Steel Mills

Goncalves sees more US trade actions ahead, says Nippon deal for USS has 'zero chance'

Written by Ethan Bernard

Cleveland-Cliffs’ Lourenco Goncalves thinks trade measures announced by the US government on Tuesday against China were just the opening salvo in a series of trade actions.

Case in point: The Biden administration targeted China’s “unfair” trade policies with additional tariffs on an array of Chinese-made goods – including steel, aluminum, and EVs.

“The very first thing you need to do in a hole is stop digging,” Goncalves, Cliffs’ chairman, president, and CEO said at a press conference in Washington on Tuesday. The remarks were made in anticipation of the tariff announcement during the American Iron and Steel Institute’s (AISI’s) annual general meeting.

“Today is the stop digging event. So we’re putting China on notice,” he added. “Now we need to climb out of the hole. And that will involve other people and other countries.”

Among the countries he mentioned were Japan, South Korea, and Mexico. An alleged surge of Mexican steel imports, for example, has garnered attention in Washington. And legislation has been introduced to Congress to address the matter.

Mexico is a member of the US-Mexico-Canada trade agreement of 2019, which removed Section 232 tariffs.

About the agreement, Goncalves said, in four years, “I will be very surprised, no matter if the next US president is Biden or Trump, if the USMCA will keep the ‘M.’”

“I believe that Mexico as an enabler has to go,” he added.

Goncalves also gave his views on a host of other topics – among them Nippon Steel’s bid for U.S. Steel and Nucor’s published weekly spot price for hot-rolled (HR) coil.

Nippon’s play for U.S. Steel

Goncalves thinks that the Japanese steelmaker’s proposed deal to buy U.S. Steel has “zero chance” of passing.

The pact, valued at nearly $15 billion, faces regulatory hurdles from the US government. It is also opposed by some leading politicians – including both presidential candidates – as well as by the United Steelworkers (USW) union.

Goncalves said he was not privy to the details of the deal’s status. That didn’t stop him from sharing his his take on things.

“So we’re waiting for an end. It’s like a sick patient that sits on a bed with a bunch of tubes and sensors around him. He’s still alive, but for what?” Goncalves said.

President Biden has said that U.S. Steel “should remain a totally American company” – something that has been interpreted as opposition, even if not quite explicit, to the sale. Goncalves also said he had “personal support” from former President Trump that he would, if elected, oppose the deal.

As to what comes next, and if U.S. Steel could still be sold to an American company, Goncalves said, “First things first. This deal needs to be unraveled.”

He added: “Let’s see what the board of U.S. Steel will do. We’ll be watching.”

Nippon and U.S. Steel did not respond to requests for comment by time of publication.

Nucor CSP, Cliffs monthly price

Goncalves was also asked about Cleveland-Cliffs’ decision last month to publish monthly HR spot prices.

“The fact that a competitor, Nucor, started published weekly prices made me think, ‘Let’s publish our prices every month,’ and that’s what we’re doing,” he said.

Nucor announced in April that it would publish a weekly consumer spot price (CSP) for HR.

Goncalves said of Cliffs’ published HR price, “It’s a very new thing, and we need to have a little more time to understand the impact in the marketplace.”

“At the end of the day, supply and demand is the real deal,” he added.

Ethan Bernard

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