Tag: US Steel

Trump Signs Memo Mandating American-Made Steel for Pipeline Projects

Trump Signs Memo Mandating American-Made Steel for Pipeline Projects

In addition to executive orders essentially reviving the Keystone XL and Dakota Access pipelines this morning, President Donald Trump signed a memorandum that will require the secretary of Commerce (his nominee, Wilbur Ross, still awaits confirmation) to come up with a plan to mandate American-made steel for all new, expanded or retrofitted pipelines in the U.S. The plan is due in six months.
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“Going to put a lot of workers, a lot of steelworkers, back to work,” Trump said after signing the memo. According to the memo, “produced in the United States” shall mean:

  1. With regard to iron or steel products, that all manufacturing processes for such iron or steel products, from the initial melting stage through the application of coatings, occurred in the U.S.
  2. Steel or iron material or products manufactured abroad from semi-finished steel or iron from the U.S. are not “produced in the U.S.” for purposes of this memorandum.
  3. Steel or iron material or products manufactured in the U.S. from semi-finished steel or iron of foreign origin are not “produced in the United States” for purposes of this memorandum.

Trump also urged the chief executives of the Big Three U.S. automakers to build more cars in the U.S., pressing his pledge to bring jobs to America and discourage Ford Motor Company, General Motors and Fiat-Chrysler Automobiles from investing in Mexico.
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Trump has threatened to impose 35% tariffs on imported vehicles and opened the White House meeting with General Motors CEO Mary Barra, Ford CEO Mark Fields and Fiat Chrysler Automobiles NV CEO Sergio Marchionne saying he wants to see more auto plants in the U.S.

Supreme Court Blocks EPA Clean Power Plan While Legal Challenges Proceed

Supreme Court Blocks EPA Clean Power Plan While Legal Challenges Proceed

The Supreme Court has blocked the EPA Clean Power Plan and U.S. steel shipments ticked up in December, even as they lost ground from 2014 on the entire year.

Supreme Court Blocks Clean Power Plan… For Now

The Supreme Court has blocked President Obama and the Environmental Protection Agency‘s new climate rules for power plants, dealing a major blow to the president’s climate agenda.

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In an order released Tuesday night, the court said it is placing a stay on the EPA’s Clean Power Plan to cut carbon pollution from power plants while industry and state lawsuits move forward. This is not unexpected, as the rule — currently being challenged by 29 states and several industry groups — will be heard at the D.C. circuit court in June and could go through appeals that could last more than a year after that.

The length of the appeals process is important because the High Court granted the request in a 5-4 vote on Tuesday night, saying the rule was on hold until the circuit court reviews it and all Supreme Court appeals are exhausted. The court’s four liberal justices dissented from the decision.

The rules would have required existing electricity generating utilities to reduce carbon dioxide (CO2) emissions by 32% in the next 15 years. The Court “stayed” a decision on implementing the rule while it considers the legal challenges.

White House press secretary Josh Earnest said in a statement that the administration disagrees with the order, but “we remain confident that we will prevail” when the rule is argued on its merits.

That stands in stark contrast to the statements from the 29-state majority challenging the law and the industry groups that have joined the lawsuit.

The American Iron and Steel Institute (AISI) released a statement saying it applauded the decision. Wisconsin Attorney General Brad Schimel (R.), one of the 29 attorneys general challenging the rule, took his applause a bit further.

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“It is an extraordinary action for the Supreme Court of the United States to grant a stay and is telling of the obvious illegality of the rule,” Schimel said in a statement. “It’s imperative that we fight back against the federal government’s intrusion into the affairs of the State of Wisconsin.”

Steel Shipments Up in December, Down for the Year

The AISI also reported that for the month of December, U.S. steel mills shipped 6,556,342 net tons, a 1.5% increase from the 6,457,870 nt shipped in November 2015, and a 17.8% decrease from the 7,978,310 nt shipped in December 2014. Shipments for the full year 2015 were 86,546,657 nt, an 11.9% decrease vs. full year 2014 shipments of 98,248,666 nt.

Life is Getting Tougher for US Steel Producers With Imports Rising as Demand Wanes Elsewhere

Despite falling raw material costs, figures posted by U.S. Steel underline the damage imports are having on the US steel industry.

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The WSJ reported U.S. Steel posted a 34% decline in revenue and a $261 million loss in the latest quarter, up from a $18 million loss for the same time last year.

Falling Prices, Rising Surpluses

Steel prices have continued to fall, just as my colleague Lisa Reisman has been predicting for the last year. As demand has suffered, cutbacks in the energy sector, particularly for drill pipe, and imports have risen with a stronger dollar and growing surplus in the global steel market. Capacity utilization in the US market is down to 72.5% according to the American Iron and Steel Institute, a sharp fall from the same period last year, with even that number looking optimistic compared to reports in Bloomberg which suggest it could now be below 70%.

[caption id="attachment_57254" align="aligncenter" width="550"]Steel Coil Expect shipments of steel into the US to stay high so long as the dollar retains its strength against other currencies.[/caption]

As Bloomberg reported last week, the amount of imported steel used in the US market has swelled from 28 to 33% since last year as the economies of major producing countries like China, Russia and Brazil have slowed and producers have sought more exports. Nucor Corp., the US’s largest and most efficient producer, warned as far back as March that its first quarter profit would be as much as 71% lower due to the exceptionally high levels of imports flooding into the market.

It’s not that overall steel demand in the US is depressed, demand grew 13% in 2014 to 118 million tons, although the cutbacks in shale oil and gas drilling in 2015 will have hit those with a specialty in oil country goods this year. Steel producers gross revenues are down as much due to falling prices, HRC has fallen 25% in the last twelve months to around $476 per ton today.

They’re Coming to America, Today…

The US market is all the more vulnerable because of its standout strength in demand while other markets have waned. China is down for the first time since the ’80s and weaker currencies in Russia, Ukraine and Brazil have allowed steel producers in those locations to compete against US steel producers burdened by a stronger dollar. Even Europe, where demand has turned a corner and is picking up this year, the weak Euro has allowed steel producers there to compete in the US and take some market share.

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US Steel producers are lobbying government to mitigate the rise in imports as most observers expect the dollar to get stronger over the next 12 months as the Federal Reserve raises rates ahead of the rest of the world. Currency will remain a challenge for domestic steel producers as will the number and diversity of suppliers seeking to sell into the domestic market.

Week-In-Review: How The Domestic Steel Industry Finally Won in Washington

Week-In-Review: How The Domestic Steel Industry Finally Won in Washington

The US Steel industry has long said that a wave of cheap and illegally subsidized imports is crushing its ability to compete.

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While not turning a blind eye to the situation, Washington has not been as responsive to the situation as many in the domestic steel industry would like. The lobbying efforts of domestic steel have largely fallen on deaf ears when it comes to enforcing existing trade laws and placing tariffs that would be punitive enough to stop foreign nations such as China from overproducing.

Yet, today, a key bill supporting tougher anti-dumping enforcement has passed the House, has a path to passing the Senate and even more customs protections could be passed as early as next week. All from a Congress known more for not passing legislation than passing it. How did this happen? First, let’s see how we got here.

WTO Claims Chinese Imports Aren’t Subsidized

Some relatively modest tariffs were revoked a year ago when the World Trade Organization said the US broke the rules for imposing duties on Chinese steel products, solar panels and other goods.

The WTO’s judges said that under the 1964 Marrakesh accords (which also set up the WTO) countervailing duties can only be levied when there is clear evidence that state-owned or partially state-owned enterprises passing on the subsidies are “public bodies.”

The panel found that Washington had produced insufficient evidence to prove subsidization, and was also at fault in its calculations of the value of the subsidies to Chinese firms. This was a very novel reading for the WTO as there is…

Actual Proof That Chinese Steel is Subsidized

Last year, and now, evidence exists that Chinese steel is subsidized on the state and national level and exports are sold below cost.

This history of ignoring evidence is why we didn’t expect big things for steel this week. Maybe more ambiguous language about actually enforcing existing law as a sweetener in the Trade Promotion Authority bill that both the president the republican congress support, but nothing more.

How, then, did steel become the big winner?

TPA Goes Down in Flames

When democrats in the House refused to approve TPA it looked like the bill, that would ensure an up or down vote for future trade agreements such as the Trans-Pacific Partnership, wouldn’t move forward.

When TPA was separated from a worker aid package for those displaced by future trade deals known as Trade Adjustment Assistance, we still didn’t think it would result in help for domestic steel, yet competing interests that put free-trade Republicans and the Obama administration on one side and more liberal democrats on the other worked in the industry’s favor.

Long Live TPA

TPA, once separated from TAA, passed the House and then the Senate. It still looked like more trade deals and no help for steel or US manufacturing. But with TAA still stuck in the House, guess what the perfect sweetener to get democrats on board become? Support for the US steel industry. The Congressional Steel Caucus is a bipartisan group that spans several key states. Senators and congressmen and women from the midwest, south and southwest coalesced around their support for local steel.

TAA Passes With Stronger Steel Support

Not only did the House leadership promise new safeguards for the steel industry as part of the revamped TAA bill that passed yesterday, but a customs enforcement bill that would force US Customs and Border Protection to enforce anti-dumping laws as written also passed both houses earlier in the week. It awaits a conference committee negotiation, one that the American Iron and Steel Institute favors the Senate version of the bill in. Everything’s suddenly coming up steel.

TPA passed both houses by midweek and TAA passed the Senate and, after being sweetened with support for the steel industry, the House yesterday. Even more customs enforcement protections are still waiting in the conference committee.

“We commend the House for passing legislation today that will improve the effectiveness of our anti-dumping and countervailing duty laws to combat unfairly traded imports,” said Thomas Gibson, president and CEO of the AISI. “These modifications to the trade laws come at a critical time for the steel industry, as we are currently faced with a surge in steel imports that are causing injury to the domestic industry, including significant reductions in domestic steel production and job losses. We look forward to President Obama quickly signing this bill into law.”

It’s about time.

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US Steelmakers Seek Anti-Dumping Relief Against 5 Countries

US Steelmakers Seek Anti-Dumping Relief Against 5 Countries

Six steelmakers with major US operations filed a trade complaint Wednesday seeking punitive tariffs for alleged unfair pricing of imported steel from China, India, Italy, South Korea and Taiwan.

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The suit, which concerns corrosion-resistant steel used in automobile and construction industries, is the first salvo in the campaign this year by the beleaguered US steel industry to protect itself against a record flood of imports.

The steelmakers are U.S. Steel Corp. , Nucor Corp., Steel Dynamics Inc., ArcelorMittal USA, AK Steel Corp. and California Steel Industries. All are based in the US except multinational ArcelorMittal, the world’s biggest steelmaker, which is based in Luxembourg and London but owns big mills in Indiana and elsewhere in the country.

US Geological Survey Says US Mines Produced $77.6 Billion in Minerals Last Year

US Geological Survey Says US Mines Produced $77.6 Billion in Minerals Last Year

Today in MetalCrawler, the value of mined minerals from the US increased last year and a steel major moved further into the automotive market.

US Mining Values Increased in 2014

The Mineral Commodity Summaries, an annual report from the US Geological Survey, was released yesterday.

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This year’s report said the estimated value of mineral raw materials produced at US mines in 2014 was $77.6 billion.

The domestic minerals mining industry is a major stimulant of the US economy. The estimated value of minerals produced at mines increased by $3.3 billion in 2014 and during the year industries utilized those minerals to add more than $2.5 trillion to the US gross domestic product (GDP).

U.S. Steel Acquires Rest of Double Eagle Steel Coatings

United States Steel Corp. acquired the remaining shares of Double Eagle Steel Coating Co., a steel coating company it owned as a joint venture with AK Steel, a further step in the Pittsburgh steelmaker’s efforts to win over more of the automotive industry. The Pittsburgh Business Times originally reported the acquisition.

AK Steel will receive $25.2 million for its half of the joint venture and its 700,000-ton electrolytic-galvanizing line. U.S. Steel had owned 50% of DESCO with the other half owned by AK, which acquired its shares in July 2014 along with other facilities and joint ventures when it acquired Severstal North America’s operations in Dearborn, Mich.

Morningstar: Iron Ore Prices Will Stay Low

Morningstar: Iron Ore Prices Will Stay Low

Morningstar‘s new report “Strike While the Iron is… Cold,” claims that iron ore’s new normal will mean lower steel prices and a flatter cost curve for the major steel producers.

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Morningstar Research Analyst Andrew Lane wrote that, relative to other industries in the basic materials space, the steel industry exhibits a very flat cost curve.

With Automotive Light-Weighting, AK Steel and Nucor Are Not Bedfellows

With Automotive Light-Weighting, AK Steel and Nucor Are Not Bedfellows

Has aluminum or even carbon fiber eaten steel’s lunch in the auto sector? Some say yes, and according to this cleverly titled article, “Steel is Cooked if this Auto Trend […]

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