment will also be upgraded.
The expanded capacity is expected to come online late next year. The mill currently has an annual capacity of 1.25 million tons, according to SMU’s records.
“Growing SSAB here in Alabama is a priority for our company. SSAB Special Steels’ strategic objective is to increase QT (quenching and tempering) capacity, and Mobile plays a significant role in achieving this,” Andy Bramstedt, general manager of SSAB Alabama, told local media.
The Mobile mill is part of SSAB Special Steels, whose strategic objectives include increasing quenched-and-tempered capacity.
The plant primarily produces plate steel for heavy machinery, ships, wind towers, railway wagons, and other uses. It also offers coil slitting, blasting, painting, and heat-treatment services.
This article was first published by CRU. To learn more about CRU’s services, visit www.crugroup.com.
Alan Beaulieu, president of ITR Economics, presented a keynote at last week’s Steel Summit conference. Titled ‘Preparing for Cyclical Change,’ Alan’s presentation was significant as it marked his last address at the Summit before his retirement.
Beaulieu, a respected voice in economic forecasting for over 35 years, provided a detailed analysis of the current economy and his projections for the years ahead. In short, he foresees challenging business conditions through the remainder of the decade, with a multi-year depression expected in the 2030s.
In the near term, Beaulieu anticipates a mixed economic landscape through the remainder of 2024. Despite the mediocre business conditions of this year, he noted that the stable financial status of consumers and healthy business cash balances helped to mitigate any economic downturn. He warned that rising government debt is contributing to increasing inflation, an unstoppable trend already in place. Beaulieu shared concerns for rising electricity costs due to increased demand from technology and EVs. He also foresees increasing production costs driven by retiring baby boomers and labor shortages.
“We simply don’t have enough labor in this country for the jobs being created,” he remarked.
Beaulieu maintains a positive outlook for the near future, foreseeing economic expansion in the next two years. He forecasts a modest recovery in the industrial economy and a growing service sector in 2025. Regarding the steel industry, he expects US iron and steel production to continue experiencing a mild decline before improving in the second half of next year.
Looking further down the road, Beaulieu warned, “Enjoy the rest of the decade because 2030 depression is coming.” He attributed this to a combination high inflation, rising interest rates, an aging global population, and unsustainable levels of government debt. These factors will contribute to financial strain in the US, reduced economic growth, and an increased social service burden.
Regarding interest rates, Beaulieu remarked they may ease 25-50 basis points by the end of the year. He does not foresee rates moving much lower, instead predicting they will increase through the end of the decade, potentially easing in the 2030s.
Beaulieu advised Summit attendees on how to prepare for these future challenges. He advised attendees to focus on their competitive advantages and to improve efficiencies now rather than later. He stressed the importance of inflation-proofing businesses. He also noted that presidential elections will not have a significant influence the economy, and to ignore the media noise.
When asked about his retirement, Alan remarked that after consulting numerous business leaders around the world, he has come to believe that, “you have to know when it’s time to get out of the way.”
He proudly shared that ITR has some brilliant millennials who will take the company to a different level. Alan looks forward to spending time with his grandkids and exploring the country with his wife in their RV.
Welcome back from Labor Day, from Steel Summit, and from whatever fun you might have had over the long weekend.
Personally, I enjoyed camping with friends and family near Starved Rock in Illinois. No one starved, there were no major injuries, and we enjoyed the many splendors of Mystical Fire. It will spice up your ordinary campfire into a kaleidoscope of color – and toxins. (Speaking of which, does that have industrial uses? But I digress.)
Depends on who you ask. I spoke to a service center executive who said conversations around demand at Summit – whether along the sidelines or at the bars – were a collective shoulder shrug. The market isn’t good. It’s not bad… It’s just kind of “meh.”
Yes, a lot of capacity will come out of the market because of planned fall maintenance outages. But that will also depress scrap demand, which could lead to modestly lower scrap prices in September. And mills appear to have been increasing production ahead of those outages, according to AISI figures. So the downtime might not have the outsized impact some have been hoping for.
Could sheet prices continue to inch upward as they’ve done since late July? Yes. But there remains no obvious catalyst to send them significantly higher absent something unexpected.
What might that unexpected thing be? There is always the possibility of a big, unplanned outage. (That said, the market mostly shook off the unexpectedly protracted strike at ArcelorMittal Mexico.)
In this market and given that it’s an election year, I think the trade front might be the place to watch for the unexpected – and in coated flat-rolled steel in particular. There continues to be chatter that a coated trade case could be filed soon.
Maybe this week? Maybe next week? It’s often hard to predict the exact timing of those. But timing aside, the other question seems to be whether a coated case would be targeted at only one country, maybe a few, or whether it might “go big.” Think something like the tinplate case filed early last year that targeted eight countries.
As I’ve written before, my understanding remains that any coated case hinged on two things happening: (1) The Commerce Department determining that Vietnam remained a “non-market economy” (or NME), which would all for higher duty calculations, and (2) lower Q2 profits. Mills have checked both of those criteria off their list.
There had been an assumption among some that the case might target Vietnam alone given the focus on the Southeast Asian nation during the NME case and given how much its exports of coated products to the US have increased. I’m not going to float names of who else might be included. That said, you can pull the trade data yourself on coated imports into the US here. Take the top 10 exporters of those products to the US, and you’ll get a pretty good idea of who the potential targets might be.
What would the impact of a coated trade case be? Some mills will tell you that, yes, spot activity might be spotty. But they’re doing well with contract business. And if a trade case were filed, there would probably be some canceled orders for coated material abroad that would end up being placed domestically instead. That could tighten things up.
They might also tell you that, when it comes to hot-rolled (HR) coil, lead times average four to six weeks. That’s not stellar. But it’s a lot better than the three-week lead times some were seeing in July.
So perhaps buyers with inventory can afford to wait and see how things develop. Mills can be patient too. Modestly higher steel prices and modestly lower scrap prices? There are worse definitions of the “Goldilocks zone” for producers.
Of course, you could make the case that all the new coating capacity (including Galvalume capacity) that’s being built in the US could moderate the impact of even a big trade case. … In any case, I’m back at my desk from the wilds of northern Illinois and looking forward to watching how it all plays out.
Now that Steel Summit has wrapped up, mark your calendars for Feb. 2-4, 2025. That’s when we’ll be holding the Tampa Steel Conference together with our partners, Port Tampa Bay.
We’re working on the agenda now. So expect to see more on that in the coming weeks. And if you have any topics you’d like to see discussed, let me know at michael@steelmarketupdate.com.
I appreciate your feedback. And, as always, a big thank you from all of us at SMU for your continued business.
SMU’s steel price indices were mixed this week as the market waited for direction coming out of the Labor Day holiday.
SMU indices moved higher on cold rolled products, while galvanized prices were flat. Our indices for plate, hot rolled, and Galvalume all edged lower.
Buyers continued to report mediocre demand. But that was offset in part by planned mill outages this fall.
Hot-rolled steel prices slipped this week for the first time in over a month, declining $10 per short ton (st) from one week prior to $690/st. Cold-rolled (CR) prices moved in the opposite direction, rising $25/st week over week (w/w) to $945/st. CR prices now stand at an eight-week high.
Our galvanized index held steady at an eight-week high of $905/st. Galvalume prices edged $10/st lower w/w to $915/st. Note that on the coated side, there have been increased rumors of a trade case – potentially one targeting multiple countries.
Plate prices fell $20/st this week to $960/st. Plate prices have been trending downward since last November.
SMU’s sheet price momentum indicator remains at higher following our Aug. 6 adjustment. Our plate price momentum indicator remains at lower.
The SMU price range is $660-720/st, averaging $690/st FOB mill, east of the Rockies. Our entire range shifted lower by $10/st w/w. Our price momentum indicator for HR remains at higher, meaning we expect prices to increase over the next 30 days.
Hot rolled lead times range from 3-7 weeks, averaging 5.2 weeks as of our Aug. 28 market survey.
The SMU price range is $900–990/st, averaging $945/st FOB mill, east of the Rockies. The lower end of our range is up $20/st w/w, while the top end is up $30/st w/w. Our overall average is up $25/st w/w. Our price momentum indicator for CR remains at higher, meaning we expect prices to increase over the next 30 days.
Cold rolled lead times range from 5-9 weeks, averaging 7.0 weeks through our latest survey.
The SMU price range is $860–950/st, averaging $905/st FOB mill, east of the Rockies. Our range is unchanged w/w. Our price momentum indicator for galvanized remains at higher, meaning we expect prices to increase over the next 30 days.
Galvanized .060” G90 benchmark: SMU price range is $957–1,047/st, averaging $1,002/st FOB mill, east of the Rockies.
Galvanized lead times range from 6-9 weeks, averaging 7.3 weeks through our latest survey.
The SMU price range is $880–950/st, averaging $915/st FOB mill, east of the Rockies. The lower end of our range is up $10/st w/w, while the top end is down $30/st w/w. Our overall average is down $10/st w/w. Our price momentum indicator for Galvalume remains at higher, meaning we expect prices to increase over the next 30 days.
Galvalume .0142” AZ50, grade 80 benchmark: SMU price range is $1,174–1,244/st, averaging $1,209/st FOB mill, east of the Rockies.
Galvalume lead times range from 7-9 weeks, averaging 7.4 weeks through our latest survey.
The SMU price range is $920–1,000/st, averaging $960/st FOB mill. The lower end of our range is unchanged w/w, while the top end is down $40/st w/w. Our overall average is down $20/st w/w. Our price momentum indicator for plate remains at lower, meaning we expect prices to decline over the next 30 days.
Plate lead times range from 3-5 weeks, averaging 4.2 weeks through our latest survey.
SMU note: Above is a graphic showing our hot rolled, cold rolled, galvanized, Galvalume, and plate price history. This data is also available here on our website with our interactive pricing tool. If you need help navigating the website or need to know your login information, contact us at info@steelmarketupdate.com.
Much like the classic EF Hutton commercial, when Barry Zekelman talks, people listen. Add in an audience at Steel Summit 2024… and people’s ears seem to perk up even more.
The executive chairman and CEO of Zekelman Industries sat down for a Fireside Chat with SMU Managing Editor Michael Cowden on Aug. 27. The freewheeling conversation touched on so many topics that the only way to get a true flavor would be to be there in person. Still, confining the view to topics starting with a single letter, “M,” can give a taste. (The letter “X” would’ve been a lot harder.)
One new element of the Chicago-based company, traditionally associated with pipe and tube, that gives an insight into how he conducts business is the foray into modular construction.
He saw it as as an opportunity to use more steel in construction in general.
“We want to put the most recycled product on Earth into these buildings and build them more robustly, and then provide the solution where labor is the problem,” Zekelman said.
“Every building was a snowflake. So we went in and standardized the product,” he quipped. He noted an attention to detail, measuring things like man hours per square foot, man hours per site, “compressing how much time the cement truck is there.”
“Now we’re putting up, you know, 360-unit developments in eight buildings, a clubhouse, in 14 months you’re renting,” he said.
At the end of the day, Zekelman said “he’s really providing an economical solution with a higher-quality product, faster to market and cheaper to build.”
Zekelman was asked about his comment to SMU over a year ago about wanting to own a steel mill.
“The reason I would love to own a steel mill is because most of the steel mills that are out there today have let me down for decades,” he said to audience laughter.
Recently, Zekelman Industries purchased a 5% stake in Canadian steelmaker Algoma. (The Sault Ste. Marie, Ontario-based company is currently in the midst of transferring its production from blast furnace to EAF.) This obviously led to question of what Zekelman’s move means?
“I think Algoma is largely through the most risk in the execution of their plan, like the fact they’re going to EAF, you got about 80% of the dollars spent,” he said. “I think the transition from BOF to EAF will be pretty seamless for them.”
Zekelman noted that Algoma is a supplier to him, “and I want to have a seat at the table for what might happen with them.”
As we’ve seen in the past, M&A can come pretty fast and from unexpected directions in the North American steel industry.
Zekelman has long been a critic of what he believes is the surge of Mexican steel imports into the US, especially conduit.
He had to close a California conduit facility in 2022, citing Mexican imports as a reason. This year he voiced his opinion on manufacturing moving from the US into Mexico.
“When you see manufacturing plants picking up and going to Mexico, they’re not doing it for the weather or for the tacos,” he said.
“They’re going there for one reason, wages, which means you’re stripping wages out of the US. You’re stripping the ability to take taxes, the tax revenue from that,” he added.
On the broader trade front, Zekelman said that a lot of import pricing doesn’t add up.
“You ship it across the ocean in carbon-belching ships that are emitting more CO2 than all the cars combined in the world, and sell it over here at 40% less than me?” he asked.
“That is subsidized. Somehow, the numbers don’t add up. The equation does not add up,” commented Zekelman.
“So I can’t compete against the government, so that’s why I take trade policy to it when I’m competing against governments, because I can’t,” Zekelman added. “But you want to go toe to toe with me, no problem. I’ll swing.”
Addressing environmental concerns, Zekelman pointed out a few inconsistencies in where we place our attention, like the ban in many places on plastic straws.
“But we’re gonna bring in a ship from China, and we’re going to bring oil from Saudi Arabia, and from Iran and from Venezuela?” Zekelman asked rhetorically. “We are morons.”
Domestic raw steel mill production eased last week but remains historically high, according to the latest release from the American Iron and Steel Institute (AISI). Recall that the weekly production figure two weeks ago had reached the highest rate seen in over a year and a half.
Total raw steel mill output was estimated to have been 1,760,000 short tons (st) in the week ending Aug. 31. This is down 22,000 st or 1.2% from the week prior.
Raw production last week was 2.3% higher than the year-to-date weekly average of 1,721,000 st. Production is 1.0% greater than the same week one year prior when mill output totaled 1,742,000 st.
Mill capability utilization rate last week eased to 79.2%, down from 80.2% the week prior but up from 76.6% this time last year.
Year-to-date production is up to 59,338,000 st at a capability utilization rate of 76.6%. This is 2.0% less than this time last year when 60,560,000 st were produced at a capability utilization rate of 77.2%.
Weekly production by region is shown below, with the weekly changes noted in parentheses:
Editor’s note: The raw steel production tonnage provided in this report is estimated and should be used primarily to assess production trends. The monthly AISI “AIS 7” report is available by subscription and provides a more detailed summary of domestic steel production.
US manufacturing activity contracted for a fifth straight month in August, as reported in the latest release from the Institute for Supply Management (ISM). The Index has indicated contraction in the manufacturing sector for 21 of the last 22 months.
The ISM Manufacturing PMI improved to 47.2% in August, up just 0.4 percentage points from July, and the lowest reading of the year. A reading above 50 indicates the manufacturing economy is growing, while a reading below 50 indicates contraction.
Despite this, ISM said the overall economy remained in expansion for the 51st month in a row through July. (The institute noted that a Manufacturing PMI above 42.5%, over a period, generally indicates that the overall economy is expanding.)
“Demand remains subdued, as companies show an unwillingness to invest in capital and inventory due to current federal monetary policy and election uncertainty,” said ISM Chair Timothy R. Fiore. “Production execution was down compared to July, putting additional pressure on profitability.”
The slowdown in demand was impacted by lower results in several indices, but primarily driven by declines in New Orders, Backlog of Orders, and Customers’ Inventories, the report said.
Of the 17 manufacturing industries tracked, ISM said five reported growth in August while the remaining 12 contracted. Primary Metals was identified as a growing industry while Fabricated Metal Products was reported to be in contraction.
The report includes comments from survey respondents, one of which was from a fabricated metal products executive expressing the extent of the decline in business conditions:
“Our order levels are on a slow, steady decline; it looks like the trend will continue through the end of the year,” the respondent said.
“We are downsizing through attrition and not hiring backfills, but there have been no layoffs to date. The bright spot is a few customer programs have helped increase orders for parts, resulting in some production areas to be very busy while others have little work,” the respondent added.
The full August report is available on the ISM website here.
SMU’s Monthly Review provides a summary of important steel market metrics for the previous month. Our latest report includes data updated through Aug. 30.
Following the low seen in mid-July, sheet prices gradually increased throughout August, supported by upcoming maintenance outages and mill price increases. Meanwhile, plate prices ticked lower across the month, a trend seen since late last year.
The SMU Price Momentum Indicator on sheet was adjusted from Neutral to Higher in the first week of August. The Price Momentum Indicator for plate remains at Lower, where it has been for four months.
Scrap prices were mostly sideways from July to August, ticking up $5-20 per gross ton. Buyers were mixed on what prices could do in September, with some expecting a decline and others foreseeing further recovery.
We saw an improvement in Steel Buyers Sentiment as we neared the end of August. Current Sentiment jumped to a two-month high last week, while Future Sentiment rose to a nine-month high.
Steel mill lead times edged higher across August but are not far from the multi-month lows seen in July. The percentage of buyers reporting that mills were willing to negotiate on new orders slightly declined from July to August, but remains at a relatively strong rate.
See the chart below for other key metrics for August.
In the US, does the scrap market drive the price of steel or vice versa?
Tom Knippel, vice president, ferrous, SA Recycling LL, quipped that the answer is “yes.” His joke underscored the unexpected movements of the scrap market this year.
Knippel was one of three panelists who discussed the recycled metals market at Steel Summit 2024 in Atlanta. He was joined by Joe Pickard, chief economist and director of commodities for the Recycled Metals Association and Adina Renee Adler, executive director of the Global Steel Climate Council. The session was moderated by Lynn Lupori, head of consulting, Americas, for CRU Group.
“It’s been a very interesting year in that the price of scrap should have gone down earlier this year, in particular on exports going into Turkey,” Knippel told the crowd. “But scrap was not readily available.”
He noted that it ultimately comes down to supply and demand, but over the last year demand has been lacking.
“Scrap has been supported because it’s been in tight supply,” Knippel said.
However, hot-rolled coil has been a significant driver of scrap prices over the last couple of years.
“Mills have improved the large volume of profits on that over the last two years,” he continued.
In August, SMU reported the price spread between hot-rolled coil (HRC) and prime scrap widened slightly during the month but remains in low territory not seen since late 2022.
According to SMU’s most recent pricing data, the average HRC price rose as of Aug. 20, as did the August price for busheling scrap.
SMU’s HR coil price stands at $700 per short ton (st) on average as of Aug. 27, up $25/ton from the prior week
At the same time, busheling tags increased $20 month over month to an average of $395 per gross ton (gt) in August.
ReMA’s Pickard pointed out that scrap sellers outnumber the amount of buyers.
“It shouldn’t come as a huge surprise who has the market power in that dynamic,” Pickard said.
“Previously, we would always say that the scrap dealers tend to be the price takers because the development of prices is informed by demand, and so we tend to be the ones who adapt to the marketplace,” he said.
“There’s certainly give and take on a monthly basis.”
Three US senators have called on the Commerce Department to reduce the quota for South Korean oil country tubular goods (OCTG).
“This quota was originally established in 2018 but is now outdated and ineffective due to lower demand for OCTG,” they wrote in a letter to Commerce Secretary Gina Raimondo on Aug. 30.
US Sens. Sherrod Brown (D-Ohio), Bob Casey (D-Pa.), and John Fetterman (D-Pa.) all signed on to the letter.
The senators wrote that a new quota should reflect the lower demand. Additionally, it should “level the playing field for the domestic OCTG industry and its workers.”
Recall that in 2018, Section 232 tariffs were announced at rates of 25% and 10% on certain steel and aluminum imports, including OCTG.
The US government made exceptions for certain trading partners, including South Korea. An annual absolute quota of 508,020 short tons was set for South Korean OCTG, the letter said. (This rate has held except for 2020. At that time the US government implemented a 40% quota reduction because of the Covid-19 pandemic.)
The senators said OCTG consumption this year is expected to decline by about 22% from 2023.
“Simultaneously, South Korea no longer has a home market to purchase OCTG products, so their industry is solely reliant on exports,” according to the letter.
The senators noted the reduced demand and “out-of-date quota” have affected companies like Tenaris and Vallourec. Tenaris has operations in Ohio and Pennsylvania, and Vallourec has operations in Ohio.
Steel trade groups came out in support of the letter.
Kevin Dempsey, president and CEO of the American Iron and Steel Institute (AISI), applauded the letter’s intent.
“Significant volumes of OCTG imports come from South Korea which has no real domestic market for OCTG and therefore produces this pipe almost exclusively for export,” Dempsey said in a statement. “These high levels of imports threaten good-paying jobs in the American steel industry.”
Dempsey noted that the “OCTG market remains a key focus” in the continuing attempt to level the playing field for the domestic steel industry.
Likewise, Philip K. Bell, president of Steel Manufacturers Association (SMA), praised the letter, calling the current quotas “outdated.”
“Reducing the import quotas is a commonsense way to defend American steel workers,” Bell said in a statement to SMU. “It also supports our efforts to decarbonize steel, as OCTG made in America is less carbon-intensive than steel made in South Korea or just about anywhere else in the world.”
Vice President Kamala Harris said she opposed U.S. Steel’s acquisition by Nippon Steel in a speech on Labor Day in Pittsburgh.
Her words mean that the candidates from both major political parties have spoken out against the $15-billion sale of the Pittsburgh-based company to Japan’s largest steelmaker.
The United Steelworkers (USW) union cheered the speech by Harris. That matters because the union is a key constituency in Rust Belt swing states – notably Pennsylvania, a state both Harris and Trump will likely need to win to become the next president.
“U.S. Steel is an historic American company. And it is vital for our nation to maintain strong American steel companies,” Harris said.
“I couldn’t agree more with President Biden (that) U.S. Steel should remain American owned and American operated,” she said.
“And I will always have the back of America’s steelworkers,” Harris added.
The remarks were greeted by rousing applause from an audience at the headquarters of International Brotherhood of Electrical Workers (IBEW) Local No. 5.
USW – which, like U.S. Steel, is based in Pittsburgh – also praised the news.
“Our union today welcomed Vice President Kamala Harris’ call for U.S. Steel to remain domestically owned and operated,” USW International President Dave McCall said in a statement.
“Harris’ comments … make it clear that she understands the crucial role of the steel industry, not only when it comes to safeguarding our national security, but also to ensuring a brighter future for the workers and communities that depend on good, union jobs,” he added.
President Biden said in March that he was against the deal and has reiterated that stance since. President Donald Trump said in January that he would block the deal. Harris had not previously been explicit in her opposition to the pact.
U.S. Steel countered by stressing that an acquisition by Nippon Steel would give it deeper pockets with which to fund its operations, including its facilities in the Pittsburgh area.
“U.S. Steel will be a much stronger company as a result of the transaction with Nippon Steel, and the American steel industry will be more globally competitive,” a company spokesperson said in a statement.
“Nippon Steel has committed to investing nearly $3 billion in our union-represented facilities. These investments would be truly transformative, securing jobs for generations of steelmakers in Western Pennsylvania and represent an influx of capital that U.S. Steel simply would not pursue absent the transaction with Nippon,” the spokesperson added.
Note that some of the bad blood between the USW and U.S. Steel appears to center around the company’s decision to shift $1 billion in planned investments from its Mon Valley Works near Pittsburgh to Big River Steel in Osceola, Ark.
Mon Valley is an integrated, union-represented mill with history dating to the 19th century. Big River is a non-union EAF sheet mill that started up in 2017. U.S. Steel acquired it several years later and has since invested heavily to expand operations there.
Roughly two-thirds of the hundreds of people who participated in a snap poll at SMU Steel Summit said that they expected the deal to close.
The sale remains subject to government approvals. That includes an antitrust review as well as approval from the powerful Committee on Foreign Investment in the United States (CFIUS).
Several speakers at Steel Summit voiced their support for the deal, including David Sticker.
“Nippon will help US Steel in terms of technology, in terms of quality product, in terms of automotive sales, and most importantly, from my perspective, will absolutely treat their employees fairly, whether they’re union employees or not,” Stickler said in Atlanta during the conference.
Stickler is currently the head of Hybar, which is building a new rebar mill in Osceola. He was also one of the founders of Big River Steel, which is seen as one of the jewels in U.S. Steel’s crown.