Final Thoughts

February 28, 2018

As much as the mills are gloating about President Trump’s decision to lay a 25 percent tariff on foreign steel, remember one thing – not one of them asked for it. When it was handed to them, they took it. They did not fight to protect those products that they don’t like to make (or can’t make according to the customer base).

I found interesting one of the responses I got today from a former OEM steel buyer now with a service center, as I am personally not a big supporter of political intervention – especially if the so-called harmed parties did not request it. (Although there are some absolutely bad hombres sending in pipe and some other products at foolish prices.) Here is what one industry executive thinks will happen from here:

John, I predict the following:

Raise steel prices in the USA by 25%
Increase the profitability of domestic USA steel companies 5 to 600%
Make all steel based products produced in the USA much less competitive vs. import steel based products
Increase unemployment to over 7% in next 18 months
Reduce GDP to near 0% in next 24 months
Increase friction with International trading partners further aggravating the balance of payments issue and reducing demand for our export products by retaliation
This together with the huge deficit spending to occur will drive inflation to over 5% per year and drive dollar value down further

Absolutely the worst thing any President has done to our USA economy in my lifetime.

I appreciate your comments. You can send them to: John@SteelMarketUpdate.com.

Do you think AK Steel will announce the opening of Ashland next week? Will U.S. Steel (whose CEO was singled out by President Trump) fire up their two blast furnaces at Granite City? Will they finish construction of the EAF at Fairfield in Birmingham?

Will slabs be excluded? If not, will the potential loss of jobs at California Steel, NLMK Farrell, Evraz Oregon and JSW overshadow the jobs gained at USS and AK Steel?

Will the loss of jobs at U.S. ports overshadow the job gains at USS and AK Steel?

Will manufacturing that was considering coming back to the U.S. due to tax law changes now not come because of non-competitive steel prices compared to the rest of the world? What about those companies that have been sitting on the edge (leave U.S./not leave)?

There will be much to discuss at our 2018 SMU Steel Summit Conference. We will have Grant Aldonas, former Undersecretary of Commerce during the Bush Administration, as well as trade attorney Lewis Leibowitz, and much more, at this year’s conference. Go to our website to register: www.SteelMarketUpdate.com/Events/Steel-Summit.

Ferrous scrap traded in Detroit at up $10 on shred and sideways on primes. This was done before the 232 announcement.

As always, your business is truly appreciated by all of us here at Steel Market Update.

John Packard, Publisher