Tariffs Lead to Layoffs at NLMK Pennsylvania

“This is what I predicted a year ago,’’ Miller told the Sharon Herald. “We’re running less turns and experiencing layoffs now because of tariffs.’’

Steel prices accelerated after the tariffs were imposed in March 2018 but have since retreated to lower levels than before the tariffs were put in place. U.S. mills have announced two price increases in the last month to try to regain pricing momentum in the market.

NLMK relies on slab imports from its Russian parent company, Novolipetsk Steel, to roll into coils and sell to customers in the U.S. Although NLMK operates facilities in Indiana and Pennsylvania, the company was denied exclusion from the 25 percent Section 232 tariff imposed last year.

With slab production in the U.S. insufficient for its needs, NLMK USA was forced to pay the higher tariffs—resulting in a running total of $160 million in additional costs as of last April. Miller said in a recent interview that the company is no longer sourcing slabs from its parent.

“Even though they invested in a company and created a strategic raw material link and put workers back to work in western Pennsylvania, the math doesn’t work with a 25 percent tariff in this market,” Miller told S&P Global Platts.

NLMK USA looked to Brazil for material since the country was under a quota system rather than the 25 percent tariff. That supply will be depleted as of the fourth quarter when only 10 percent of Brazil’s annual quota will remain. NLMK reportedly began sourcing slab from Stelco in June after the tariffs were lifted on Canada.

Miller is hoping NLMK will reap some benefit from the recent U.S. price increases in the second half of this year. He does not expect the layoffs to be long-term. “We match up what our production needs are, and that changes from week to week,” he said.