We haven’t seen gains of this magnitude since the first quarter. And some market participants continue to say that more mill increases, probably hefty ones, will come at the first indication of the United Auto Workers (UAW) strike ending.

The Market Has Bottomed

Lead times have extended. Our average lead time for HRC is about 5.5 weeks, or late November. And some mills are into December already. In other words, Q4 is close to being a done deal.

On the scrap front, prime prices were sideways this month. And scrap market participants told SMU this week that October might prove to be a bottom for prime.

We haven’t crunched our service center inventory data yet. (That goes out to our premium subscribers on Monday.) But many of you tell me that inventories are lower.

And imports probably aren’t going to ride to the rescue, not in the short-term anyway. I’ve heard from some of you that Canadian mills, which had been lagging US mills in pricing, are now around $700 per ton as well. It’s a similar story in Mexico, you might save a few dollars – but not much more than that.

Some of you have pointed out that cold-rolled and coated imports from South America, Southeast Asia, and Europe might be competitive, especially if you’re talking thin-gauge coated products. The catch: some of that material might not arrive until March.

Sound familiar? It’s in some respects a repeat of what we saw last year.

Higher prices, longer lead times, scrap firming, low inventories, and low imports – all of this suggests that the $645 per ton was saw in late September might turn out to be the low point of the year for US HRC prices. And for the next few months at least, US mills might have the wind in their sales.

How Durable Is the Floor?

I can see the logic to that case. I can also see why some of you are still skeptical.

There are some significant wildcards to consider – the UAW strike, the risk of a wider conflict in the Middle East, and the potential sale of U.S. Steel.

I was skeptical of the idea of a UAW strike ending soon – especially after the big escalation we saw on Wednesday night. I still am.

But some of you reason that the UAW striking the most profitable plants of the Big Three – like Ford’s Kentucky Truck Plant – is, counterintuitively, an indication that the end is near. Striking the truck plants might be the grand finale, so to speak.

Perhaps. We’ll see, in what has become something of a Friday ritual, what UAW president Shawn Fain has to say on Facebook Live.

I think the concern I find most convincing – or at least easiest to get my head around – are worries I’m hearing from some of you about 2024 demand.

You reason that lead times stretched out because of widespread mill outages and because of some consumers making large, speculative buys at what they thought was the bottom of the market.

What happens once all those maintenance outages are complete? And what comes after all those big, speculative tons are processed? Is there enough day-to-day demand to continue to support longer lead times and higher prices?

Let me know what you think. And, in the meantime, thanks to all of you for your continued support of SMU.

With a capacity of 200,000 tons per year, the new 2,333-foot-long line will make U.S. Steel the largest domestic producer of NGO electrical steel, according to a company press release on Oct. 12.

“This investment will enable us to serve our customers as they address growing markets, like electric vehicles,” said David Burritt, U.S. Steel’s president and CEO, touting not only the product’s sustainability but the fact that it’s mined, melted, and made in the US.

The line’s new product, InduX, will use 90% scrap steel as its raw material, reducing CO2 emissions by more than 70% vs. “traditional integrated steelmaking, while producing sustainable, infinitely recyclable steels,” the release said.

“This investment will allow our customers to purchase more steel made here in the USA and help them to meet their own sustainability goals,” added Daniel Brown, U.S. Steel’s senior VP and CEO of Big River Steel Works.

“Congratulations to U.S. Steel for opening their newest steel line at Osceola’s Big River Steel facility. As this project shows, when business, government, and communities work together, anything is possible,” Arkansas Governor Sarah Huckabee Sanders said in a statement.

Earnings Results

With solid demand and attractive margins, the North American market has been helping to prop up CMC’s results as its European operations struggle with weaker demand amid challenging market conditions.

CMC’s fiscal fourth-quarter sales were down 8%, while net income declined 36% (see chart). For fiscal year 2023, sales were down just 1% from the prior year, while net income dropped 29%, the Irving, Texas-based longs producer and metal recycler said.

In North America, Q4 finished steel volumes were up 2% year over year (YoY), while average selling prices were down by $172 per ton YoY. The cost of scrap utilized dropped by $49 per ton. This resulted in steel product margins over scrap declining by $123 per ton YoY.

Q4 steel tonnages of 758,000 tons in North America were down 4% sequentially but up 8% YoY. Average selling prices of $932 per ton for its rebar and merchant bar products were 5% lower than the previous quarter and 16% lower than the year-ago quarter.

Raw material shipments in North America were 16% lower sequentially and 4% lower YoY at 344,000 tons. The average selling price of raw materials was $838 per ton in Q4, a slight increase from $833 per ton in the prior quarter but a 12% decline from Q4 2022.

In Europe, where CMC operates a mill in Poland, net sales declined 15% quarter on quarter and 27% YoY to $301.3 million. Steel shipments of 389,000 tons were 9% lower than both the prior and year-ago quarters.

Outlook

“Strong pricing and demand conditions for domestic rebar have started to diverge from the weaker global environment, and growth within the US construction sector similarly stands in contrast to most other global regions,” commented CMC president and CEO Peter Matt on the company’s earnings call with analysts on Thursday, Oct. 12.

“This robust relative demand has attracted rebar imports from nontraditional suppliers who have put pressure on domestic pricing in recent months. Despite these more challenging conditions, we expect CMC’s North American business to continue generating margins well in excess of historical average levels but down from the record highs of recent quarters,” Matt added.

In the current quarter, CMC expects seasonally lower shipments, margin compression in steel products in North America, and challenging market conditions to persist in Europe.

CMC’s backlog has reduced in volume and value due to a slowdown in the rate at which contracts are awarded, Matt said on the call. Driving this is tightness in the construction labor market and a tighter credit market for many types of commercial projects, he said.

Infrastructure spending has been slow to materialize, but executives on the call said they expect to see more money flowing starting next calendar year.

“The US is in the early stages of massive investment trends that are intended to remake large portions of our economy by extensively upgrading infrastructure, realigning global trade patterns and reorienting automotive production to electric vehicles, and transitioning the electricity grid to greener sources of energy. Construction makes all this possible,” Matt stated.

As a key supplier to the construction markets, Matt said CMC is well positioned “to be both a primary beneficiary of the expected growth and a key solution provider to our customers.”

Operations Update

During Q4, CMC had a major planned outage at its flagship Steel Alabama merchant bar mill. This resulted in lower total quarterly merchant bar shipments: 216,000 tons vs. 248,000 tons in the prior quarter and 249,000 tons in the year-ago quarter.

CMC’s Arizona 2 micro mill began operations in June “and is making steady progress in ramping up production,” the company said. It is targeting a full run rate of 500,000 tons – 350,000 tons of rebar and 150,000 tons of merchant bar. For fiscal 2024, the mill’s production is anticipated to hit 400,000 tons. Some of those tons will be incremental, while others will replace tonnages currently supplied by other CMC mills, Matt said on the call.

CMC broke ground on its Steel West Virginia project this summer. CMC’s total cap-ex spending in 2024 and 2025 will likely remain elevated due to that project, CFO Paul Lawrence said.

However, the market developed unevenly across the country. Shredded fell between $10 and $20 month over month: -$10 in the East, -$10 in the South, and -$20 in Ohio, he said.

Cut grades were generally sideways in the East, the source said. But plate and structural seemed to be in better supply than #1 HMS, he added.

Looking ahead, another source said: “I don’t think the mills can take down scrap further in November.”

He said there is also dealer resistance to the October prices. “Most dealers want to take an order in November that will last them through December.”  

The second source said the dealers “know winter scrap flows will dwindle, and the scrap market in January usually goes up.”

On the exports front, the first source said export pricing is drifting amid a lack of demand for Turkish rebar. 

“We have seen prices move marginally lower so far,” he said. “But scrap flows are tight so I don’t expect any major downward moves.”

October Scrap Settlement

Our October scrap prices stood at:

• Busheling at $380-420 per gross ton, averaging $400, unchanged from September.
• Shredded at $350-390 per gross ton, averaging $370, down $20 from September.
• HMS at $300-340 per gross ton, averaging $320, down $10 from September.

Every two weeks, SMU asks steel buyers whether domestic mills are willing to negotiate lower spot pricing on new orders. This week, 59% of participants surveyed by SMU reported mills were willing to negotiate price on new orders, diving 31 percentage points from 90% two weeks earlier (Figure 1). This is the lowest rate since the middle of April. This comes amid the ongoing United Auto Workers (UAW) strike and as sheet prices have moved up for the second consecutive week.

Figure 2 below shows negotiation rates by product. Cold rolled dropped 21 percentage points from two weeks earlier to 69% of buyers reporting mills more willing to negotiate price; and plate was 67%, off eight percentage points. Galvalume stood at 42%, down 42 percentage points. We have averaged in the previous market check’s reading due to fewer market participants for this product.

Here’s what some survey respondents had to say:

“(Willing to negotiate on plate), with large tons.”

“Galv is like gold now.”

“Not seeing much negotiation right now (on hot rolled).”

“ I was out with some West Coast folks and they were still willing to negotiate a bit (on HRC) but nothing like a few weeks ago.”

Note: SMU surveys active steel buyers every other week to gauge the willingness of their steel suppliers to negotiate pricing. The results reflect current steel demand and changing spot pricing trends. SMU provides our members with a number of ways to interact with current and historical data. To see an interactive history of our Steel Mill Negotiations data, visit our website here.

Present Dynamics

Domestic sheet prices rose in consecutive weeks after a six-month slump. The turn followed a price hike announced by Cleveland-Cliffs on Sept. 27. Other US mills have followed – unofficially – while prices for offshore hot band have been largely unchanged.

US tags increased by $25 per ton ($1.25 per cwt) week on week (WoW) to $695 per ton. Import prices inched up by roughly $2 per ton on average over the same period. The result: Imported product is now just about 1% more expensive than domestic material once freight and other costs are accounted for. That’s a shift from just two weeks ago when imports were nearly 11% more expensive.

Recall that US HRC prices had fallen to their lowest point of the year, $645 per ton, in late September before bottoming and rebounding.

Methodology

This is how SMU calculates the theoretical spread between foreign HRC prices (delivered to US ports) and domestic HRC prices (FOB domestic mills): We compare the SMU US HRC weekly index to the CRU HRC 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 per ton 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 HRC price. Buyers should use our $90-per-ton 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 contact david@steelmarketupdate.com.

Asian Hot-Rolled Coil (East and Southeast Asian Ports)

As of Thursday, Oct. 12, the CRU Asian HRC price was $508 per ton, unchanged from the prior week. Adding a 25% tariff and $90 per ton in estimated import costs, the delivered price of Asian HRC to the US is approximately $725 per ton. The latest SMU hot rolled average for domestic material is $695 per ton.

The result: US-produced HRC is now theoretically $30 per ton cheaper than steel imported from Asia.

Italian Hot-Rolled Coil

Italian HRC prices slipped $2 per ton this week to roughly $581 per ton. They are also down $61 per ton over the past month. After adding import costs, the delivered price of Italian HRC is in theory $671 per ton.

That means domestic HRC is now theoretically $24 per ton more expensive than HRC imported from Italy. That’s more than a $70-per-ton swing from late September, when US prices were $49 per ton cheaper than prices for Italian hot band.

German Hot-Rolled Coil

CRU’s German HRC prices increased $8 per ton WoW to $619 per ton. After adding import costs, the delivered price of German HRC is in theory $709 per ton. The result: Domestic HRC is now theoretically just $14 per ton cheaper than HRC imported from Germany.

Figure 4 compares all four price indices. The chart on the right zooms in to highlight the difference in pricing from the second quarter of this year to the present.

Notes: Freight is important in 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, the traditional Section 232 tariff no longer applies 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 foreign prices from other countries. We do not include any antidumping (AD) or countervailing duties (CVD) in this analysis.

SDI is just one of several domestic mills taking maintenance outages. Also, U.S. Steel last month idled steelmaking operations at its Granite City Works near St. Louis.

Lead times have stretched out because of those issues. They have also stretched out because mill price increases last month spurred more buying activity, market participants said.

Delivery dates are now into early November through early December for hot-rolled sheet, mid-November to mid-December for cold-rolled sheet, mid-November to late December for galvanized sheet, December for Galvalume, and November for plate.

Steel Mill Lead Times This Week

Lead times for hot rolled were reported by buyers in this week’s survey to be between 4 and 8 weeks, with an average of 5.59 weeks. That’s an extension of a week from our survey results two weeks ago and the longest lead time for hot-rolled coil since mid-May.

Cold rolled lead times were said to be between 5 and 9 weeks this week. The average CR lead time of 6.79 weeks increased by 0.32 from two weeks ago. Like hot rolled, this is CRC’s most extended lead time since mid-May.

Surveyed buyers reported lead times for galvanized sheet ranging from 5 to 10 weeks. SMU’s average galvanized lead time increased by 0.88 weeks from the last week of September to an average of 7.41 weeks this week. Galvanized lead times were last reported this long in April.

Galvalume lead times were reported by buyers this week to be between 7 and 9 weeks, with an average of 8.17 weeks. Lead times for this sheet product extended by 0.84 weeks from two weeks prior. We have to go back to mid-March to see a longer lead time for Galvalume.

Note that our data for Galvalume is more volatile due to the smaller sample and market size. If you are a buyer of Galvalume and would like to share your lead time and pricing data with SMU, please contact david@steelmarketupdate.com.

Lead times for plate increased more modestly, rising by 0.14 weeks from two weeks ago to an average of 5.0 weeks this week. Buyers reported plate lead times to be between 4 and 6 weeks. The 4.86-week average lead time for plate registered in the survey during the last week of September was the shortest since January.

This Week’s Survey Says

Of service centers and manufacturers responding to this week’s survey question about how they would categorize current mill lead times, 45% said they are ‘normal’ while 32.5% said they are ‘shorter than normal.’ Still, 17.5% categorized them as ‘slightly longer than normal,’ and 5% said they are ‘highly extended.’

One service center source said most mills are full and are not offering spot tons right now.

Another service center buyer noted that they think the market has bottomed. With current mill lead times and low inventories, they believe there is enough support for another price increase.

That same buyer commented: “I think the worst happens in the next few weeks, and then buying starts to decline, impacting lead times, [which] are inflated because of the [mill] outages.”

Although “intrigued by the recent subtle spike in lead times,” one manufacturer noted their “worry about imports coming back in the first quarter.”

3MMA Lead Times

To smooth out the variability in SMU’s weekly readings, we can look at lead times on a three-month moving average (3MMA) basis.

The 3MMA of hot rolled lead times increased slightly to 4.8 weeks in this week’s survey. The hot rolled 3MMA has been steady, averaging between 4.6 and 4.8 weeks since early August.

Cold-rolled sheet’s 3MMA lead time stood at 6.5 weeks this week. This has also been steady since the start of the summer.

The 3MMA of galvanized lead times inched up to 6.8 weeks. Galv’s 3MMA hit a recent bottom of 6.5 weeks throughout August.

Galvalume’s 3MMA lead time rose for a third consecutive market check to 7.2 weeks this week, comparable to that at summer’s start.

Meanwhile, the 3MMA plate lead time held steady at 5.2 weeks this week. That’s the shortest the product’s 3MMA has been since March.

Note: These lead times are based on the average from manufacturers and steel service centers participating in this week’s SMU market trends analysis. SMU measures lead times as the time it takes from when an order is placed with the mill to when the order is processed and ready for shipping, not including delivery time to the buyer. Our lead times do not predict what any individual may get from any specific mill supplier. Look to your mill rep for actual lead times. To see an interactive history of our steel mill lead times data, visit our website here.

The hot-rolled coil (HRC) futures market is currently navigating through a period of exceptional volatility and uncertainty. The United Auto Workers (UAW) strike’s impact (including the expansion to the Ford Kentucky plant on Oct. 11), speculator behavior, market activity, and the situation abroad are all contributing to a complex pricing environment. As the industry watches for further developments, it remains clear that the steel market’s resilience and capacity for surprises continue to define its character.

What can be done to address risk in times where market clarity is virtually non-existent?

Options can be thought of as insurance in many cases. Just like with insurance premiums, if the insured carries an elevated risk, the premiums can be expected to be more expensive. Given the market conditions described above, it is no surprise that option premiums are historically high. Implied volatility, the measure of what options markets think volatility will be over a given period of time, is a good indication of how cheap or expensive options are. You can see that December HRC implied volatility has risen over the past few months, although it is about even with year-ago levels. The blue line in 2023 implied volatility and the red line is 2022.

If money was no issue, buying an option (call protects against upside risk, put for downside) would always be the best risk management tool as they provide unlimited protection and unlimited participation. Money doesn’t grow on trees, so the cost of premium must be considered. The options market allows participants to sell “insurance” around their owned options. This can be a great way to reduce the cost of your protection.

It is also prudent to evaluate a range of protection a hedger needs. A trader can produce a strategy at no cost, or even a credit, but will generally have to give something up to accomplish this. Currently, strategies with a ranges of $100 per ton on either side are costing around $20-25/ton.

For Buyers

Steel buyers can buy a $825 call option for ~$45 per ton. They could also sell a $600 put option and a $950 call option, collecting a total of ~$22 ($10 and $12, respectively). Net, the strategy would cost about $23 per ton and provide protection from $825 to the contract highs we saw last spring. The hedger would participate in lower prices until $700.

For Sellers

Steel sellers can implement a three-way strategy by purchasing a $800 put for ~$43.00 per ton, and simultaneously selling both the $700 put and $925 call. The resulting strategy would carry a net cost of ~$24.00 per ton ($10.50 and $13.50 respectively). Leaving the hedger with protection down to $700 and participation all the way to $925, last seen in March of this year.

There is risk in futures and options trading.

• Both strategies would carry potential margin risk (capital call).
• Both strategies involve limitations to protection and participation.
• Offsetting either strategy before expiration will change the cost and P/L.

When trading options, positions should be managed as the market changes and time passes.

Options pricing above based on theoretical values. There is a risk of loss in futures trading. Past performance is not indicative of future results.

© 2023 Commodity & Ingredient Hedging, LLC. All rights reserved.

That’s because pickups and SUVs are among the most profitable and best-selling vehicles made by the “Big Three” automakers.

Kentucky Truck, located in Louisville, Ky., makes the F-250 to F-550 Super Duty Trucks as well as the Ford Expedition and Lincoln Navigator SUVs, according to Ford’s website.

UAW: Ford “Refused” Progress in Contract Talks

UAW President Shawn Fain and Vice President Chuck Browning called on workers to strike “directly after Ford refused to make progress in bargaining,” the union said in a Facebook post.

Union members then walked off the job at Kentucky Truck at 6:30 p.m. ET. The UAW noted that the plant was “iconic and extremely profitable.”

“We have been crystal clear, and we have waited long enough. But Ford has not gotten the message,” Fain said.

Ford Warns of Consequences

Kentucky Truck generates $25 billion a year in revenue. It is not only one of the largest factories in the US but also one of the largest in the world, Ford said.

Ford said its latest offer to the UAW was “outstanding” and that the union’s move was “grossly irresponsible.” The company also noted that its 57,000 UAW-represented workers were already “among the best-compensated hourly manufacturing workers anywhere in the world.”

The strike at Kentucky Truck will have “serious consequences,” Ford warned. It said the work stoppage put a dozen other Ford plants “at risk” as well as 100,000 jobs once indirect employment at suppliers was taken into account.

Bring the Hammer Down

The move came as a surprise because the union has, in the past, announced new strikes on Fridays. It was also unexpected because the UAW last Friday decided not to expand its strike, citing progress in contract talks.

But Fain on Friday also said that some union members had wanted to “bring the hammer down” on truck plants.

“There is a time and place for that. And believe me: if the Big Three don’t continue to make progress, then that time will be coming soon,” he said then.

The company will be upgrading its cut-to-length line, and adding an intelli-crane system, new coil grabber, new sheet lifter, and an updated conveyor system, as well as making dock improvements, Industrial Development Board (IDB) attorney Barney Lovelace told the paper.

The Decatur IDB OK’d a $258,000, 10-year tax abatement for the project on Tuesday, the article said. Also approved was an abatement of $94,800 of Decatur sales and use taxes during construction and $123,390 of state sales and use taxes.

Feralloy’s Decatur location has a 72” Stamco slitter, a 52” Loopco slitter, a 72” Butech stretch-leveler, and a 72” Red Bud multi-blanking line. These serve “the metal processing and delivery needs” for customers in the Southeast “and beyond,” according to Feralloy’s website.

When contacted by SMU, Feralloy declined to comment at this time.

Many steel companies have turned to large-scale technology systems, including enterprise resource planning and customer relationship management platforms, to address business issues. However, as technology continues to evolve at an accelerated pace – particularly with the rapid increase in artificial intelligence (AI) applications – steel leaders seem to have more questions than answers about implementing and using technology as a solution.

Research shows technology investments are not slowing down, but the amplified uncertainty steel leaders are faced with leaves them wondering what the future of the industry might look like.

A Closer Look at the Data

For the past 12 years, Crowe has surveyed metals leaders to gather data and insights regarding the use of technology within their companies.

The Crowe “2023 Technology in Metals Survey Insights” report uncovered three key findings that reveal how the steel industry is changing as technology evolves.

1. Customer needs are the top priority for technology investments

In 2023, 68% of survey respondents named customer needs and requirements as the number-one factor when making decisions about technology investments – a statistic that continues to rise.

Historically, steel leaders focused on controlling internal costs and improving operational efficiencies when deciding on technology investments. While those factors remain important, executives are increasingly considering customer expectations and the employee experience. This shift has resulted in more steel companies turning to non-traditional technology tools and platforms to enhance user experiences. These include employee collaboration tools, e-commerce portals, and augmented reality platforms.

2. Employee experience is being elevated

Steel leaders named technology adoption uncertainty as the primary challenge in the digital transformation of their businesses today. For the second year in a row, responses to an open-ended question regarding digital transformation challenges mentioned struggles with employee training, a lack of skilled resources, and change management.

As many steel companies face worker shortages and disengaged workers, survey results show 93% of companies are investing in technology to improve the employee experience. Effort is being made, but more can be done to support employees. Establishing a change management plan to guide and empower employees along the way is a critical step in helping workers overcome adoption uncertainty. Ensuring workers are a part of the process and their voices are heard is a key factor to attract and retain top talent.

3. Work is shifting with the use of AI and advanced technologies

The number of steel companies that plan to use advanced technology like AI within the next five years has increased significantly. In 2022, 32% of those surveyed planned to use AI in the next five years compared to 41% in 2023. Every steel company should have a plan in place before the end of 2024 for how they will leverage AI’s capabilities to improve their business.

With the rise of advanced emerging technologies, steel companies can also anticipate a significant change in operational processes and how employees engage with technology. It’s critical for executives to consider the implications that advanced technology might have on the way employees work.

Innovation Starts With People

Technology trends from data shown in the “2023 Technology in Metals Survey Insights” report point back to the importance of people in the process of implementing and using technology. While technology provides the tools to enhance operations, increase efficiency, and minimize time spent on tedious tasks, it’s the people using the technology who power innovation.

The future of the steel industry has the potential to maximize growth with tools like e-commerce technology and AI, but companies might not realize the full benefits technology can offer without first recognizing and building internal processes that support their employees.

Gain More Insights Into 2023 Steel Technology Trends

The path forward might seem uncertain as circumstances and technology continue to evolve. But with a greater understanding of technology trends and insights from industry specialists, steel leaders can gain confidence in their technology investment decisions.

Download the Crowe 2023 Technology in Metals Survey Insights report today to see more data and gain a deeper understanding of what the next steps might look like.

Learn more about Crowe’s steel services here.

Commerce found that the imports would likely continue to be dumped at a margin of 95.29% should the duties be revoked. The department issued its ruling in a Federal Register filing.

The AD duties on Japanese tin mill product imports have been in place since 2000. This is the fourth sunset review of the duties. Sunset reviews are conducted every five years as required by international trade law.

The International Trade Commission must now issue its final injury determination in its portion of the sunset review. An affirmative injury ruling – meaning revoking the duties would likely cause injury to the domestic industry – would result in the duties being maintained for another five years. A negative injury finding by the ITC would eliminate the duties completely.

While Commerce conducted an expedited review, the ITC decided to conduct a full sunset review of these duties in September. A full review will be completed within 360 days of initiation, while an expedited review is completed within 150 days.

The ITC told SMU that a schedule for the review is still being developed.

Cleveland-Cliffs and U.S. Steel are the domestic parties participating in this investigation.

Current Tin Mill Products Trade Case

Separately, a new trade case investigating the alleged dumping and subsidizing of tin mill products from a handful of countries is underway.

The countries being investigated are Canada, China, Germany, the Netherlands, Taiwan, Turkey, and the UK.

Cleveland-Cliffs and the United Steelworkers (USW) union filed the trade case in January.

More information about the case can be found here.

What gives them the confidence to do so?

Lead Times Looking Solid

We’ll update lead times on Thursday. But in an indication of what might be to come, I’ve seen lead times from an EAF mill that begin in late November for hot-rolled – or roughly seven weeks from now.

That sounds like a cold-rolled lead time to me. But for that mill, lead times for cold-rolled are in mid/late December – or roughly 9-10 weeks from now. Add annealing and you could be looking at a 2024 lead time.

I’ve heard similar stories on the Galvalume side, a product that isn’t exposed to automotive. Some of you tell me that demand for G’lume remains firm on continued strong demand for metal roofing as well as for newer applications such as solar.

You might be looking at a December lead time at certain Galvalume producers. Assuming that they can fit you into their schedule at all. If you’re a contract buyer or a regular spot buyer, you’ll probably have no issues. If you’re a “Johnny Come Lately,” you might be out of luck.

I know some of you think that lead times have been inflated by the raft of maintenance outages underway or coming up. That might prove to be true. But that doesn’t change the facts on the ground right now.

UAW Strike: What Will the Rank and File Do?

A lot also hinges on the UAW strike. Some of you think the UAW strike might end sooner than expected. Others think it will be a lengthy battle, one that could result in additional blast furnace idlings.

Preliminary results of our Steel Market Survey this week indicate ~75% of respondents expect the strike, which started on Sept. 15, to last 5-7 weeks. In other words, they think it will be over by the end of this month or by early November. Nearly 25% think the strike will last eight weeks or more – or potentially into the holiday season. I can see a reasonable case for each side.

UAW president Shawn Fain might have been wearing an “EAT THE RICH” T-shirt on Friday when he provided an update on negotiations. But the fact is, he didn’t expand the strikes against GM, Ford, or Stellantis. Mostly because the automakers have been significantly sweetening the pot.

The union has been offered much of what it asked for – including significant wage increases, the restoration of COLA, and union representation at battery plants. How much more can the “Big Three” – which face stiff competition from non-union Tesla and non-union transplants – realistically offer?

GM, for example, was one of the largest corporations in the world in the mid-20th century. That is no longer the case.

It’s been said before that negotiations between the UAW and the “Big Three” are in uncharted territory. Yes, that includes UAW leadership taking the unprecedented step of striking GM, Ford, and Stellantis all at once.

It might also include a more militant rank and file. Case in point: At Mack Trucks union members overwhelmingly rejected a tentative agreement negotiated by UAW leaders. So that’s another variable to consider.

Let’s say automakers make their last, best, and final offers. Let’s say UAW leadership accepts them, and the two sides reach a tentative agreement. The terms might be the most generous the union has seen in a generation.

But would rank-and-file members – who’ve been fired up on talk of 40% wage increases, four-day work weeks, and the restoration of traditional pensions – accept even a once-in-a-generation contract?

Tampa Steel Conference: Jan. 28-30, 2024

The weather has gotten chilly in the Midwest. So don’t forget to book some time away from the cold in January.

The Tampa Steel Conference, which SMU does with Port Tampa Bay, runs Jan. 28-30, 2024.

We’ll have not only a solid program but also outdoor networking, golf, and a harbor tour. Register here, and reserve your spot today!

Lead times, meanwhile, were expected to remain firm because of maintenance outages and because of large orders placed shortly before or after the price hike announced by Cleveland-Cliffs in late September.

Steel Market Update’s hot-rolled coil price now stands at $695 per ton ($34.75 per cwt), up $25 per ton from last week and marking the first time HRC has seen consecutive price gains since early July.

Cold-rolled and coated base prices also rose (up $10 per ton) as did Galvalume base prices (up $15 per ton). Plate prices were little changed from last week (up $5 per ton).

Our sheet price momentum indicators remain pointed upward. Our plate price momentum indicator remains at neutral.

Hot-Rolled Coil

The SMU price range is $660–730 per net ton ($33.00–36.50 per cwt), with an average of $695 per ton ($34.75 per cwt) FOB mill, east of the Rockies. The bottom end of our range increased $20 per ton vs. one week ago, while the top end of the range edged up $30 per ton compared to the prior week. Our overall average is up $25 per ton week over week (WoW). Our price momentum indicator for HRC is now pointing higher, a shift from lower, meaning SMU expects prices will increase over the next 30 days.

Hot Rolled Lead Times: 3–7 weeks

Cold-Rolled Coil

The SMU price range is $880–940 per net ton ($44.00–47.00 per cwt), with an average of $910 per ton ($45.50 per cwt) FOB mill, east of the Rockies. The lower end of our range was unchanged WoW, while the top end was $20 per ton higher compared to a week ago. Our overall average is up $10 per ton WoW. Our price momentum indicator for CRC is now pointing higher, a shift from lower, meaning SMU expects prices will increase over the next 30 days.

Cold Rolled Lead Times: 5–8 weeks

Galvanized Coil

The SMU price range is $880–940 per net ton ($44.00–47.00 per cwt), with an average of $910 per ton ($45.50 per cwt) FOB mill, east of the Rockies. The lower end of our range was up $10 per ton vs. last week, while the top end of our range was also up $10 per ton WoW. Thus, our overall average is up $10 per ton vs. the prior week. Our price momentum indicator on galvanized steel is now pointing higher, a shift from lower, meaning SMU expects prices will increase over the next 30 days.

Galvanized .060” G90 Benchmark: SMU price range is $977–1,037 per ton with an average of $1,007 per ton FOB mill, east of the Rockies.

Galvanized Lead Times: 5-8 weeks

Galvalume Coil

The SMU price range is $900–940 per net ton ($45.00–47.00 per cwt), with an average of $920 per ton ($46.00 per cwt) FOB mill, east of the Rockies. The lower end of our range was up $40 per ton vs. last week, while the top end of the range was $10 per ton lower WoW. Our overall average was up $15 per ton compared to one week ago. Our price momentum indicator on Galvalume steel is now pointing higher, a shift from lower, meaning SMU expects prices will increase over the next 30 days.

Galvalume .0142” AZ50, Grade 80 Benchmark: SMU price range is $1,194–1,234 per ton with an average of $1,214 per ton FOB mill, east of the Rockies.

Galvalume Lead Times: 5-10 weeks

Plate

The SMU price range is $1,440–1,500 per net ton ($72.00–75.00 per cwt), with an average of $1,470 per ton ($73.50 per cwt) FOB mill. The lower end of our range was $40 per ton higher WoW, while the top end of our range was down $30 per ton compared to the week prior. Thus, our overall average is up $5 per ton vs. one week ago. Our price momentum indicator on steel plate shifted to neutral meaning there is no clear indication where prices will head over the next 30 days.

Plate Lead Times: 4-7 weeks

SMU Note: Above is a graphic showing our hot rolled, cold rolled, galvanized, Galvalume, and plate price history. This data is 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.

“We are pleased to welcome a CFO of Maria’s caliber and experience to Samuel. Maria has proven financial leadership capabilities at top-performing industrial and technology companies. I look forward to working with her as we accelerate Samuel’s growth and overall performance,” said Colin Osborne, Samuel’s president and CEO, in a statement.

Perrella succeeds Samuel’s previous CFO, John Amodeo, who announced his retirement earlier this year.

“I would like to thank John for his longstanding service to Samuel. During his tenure, we grew and diversified the business, expanded throughout North America, and entered several new markets. This progress was possible because of the strong financial systems and teams John developed over this time. On behalf of our owners, board, and team, I would like to wish John well in retirement,” Osborne stated.

Samuel is a family-owned, Oakville, Ontario-based metal processor and distributor with more than 80 locations throughout North America.

“Solid demand for data centers, life science labs, and hospitals supported the uptick in nonresidential planning activity last month,” said Sarah Martin, DCN’s associate director of forecasting. “While month-to-month trends can be volatile, year-to-date trends show an overall decrease in commercial planning, offset by more institutional projects entering the queue.”

“Steady planning activity should follow if financial conditions improve in early 2024,” Martin added.

The two largest institutional segments, healthcare and education, saw stronger planning activity in September, while a drop in commercial project planning resulted from weaker office planning, the report said.

Month over month, the commercial component of the DMI dropped 1%, while the institutional component fell 9%. The commercial component was 12% lower year over year, while the institutional component was up 12% over the same period.

Dodge is the leading index for commercial real estate, using the data of planned nonresidential building projects to track spending in the important steel consuming sector for the next 12 months. An interactive history of the DMI is available on our website.

Murray joined Leeco in 2017 and most recently served as senior account manager.

“Tom has proven to be a valuable asset to our sales team, significantly growing his book of business since joining Leeco,” commented John Purcell, Leeco’s VP of sales, in a statement. “Tom is a highly motivated self-starter, and I’m confident that his leadership will contribute to significant regional growth in the coming years.”

Leeco, based in Lisle, Ill., is a distributor of plate steels, operating 11 locations in North America.

“Job openings remain stubbornly high, even though the industry has been raising hourly pay at an elevated rate,”  said the association’s chief economist, Ken Simonson, in a press release.

Seasonally adjusted construction employment totaled 8,014,000 or 0.1% last month, the release said. The construction sector has added 217,000 jobs over previous 12 months. The majority of those positions have been at nonresidential construction firms, heavy and civil engineering construction firms, and specialty trade contractors.

Association officials say that not enough future workers are exposed to construction as a possible.

“We need to show more American workers how much they can earn, and how little they will need to spend, to begin careers in construction,” said Stephen E. Sandherr, the association’s CEO.

Additionally, the association asked Congress and the Biden administration to open up avenues for more people with construction skills to lawfully enter the country and work in the construction field.

“Allowing more people into the country to lawfully work in construction will provide short-term relief for labor shortages without creating a new segment of the population that is dependent on public support,” said Sandherr.

The association is also encouraging public officials to increase investments in programs that introduce workers to construction.

Recall that if a deal is not reached by the end of October, this could trigger the reinstatement of Section 232 tariffs on steel and aluminum on EU exports to the US. These tariffs have been suspended since 2021. In turn, this could provoke retaliatory measures by the EU.

A fundamental disagreement is over the carbon border adjustment mechanism (CBAM) system supported by the EU but opposed by the US.

Additionally, the US is waiting on carbon emissions data from the International Trade Commission that will not be available until 2025.

As SMU previously reported, President Joe Biden will host Charles Michel, president of the European Council, and Ursula von der Leyen, president of the European Commission, at the White House for a US-EU Summit on Oct. 20.

The EU is also set to announce anti-subsidy investigations against steelmakers in China at the meeting with US representatives this month, the article said.

At the meeting, the two sides are also expected to announce another part of the Global Arrangement on Sustainable Steel and Aluminum (GSA), “curbing exports of Chinese metal, which have been flooding the world market,” according to the article.

The article added this agreement will be available to other countries such as the “United Kingdom and Japan if they agree to also implement tariffs on China.”

A letter from Unifor to its members said workers must report for their regularly scheduled shifts beginning at 2:30 p.m. on Tuesday.

“It is thanks to the solidarity of you, the members, that it was possible to move General Motors to accept the pattern to the letter, including all items that company had initial fought us on such as pensions, retiree income supports and converting full-time temporary workers into permanent employees over the life of the agreement,” said a letter signed by Unifor leaders.

“This record agreement, subject to member ratification, recognizes the many contributions of our represented team members with significant increases in wages, benefits and job security while building on GM’s historic investments in Canadian manufacturing,” GM Canada president and managing director Marissa West said in a statement.

Union members must now ratify the agreement. However, ratification is never a guarantee.

For example, United Auto Workers (UAW) members at Mack Trucks in the US just rejected a labor deal reached last week, opting to strike instead.

Ford of Canada workers represented by Unifor ratified their new labor agreement on Sunday, Sept. 24., by a narrow margin, with 54% voting in favor of consenting to the deal.

The UAW remains on strike at select Ford, General Motors, and Stellantis plants in the US. A union update on Friday, Oct. 6, said progress was being made in talks with the Big Three. Therefore the union would not be expanding its strike to other facilities at that time.

Background

The original Section 232 tariffs that went into effect in March 2018 applied 25% and 10% tariffs, respectively, on specific steel and aluminum imports.

In October 2021, the EU and US met and released a joint statement. The goal: “to re-establish historical transatlantic trade flows in steel and aluminum, and to strengthen their partnership.”

The 2021 arrangement replaced the original tariffs with a tariff rate quota (TRQ) system.

“In a demonstration of renewed trust, and reflecting long-standing security and supply chain ties, the United States will not apply section 232 duties and will allow duty-free importation steel and aluminum from the EU at a historical-based volume and the EU will suspend related tariffs on US products,” the statement said. However, the two sides agreed to continue discussions and conclude them within two years.

Why It Matters

The two sides have a self-imposed Oct. 31 deadline. If they fail to reach an agreement by the deadline, the parties could reimpose tariffs on each other’s goods. And increased tariffs could mean increased prices for US citizens.

“There’s a lot of agreement on both the carbon intensity issue and the excess capacity issue,” Kevin Dempsey, president and CEO of the American Iron and Steel Institute (AISI), told SMU.

Dempsey highlighted that one of the challenges is having both parties, who do things differently, come to an agreement. “Hopefully we’ll make some progress here in the next few weeks,” said the AISI president.

“We hope these discussions will build a framework for continued dialogue toward a meaningful agreement that remains ambitious, particularly in the areas of non-market excess capacity and lowering carbon emissions,” said Philip K. Bell, president of the Steel Manufacturer’s Association, in an email to SMU.

While progress on Oct. 20 is possible, Dempsey says the US is awaiting data from the International Trade Commission. However, the data will not be available until January 2025. “The data will be used to calculate carbon emissions intensity for domestic steel and aluminum production,” Dempsey said.

The mill capability utilization rate for the week was 74.7% compared to 75.7% a week earlier. During the same period in 2022, the mill capability utilization rate was 73.7%.

Adjusted year-to-date production through Oct. 7 was 68,468,000 tons, at a capability utilization rate of 75.9%. That was down 1.2% from the 69,327,000 tons during the same period one year ago when the capability utilization rate was 78.8%.

• Northeast – 132,000 (down 2,000 tons)
• Great Lakes – 558,000 (down 10,000 tons)
• Midwest – 204,000 (down 2,000 tons)
• South – 738,000 (down 8,000 tons)
• West – 66,000 (down 2,000 tons)

The Stockholm, Sweden-based company could “build a ‘green iron’ plant and a giant electrolyzer powered by renewable energy that would supply the site with hydrogen, replacing the use of carbon-intensive coal. The iron would then be exported,” the article states.

Or it could choose to build a complete steel mill.

The key factor in the company’s decision is “access to power and renewable electricity,” the spokesperson said in an email to SMU. “Without that, large-scale hydrogen production is not possible even if state funding comes into play.”

“Supported by Invest in Quebec, we have evaluated three locations where Sept-Îles is identified as the strongest option,” the spokesperson said. Sept-Îles is a major iron-ore handling port located on the St. Lawrence River.

“We are also evaluating sites in Texas in the US (and in Brazil and Portugal),” the spokesperson noted.

The potential project could come at an investment of €3-6 billion (US$3.17-6.34 billion), according to the Bloomberg article.

H2 Green Steel had previously said it is exploring the development of green industrial hubs in North America and Brazil together with Brazilian miner Vale.

In June, the Swedish company signed a memorandum of understanding with Mercedes-Benz for the potential supply of green steel made in North America. The automaker operates an SUV production plant in Tuscaloosa, Ala.; a Sprinter van assembly plant in Ladson, S.C.; and a battery plant in Woodstock, Ala.

H2 Green Steel was founded in 2020 to accelerate the decarbonization of the steel industry by using green hydrogen. Its first large-scale green steel plant – also the world’s first – is still being developed in Boden in northern Sweden. The company aims to have production running by 2025.

Esmark Steel International’s flat-rolled steel products include hot-rolled, cold-rolled, tin plate, metallic-coated, painted, and digital-printed coils. Product is immediately available, the company said.

“Over the last few years, we have seen the Mexican industrial steel market face significant challenges, especially with the reliability of its suppliers for flat-rolled products,” Bouchard  said.

“We know customers are actively seeking alternative sources that can offer reliable and continuous supply of products, as well as local service and North American origin,” he added. “We are focused on creating consistent supply for our customers, leveraging localized service, processing, and logistics support.”

“Esmark has been consistently buying steel products from Mexico for more than a decade. We know the market and understand its current challenges,” Alvarez added.

Esmark Steel International is a wholly owned subsidiary of Esmark Steel Group.

Management

Luis Landois has joined Esmark Steel International as its president. He will report to Esmark Steel Group CEO Roberto Alvarez.

Landois has more than 30 years of experience in the Mexican steel and industrial markets, according to the release.

Other Promotions

Additionally, Esmark Steel Group announced several promotions of its global business operations:

Dominic Grossmann, currently COO of Esmark Steel Group, has been named president of Esmark Steel Group, effective immediately. He joined Esmark in 2008 and will report to Alvarez.

John Dergentis, currently VP of operations, has been promoted to VP and general manager at Esmark Steel Group, effective immediately. In this role, Dergentis will be responsible for the Chicago Heights and University Park, Ill., division operations and will report directly to Grossmann. Dergentis joined Esmark in 2019 after 30 years in management and operations.

Patrick Frey, currently VP and general manager of Esmark Steel Group University Park, Ill., division, has been promoted to SVP of purchasing and will report to Grossmann. He joined Esmark in 2005 and has more than 35 years of experience in the steel industry, the release said.

Esmark Steel Group, a wholly owned subsidiary of Esmark Inc., is a US processor and distributor of value-added flat-rolled steel. Its affiliate Ohio Coatings Co. is the third-largest US producer of tin plate steel, the release said.

The workers at the Greensboro, N.C.-based company voted down the agreement with a 73% no vote on Sunday, according to a letter from the UAW posted on X. The letter was addressed to Holly Georgell, director of Volvo Trucks North America, which owns Mack Trucks.  

A strike had been avoided when a tentative agreement was reached before the union’s labor contract expired at 11:59 p.m. on Sunday, Oct. 1.

The letter noted some issues remaining include wage increases, cost of living allowances, job security, wage progression, pensions, and 401(k), among others.

“We will contact you for available dates, times, and locations to reconvene bargaining and address our members’ concerns,” the UAW letter said.

“We are surprised and disappointed that the UAW has chosen to strike, which we feel is unnecessary,” Mack president Stephen Roy said in a statement to SMU.

“We clearly demonstrated our commitment to good faith bargaining by arriving at a tentative agreement that was endorsed by both the International UAW and the UAW Mack Truck Council,” he added.

The tentative agreement included a 10% general wage increase in year one for all employees, a compounded 20% increase to general wages over five years, and a guarantee of no increases in health insurance premiums through the term of the contract, the statement said.

UAW said Locals 171, 677, 1247, 2301, and 2420 in UAW Region 8 and Region 9 are represented. They cover workers at Mack Trucks in Macungie and Middletown, Pa.; Hagerstown and Baltimore, Md.; and Jacksonville, Fla.

The vote comes amid the ongoing UAW strike targeting all three Detroit automakers, which started on Sept. 15.

George R. Frost will support the growth of the company’s specialty metals division as director of national sales – aluminum. He will report to Olympic’s VP of specialty metals, Andrew Wolfort, the company said in a statement on Monday, Oct. 9.

“Specialty Metals is our fastest-growing business segment. George brings a wealth of industry, product and commercial expertise that will help fuel our continued expansion into the aluminum market. We are excited to welcome him to the team and will count on his contributions to help execute our aluminum growth strategy,” commented Andy Markowitz, Olympic’s specialty metals president.

And that was before the push to lift steel prices arguably got a boost on Friday afternoon. That’s when UAW president Shawn Fain announced that the union would not expand its strike against the “Big Three” automakers.

Perhaps it is equally foolish to predict how and when and if the UAW strike might end.

New Strikes Averted, for Now

We’re entering the fourth week of the UAW strike. The consensus among our survey respondents was that the strike would last 4-6 weeks. (Only 10% thought it would last seven weeks or more.) That consensus would appear to hinge on a tentative agreement being reached soon.

Fain on Friday said last-minute progress in talks with General Motors prevented the strike from expanding. He said GM had agreed to allow workers involved in making electric batteries to join the union. That’s a big deal for the UAW.

“We have been told for months this is impossible. We have been told the EV future must be a race to the bottom,” Fain said. “What this will mean for our membership cannot be understated.”

So maybe a deal is close? Count me as skeptical. Fain made those remarks on Facebook Live while wearing a T-shirt that said, “EAT THE RICH”.

True, Fain might be under pressure to look tough from more radical members of the UAW. He acknowledged on Friday that some union member wanted to “bring the hammer down” on truck plants – among the Big Three’s most profitable operations.

“There is a time and place for that. And believe me: if the Big Three don’t continue to make progress, then that time will be coming soon,” he said.

So what is the hammer being held back for? The union has at various times floated 40% wage increases and a four-day workweek. These are probably the kind of chips that are often designed to be negotiated away. So what are the real sticking points?

Tiers Under Fire in Detroit

Some of you have told me the UAW will agree to a deal if it secures wage increases of more than 25%. If that’s really the case, then perhaps an end to the strike is in sight. Ford has already agreed to a 23% wage increase, up from the 9% it initially floated, Fain said.

That might sound like a big deal. But it’s almost par for the course given the significant uplift in wages that has been achieved by unions in other industries, including the United Steelworkers (USW) in contract negotiations with Cleveland-Cliffs and U.S. Steel last year.

My money is on tiers being a bigger sticking point. Tiers is the practice of paying new or temporary workers significantly less and offering them significantly fewer benefits than longer-serving, full-time workers.

Fain said “temps” have been “used and abused” by the Big Three. “This part of the workforce used to be a small group, used only to cover for short periods. Now, they’re an entire subsection of our union, who have few rights, low pay, and an uncertain future,” he said.

And Elsewhere Too

If that rhetoric sounds familiar, it’s because it is. Tiers have been a key sticking point in other recent labor talks as well. Take, for example, contract talks between UPS and the Teamsters. The Teamsters demanded, and got, an end to tiers before agreeing to a new labor contract in August.

Is that the formula: to get a deal, end tiers? Sounds simple. But it looks like companies don’t want to give tiers up without a fight. And it appears that unions aren’t willing to go back down either.

Case in point: Talks between Unifor (roughly the Canadian equivalent of the UAW) and General Motors of Canada have bogged down in part over the issue of tiers.

Unifor says that some people officially classified as temporary or part-time workers are effectively working full-time. But without enjoying the same pay and benefits as full-time workers.

“On this matter (tiers), there is considerable disagreement between us and GM,” Unifor National president Lana Payne said in a speech on YouTube on Saturday.

“We have been crystal clear with the companies. There is no agreement until this is resolved,” she added.

Recall that Unifor members ratified a new labor agreement with Ford of Canada on Sept. 24.

The talks in Canada, unlike those in the US, have been a more traditional pattern bargaining. In other words, the deal reached between Unifor and Ford of Canada was supposed to set the template for talks with GM.

To date, it has not. Unifor’s contract with General Motors of Canada expires at 11:59 pm ET on Monday. Maybe there will be a last-minute deal. Maybe not.

Payne, unlike Fain, didn’t slam the “billionaire class.” But she sported a black leather jacket that referenced a more militant approach among union members and leaders across industries.

How Will Non-Union Workers React?

Let’s say the UAW and Unifor succeed in negotiating life-changing improvements in working conditions for their members. How would that news be received by non-union workers? Simply put, if union workers get hefty wage and benefit increases, wouldn’t non-union workers want that too?

And, related to that, if non-union workers don’t see pay and benefits increase in tandem with those of union workers, could that leave the door open to unionization in places we traditionally think of as non-union?

I’ve always assumed that transplant automakers in the South, for example, would remain non-union. But with all that’s changed over the last three years – reshoring, a labor shortage, inflation – is that still a safe assumption?

Let me know what you think. And, in the meantime, thanks to all of you for your continued support of SMU!

Background

Congress possesses all federal legislative authority under the Constitution. It may pass laws that deal with any matter under federal jurisdiction that are otherwise consistent with the Constitution, as amended. Inevitably, questions arise regarding the interpretation of those statutes. When these questions are litigated, the federal courts will resolve them.

One of the most famous cases in US history, Marbury v. Madison, stated the general rule: “It is emphatically the duty of the Judicial Department to say what the law is.”

Chevron, an environmental case decided in 1984, holds that if a federal agency is charged with the administration of a statute by law, the courts must defer to the agency’s interpretation of that law, so long as the interpretation is “reasonable.” In the administration of most international trade statutes, the lower federal courts have deferred to agencies (the Commerce Department, International Trade Commission, USTR) and the President innumerable times.

What’s On The Table

In Loper Bright, the Supreme Court will decide by next June whether Chevron should be overruled. The outcome is, of course, uncertain. But there are straws in the wind:

First, the Supreme Court has not relied on Chevron to sustain an agency decision since 2014, based on my research, suggesting an erosion of the persuasive power of the case; but the lower federal courts cite the case repeatedly, including in international trade cases.

Second, at least three Justices (Thomas, Gorsuch, and Kavanagh) have raised serious questions about the validity of the Chevron doctrine as an exception to the Marbury rule that courts should decide “what the law is.”

Third, the Court agreed to hear the Loper Bright case limited to the Chevron question, indicating that the issue was “teed up” for decision by the Court.

Fourth, Justice Jackson, who formerly sat on the DC Circuit, has recused herself from hearing the case, due to her previous involvement with the case on the Circuit court.

Fifth, the legal community has bombarded the Court with nearly 100 amicus curiae (friend of the court) briefs on both sides of the issue.

While the Supreme Court has pushed aside Chevron as the basis for its decisions in recent years, as mentioned the lower courts have cited it endlessly as cover for deferring to agency decisions. But the record is not entirely one-sided.

What It Means

In a case just last week, the Court of International Trade set aside a Commerce finding in a countervailing duty case that an emissions trading system (ETS) in South Korea subsidized a Korean firm. You may not have time to digest the details, but I’ll try to summarize.

Commerce found that the government of Korea provided extra emission allowances to a company free of charge. Commerce ruled that was a subsidy because if the government had not given the allowances, the company would have had to buy them or potentially be liable for a penalty for excessive emissions.

The Court of International Trade held that Commerce’s decision was contrary to the statute because Congress had limited Commerce’s authority to impose duties only on payments that would currently, not just potentially, be “due.” Perhaps the statute was clearly contrary to Commerce’s decision. I’m a bit confused about that, but that was the court’s holding.

In reading the decision, I could not help recalling the column a couple of weeks ago about the EU hitting Chinese electric vehicles with a countervailing duty investigation. Do we want to curb carbon emissions or don’t we? At least one federal judge appears to give climate action something of a chance at success.

How Will It Shake Out?

The demise of the Chevron doctrine in Loper Bright could be a game changer for trade remedy cases. But it will take some time before the effect on lower courts becomes clear.

More than twenty years ago, in Mead Corp., the Supreme Court denied Chevron deference for administrative rulings by US Customs. Within three months, the US Court of Appeals for the Federal Circuit decided not to apply Mead to antidumping and countervailing duty decisions by Commerce, requiring the courts to continue to defer to Commerce decisions in trade remedy cases.

Moreover, overruling Chevron might not be applied retroactively to cases previously decided. If, as appears likely, Chevron is overruled or seriously weakened, the trade remedy landscape will change. Congress will no doubt be asked to amend the laws to permit or require greater judicial deference to agency decisions. It could make for interesting times ahead.

The other two cases (SEC v. Jarkesy and CFPB v. Community Financial Services Association) are likely to have a lesser immediate impact on international trade jurisprudence. But ultimately these cases could affect the type of congressional response that may ensue.

Jarkesy takes issue with non-judicial adjudications by “administrative law judges” in securities cases. The Court might decide that Congress cannot delegate certain types of cases to administrative agencies, but must allow courts to handle them.

The CFPB case, which was argued last week in the Supreme Court, deals with the ability of Congress to enact funding mechanisms for agencies that bypass the appropriations process.

All in all, this will be another big year for Supreme Court watchers.

Editor’s note: This is an opinion column. The views in this article are those of an experienced trade attorney on issues of relevance to the current steel market. They do not necessarily reflect those of SMU. We welcome you to share your thoughts as well at info@steelmarketupdate.com.

“Nucor and Kentucky have a longstanding partnership, and I’m excited that we continue to build on that by opening Nucor Steel Brandenburg,” Gov. Beshear said in the release.

Nucor Steel Brandenburg already employs 440 people, the release said. The company cast its first slab on its new continuous caster in March and rolled its first plate in December of last year.

“Congratulations to the Nucor Steel Brandenburg team for safely and successfully starting up our new plate mill, which will make the sustainable steel products that serve as the building blocks of our modern American economy,” said Leon Topalian, Nucor’s chair, president, and CEO.