Analysis
May 11, 2017
Trading Companies Concerned About Possible Section 232 Impact
Written by John Packard
Steel Market Update (SMU) spoke with many trading companies over the past few days about concerns their companies might have with the status of the industry and efforts to stop foreign steel from entering the country. “The trading companies are not the bad guy here,” is what one trading executive said to us late this afternoon. The U.S. economy has needed foreign steel in the past as the domestic steel mills cannot produce all of the steel that is needed when we have a full economy. There are items that the domestic mills do not want to produce (such as ultra-light gauge galvanized) or cannot yet produce in significant quantities to handle the needs of the U.S. manufacturers. Of course, one of the reasons foreign steel exists in the U.S. is due to price and, in some cases, it is used as leverage to keep domestic steel prices from spiking, thus making U.S. manufacturers non-competitive in what is a world economy.
A trader told us, “I think there is wave of change coming again for our industry and the ones who can move quickly will gain and the ones who have gotten too big and slow will have problems. There is not enough qualified import material to feed the market in my view and a small movement by Trump or ?? will have much bigger impact down-stream. All of my manufacturers don’t have enough inventory or material on order to handle another cut in import availability.”
