Final Thoughts

My neighbor here in Florida is on the board of directors for a company that manufacturers heating equipment used in stadiums around the world. Their manufacturing facility is in China and their product is being targeted by the first tranche of Section 301 tariffs aimed at Chinese products. I have been told, since theirs is a cyclical business, they were able to get their supplies for this season into the country prior to the tariffs taking place. However, if the tariffs continue into next summer, their U.S. business will be forced to “eat” the tariffs or cease to exist as their competition comes from a company with manufacturing in Korea that is not subject to the tariffs. Do they have plans to move production to the United States? No, as that is a long-term decision and the thought is the tariffs will end and they must produce products that are competitive on the world market.

Over the past 20-30 years, suppliers of parts to the manufacturing industries have diversified and parts now come from all over the world–many (if not most) from China. In my opinion, these supply chains are not going to revert to the United States, especially when steel costs here are 25 percent higher than anywhere else in the world.

Don’t get me wrong, and the NYT article points this out as well, there are merits to the challenges being thrown at China. Many American manufacturers support the action being taken by the Trump administration, despite the pain it is currently causing their companies. China is a well-known and documented trade abuser. It is better to deal with those abuses head-on now and not wait for a time when armed conflict becomes the way to resolve disputes.

In my opinion, the impacts of Section 232 steel tariffs (don’t forget there is an automotive 232 report due to President Trump soon) and Section 301 tariffs (specifically against Chinese-produced products) promise to be even bigger issues for the steel and manufacturing industries to deal with as this year plays out.

I believe the industry will be having an ongoing debate on this subject as this year progresses. When we get to the SMU Steel Summit Conference, Aug. 26-28 in Atlanta, I will be looking to attack this issue in some new and unique ways.

I am a believer in having a dialogue with our readers, with the industry, so I encourage you to personally engage with us. You can do by sending me an email at: John@SteelMarketUpdate.com. It will soon be one year since the Section 232 tariffs were announced. How have they impacted your business? Are they accomplishing what they were supposed to (protect the domestic steel industry, increase capacity utilization rates to 80 percent)? Are you now feeling any unintended consequences, are your customers or the end consumer? Do you support the Section 301 tariffs threatened to take effect in March if China does not come to an agreement on trade with the United States?

I want to make it clear – my opinions have nothing to do with President Trump – just the action and reaction to the policies currently in place. I do not want this discussion to be political in nature; rather it should reflect what is happening in your businesses and come from your perspective.

If you have suggestions on how Steel Market Update should handle this topic at our conference in August, either by specific speakers, panels or general topics, please feel free to send me your thoughts.

I have received commitments from multiple steel mill and service center CEOs to participate in this year’s SMU Steel Summit Conference, which will be held on Aug. 26-28 in the Georgia International Convention Center next to the Atlanta International Airport (ATL). We are intentionally holding back on announcing speakers and details of our program as I do not yet want to tip our hand to the competition. Suffice it to say that I am excited about the quality of the program we are putting together. I am pleased with the support we are getting from CRU, and I believe we will have an incredible slate of speakers and a powerful networking experience for those attending. Registration is open. You can find links on our website here: www.SteelMarketUpdate.com/Events/Steel-Summit. I look forward to seeing 1,000+ executives at this year’s event. Sign up soon, bring the whole staff, arrive early as CME Group will be doing a futures program prior to the conference start on Monday. Those of you who purchase aluminum should also be aware that CRU will tag an aluminum conference onto the end of our program, beginning Wednesday afternoon and concluding on Thursday.

Now, about our SMU Steel 101 workshop at the end of this month, Jan. 29-30. We are close to being sold out, but still have room for 5-7 more people before we will need to close the workshop. You can find more details about the workshop, pricing and registration on our website: www.SteelMarketUpdate.com/Events/Steel101

For those of you interested in when and where our next Steel 101: Introduction to Steel Making & Market Fundamentals workshop will be held, it is tentatively scheduled for late March or early April in conjunction with a tour of JSW’s Baytown, Texas, steel plate and pipe mill. We are working with the mill right now to finalize details. I hope to have those for you sometime later this week.

We will begin our next flat rolled and plate steel market trends survey on Monday morning. If you receive an invitation to participate, please take a few minutes to answer the first question, which is located at the end of the email you will receive. Then you will be taken to the full questionnaire. If you would like to be added to our invitation list, please send me a request at: John@SteelMarketUpdate.com

A reminder, if you would like information about becoming a subscriber, or want to renew or upgrade an existing membership, please contact Paige Mayhair at 724-720-1012 or by email: Paige.Mayhair@crugroup.com. I am also available to answer questions.

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

John Packard, President & CEO