SMA Reports on Hot-Button Issues

The SMA panelists agreed that the initial accelerated timeline did cause some disruption in the market and may have contributed to the surge in steel imports experienced this year. They noted the investigation was self-initiated by the administration and took the steel industry by surprise, although steel manufacturers welcomed the help.

When asked if Section 232 tariffs would be a temporary or a long-term solution, Bell noted it was too early to speculate and that there will always be regions and countries looking for ways to sell their steel in the U.S. “232 will help, but I think we will always have to be vigilant fighting this issue,” he said.

Questions about NAFTA revealed that no one is really sure what will happen. The panelists were encouraged that the NAFTA negotiations are off to a good start. The overall net impact of NAFTA has been good for the domestic industry, they said, but the agreement is more than 20 years old and needs to be re-evaluated and modernized. Rules of origin and U.S. domestic content in automobiles are a high priority for the administration and steel industry. The panel pointed out that the rhetoric about the “worst deal ever” and “we need to blow up NAFTA” has toned down since the campaign and election. “The idea is take the time to get this right,” said Bell.

Peter Campo, SMA first vice chairman and president of Gerdau Long Steel North America said that steel companies were solicited for their opinions regarding NAFTA, and negotiators appear to be addressing those issues.

Infrastructure spending continues to be a concern for the steel industry. Everyone wants to approve it, but the problem is how to pay for it, said Campo.

An infrastructure bill would be a good opportunity for the administration and Republicans to “put some points on the board,” said Tracy Porter, SMA chairman and executive vice president of CMC Operations.

When asked if there is a back-up plan to exert influence on infrastructure if a bill is not passed this year, Bell said the industry is always lobbying and “steel continues to box above its weight as an industry.”

Despite the administration delaying Section 232 and putting infrastructure on the back burner, mills are still investing in their future and are more efficient, safer and productive than ever, said Bell. SMA represents EAF steel producers.

The panel touched on the topic of market economy status for China, which SMA does not support. “It is pretty clear that China is not a market economy and should not be granted market economy status,” said Bell. The U.S. is not likely to change its mind on that, and the European Union appears to coming around to the U.S. point of view. The problem, said Bell, is there are others countries that are silent on the issue, or in favor, hoping to attract foreign investment from China.

The shortage of graphite electrodes used in the EAF steelmaking process is real, said Bell, however there is no evidence it is impacting shipments or creating problems for steelmakers in meeting customer demand. Driving the shortage is the environmental reforms on needle coke from China, as well as the hurricane impact on the Texas manufacturing facility. The question is whether the shortage will be sustained, said Bell.