Economy

SMA Sees USMCA Trade Pact as a Priority

January 31, 2019

The Steel Manufacturers Association would like to see the U.S.-Mexico-Canada Agreement ratified by the three countries, even if it calls for a change to the tariffs.

Speaking at a press briefing during SMA’s board meeting Thursday in Washington, SMA President Phil Bell said the modernized trade rules in the USMCA are an improvement on NAFTA. “We support USMCA. There needs to be some kind of negotiated resolution to the Section 232 tariffs. It could be in the form of quotas or some other means to ensure that we have a free and open market without retaliation between the three countries,” he said.

“We are supportive of the agreement and the Section 232 tariffs based on national security,” added SMA Chairman Tracy Porter. “Any kind of agreement between the U.S., Canada and Mexico, as long as it levels the playing field and there is no transshipping happening to get around the goal of 232, we are very supportive.”

Asked whether capital investment by SMA members will focus on producing higher-value products, such as advanced high-strength steels, rather than commodity grades, the SMA executives said it would likely be a combination of both. As Bell noted, Nucor has announced new greenfield projects including rebar micromills and a new plate mill in the Midwest. Steel Dynamics has announced new flat roll capacity. JSW USA has restarted the EAF at Mingo Junction and plans to add a new $500 million melt shop to its pipe mill in Baytown, Texas, to name a few.

Does all this new capacity raise the risk of oversupplying the market and impacting prices in the future? “Overcapacity is an issue in China and other countries, but not here,” Bell said. Through the end of November, imports into the U.S. declined by 11 percent. Besides replacing import volumes, U.S. mills are looking to expand sales into other markets, such as Mexico. “It is not something we are worried about,” Bell added. “I have no concerns at all about capacity coming online that is efficient, run by companies with strong balance sheets and good management teams.”

SMA is a trade group representing EAF steel manufacturers in North America.