July 4th Not Necessarily a Holiday for the US Steel Industry

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Spend Matters, our sister site, penned a July 4 piece today examining a number of examples of offshore production moving back to US shores. We can’t think of anything more patriotic than that — however, we don’t think the US steel industry finds itself in a particularly patriotic mood.

The first example involves the San Francisco-Oakland Bay Bridge, as this recent New York Times article aptly titled the situation: “Bridge Comes to San Francisco with a Made-in-China Label“. The second example involves some shifts in imports for key steel products. Some of the import upticks coordinate with auto production (despite slow June sales numbers) along with key raw materials including slabs, billets and booms, but some of the largest percentage gainers include plate, tube, mechanical tubing, cold rolled sheet and line pipe.

Bridge to Nowhere

First, we can’t resist making a few comments on the San Francisco Bay Bridge. We’d love to better understand the negotiation process and bid documents prepared for the State of California. The Times article references two points worthy of comment here. These points include the following:

  • “On the reputation of showcase projects like Beijing’s Olympic-size airport terminal and the mammoth hydroelectric Three Gorges Dam, Chinese companies have been hired to build copper mines in the Congo, high-speed rail lines in Brazil and huge apartment complexes in Saudi Arabia. If one didn’t know better, one might assume the Chinese “won these contracts based on merit. In fact, not too many countries have invested in the Congo (heck US companies aren’t even allowed to buy metals there). China State Inc. has ensured its victories on these projects
  • “American steelworker unions have disparaged the Bay Bridge contract by accusing the state of California of sending good jobs overseas and settling for what they deride as poor-quality Chinese steel. Industry groups in the United States and other countries have raised questions about the safety and quality of Chinese workmanship on such projects. Not to take a pro-labor union stance here but the evidence suggests some quality issues with metals, take for example this steel grating story and other metal imports from China.

But what we find particularly interesting (if not downright hypocritical) involves the way San Francisco (arguably a ‘green hub’) completely disregarded its own penchant for sustainability in deciding to outsource the lion share of the project (including all of the steel) to the Chinese. (Since most Chinese steel production comes via BOF production methods, we know the carbon footprint of sourcing from China would have well exceeded that same footprint in the US.) What’s good for the goose ought to be good for the gander, but not in this case.

Steel Imports Alive and Well

Not to merely pick on China, other steel import trends also tell an interesting story. This month’s Steel Import Monitor highlights a few product categories with significant percentage (and volume) changes sure to raise a few eyebrows. In particular:

  • A nearly 700% increase in line pipe coming from Greece from 1100+ tons in March to 9000+ tons in June
  • A 447% increase in line pipe coming from the Ukraine from 2100+tons to 11000+ tons
  • A 447% increase in sheet, steel and galvanized coil from Germany from 902 tons in March to 5000+ tons in March

Energy Market Demand

Clearly, energy markets have come alive in recent months, pitting imports against domestic producers. No example highlights this trend more than US imports of Korean plate:

Will the domestic steel industry file an anti-dumping petition? We don’t know, but the chart above looks a bit out of whack to us. Stay tuned!

–Lisa Reisman

Comments (2)

  1. Al says:

    The steel market is poised for a big rebound this year. Three years of slow production will see a major turnaround that will surprise many. In the US , US Steel and AK Steel have huge potential . US Steel has everything it needs for success and AK is also right there albeit a couple of strategic acquisitions would benefit them greatly. If I were AK I would purchase the Hamilton mill from US Steel to give then the added slab capability and also a good presence in the automotive market. US Steel would also benefit as they could process the slabs into coils at the under utilized Lake Erie hot strip mill for the galv lines that AK would have in Hamilton. There just needs to be some fine tuning and partnerships /co-ventures.

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