Steel Product Producers

Metalformers 'cautiously optimistic' about Q1'24: PMA

December 21, 2023

Metalformers remain optimistic about business prospects for the first quarter of 2024 despite some concerns about what Nippon Steel’s $14.1-billion deal for U.S. Steel might mean for domestic supply chains.

Approximately 57% of metalforming companies expect stable business conditions over the next three months, up from 49% last month, according to the December report from the Precision Metalforming Association (PMA).

Roughly 13% expect an increase in economic activity, up from 9% in November. And 30% think business conditions will worsen, down from 42% in November, the group said.

“’Cautious optimism’ is how I would characterize PMA members’ outlook as we enter into the new year,” PMA president David Klotz said in a statement.

That cautious optimism persists despite continuing supply-chain problems, inflation, and a shortage of workers, he added.

One new concern: Nippon Steel’s deal for U.S. Steel, which Klotz said could result in “new challenges.”

“The purchase may mean more disruption in the domestic steel industry that could lead to higher steel prices in this country, which are already the highest in the world in part due to the Section 232 steel and aluminum tariffs,” Klotz said.

It was not immediately clear why the PMA the deal, announced on Monday, would lead to higher prices or production disruptions. Nippon Steel and U.S. Steel have announced no operational changes. And the deal does not result in increased consolidation of the domestic market – something some steel consumers had feared.

Klotz also called on the Biden administration to end Section 232.

Recall that the Trump administration implemented Section 232 tariffs – 25% on imported steel and 10% on imported aluminum – in 2018. The Biden administration has continued the measures. But it has significantly scaled Section 232 back when it comes to US allies such the European Union, Japan, and the United Kingdom.

Michael Cowden

Michael Cowden is editor-in-chief for Steel Market Update. Cowden has covered the steel industry since 2007. He specializes in flat-rolled steel but has also reported on steel long products, steel pipe and tube, and aluminum. Before joining SMU, Cowden held reporting jobs at Fastmarkets AMM in Chicago, the Associated Press in Pittsburgh, and the Cambodia Daily in Phnom Penh. He has also worked as a copy editor and in marketing at the University of Chicago Press. Cowden has a BA in English from the University of Chicago and an MSJ journalism from Northwestern University’s Medill School of Journalism. Contact him at michael@steelmarketupdate.com or 724-759-7872.