Roaming the halls of power

Steel is not produced in Washington, but representatives from many of the largest steelmaking firms in the United States have been spending time there to lobby on behalf of their industry.

Over the last year, U.S. mills have been operating at a capacity rate of just under 77 percent. While that is not disastrously low, steel executives have been making the case that a handful of policy changes could boost that percentage while also protecting profits that allow the industry to reinvest and remain competitive.

The fortunes of the steel recycling sector are tied in part to having a strong domestic steel industry. Even processors that export benefit from strong local demand, which can boost ferrous scrap prices for shippers in all U.S. regions.

Preference for protection

The Washington-based American Iron and Steel Institute (AISI) regularly comments on government trade data concerning steel imports. When import figures rise, AISI typically warns that it considers the situation bad for the U.S. economy.

In September, Steel Dynamics Inc. (SDI), Fort Wayne, Indiana, petitioned the U.S. Department of Commerce and the International Trade Commission to apply antidumping duties against imports of corrosion-resistant flat-rolled steel (CORE) from Australia, Brazil, Canada, Mexico, the Netherlands, South Africa, Taiwan, Turkey, the United Arab Emirates and Vietnam.

Additionally, the steelmaker is petitioning for countervailing duties against CORE imports from Brazil, Canada, Mexico and Vietnam.

SDI President and Chief Operating Officer Barry Schneider says that between the first half of 2023 and the first half of this year, CORE imports from the 10 countries mentioned in the antidumping petition increased 57 percent, from less than 1.25 million tons to almost 2 million tons.

“The surge of unfairly traded imports of CORE has had a significant negative impact on the domestic steel industry’s volume, prices and profits, necessitating these cases,” Schneider says.

CORE steel is used in the production of automobiles, appliances and for certain construction applications. It can consist of hot-rolled and cold-rolled steel that has been coated (galvanized) with zinc. SDI says the present annual U.S. market demand for these products is more than 20 million tons, and it has invested to serve that market.

“[SDI] has invested $3.7 billion in our steel divisions since June 2019, including investments in a new state-of-the-art 3 million-ton electric arc furnace (EAF) flat-rolled steel mill; four flat-rolled galvanizing lines with Galvalume capability; and three flat-rolled paint lines,” says Christopher Graham, senior vice president of SDI’s Flat Roll Steel Group.

The world’s largest steel producer, China, was not named in the petition. Suspicion exists, though, that steel from China at times is shipped to other countries, including Mexico, before being forwarded into the U.S. market.

The Organization for Economic Cooperation and Development, based in Paris,and Luxembourg-based metals producer ArcelorMittal are among those expressing concern that China’s steel sector has been built to overcapacity.

In comments accompanying its earnings report in August, ArcelorMittal described current global steel market conditions as “unsustainable.”

“China’s excess production relative to demand is resulting in very low domestic steel spreads and aggressive exports; steel prices in both Europe and the U.S. are below the marginal cost,” the firm says.

In September, Washington-based law firm Wiley Rein LLP issued a report focusing on the recent history of three Chinese steel producers, pointing to examples of what policy analysts consider unfair subsidies and support measures that have helped them.

Preventing subsidized steel imports is a common policy request made by producers in the U.S. This year, the competing interests of America’s two remaining blast furnace/basic oxygen furnace (BOF) steelmakers also have had metals producers and lawmakers interacting regularly.

Differing merger views

Beginning in late summer 2023, the fate of assets operated by Pittsburgh-based U.S. Steel Corp. has drawn the attention of both the metals industry and officials staking out positions.

Interest in the proposed purchase of U.S. Steel by Japan-based Nippon Steel Corp. (NSC) has reached the top in Washington, prompting statementsfrom President Joe Biden, former President Donald Trump and Vice President Kamala Harris.

Whether the takeover of U.S. Steel by an overseas company is tied to national security has been a topic of discussion in Washington. Even though Japan has been a U.S. ally since 1946, opponents of the merger have raised the issue.

Among those opposing the deal are the United Steelworkers (USW) and U.S. Steel rival BOF producer Cleveland-Cliffs, which made a bid for U.S. Steel and enlisted the USW as an ally.

The NSC deal has been approved by U.S. Steel shareholders and by regulators in Europe and Mexico, where U.S. Steel has operations and assets.

In the U.S., however, it has run into barriers tied to the U.S. presidential election plus Senate races and others in states where U.S. Steel, Cliffs and the USW all have a considerable presence. As of mid-September, it seemed the acquisition process could remain on hold beyond the November election.

NSC and U.S. Steel have made many appeals to politicians and employees that the NSC transaction offers the best path forward to keep U.S. Steel’s mills operating and healthy.

Cliffs CEO Lourenco Goncalves, meanwhile, has made it clear the firm still is interested in acquiring U.S. Steel should the NSC deal be denied. Goncalves and representatives from the USW have presented a united front and made pledges that mills will continue to operate under Cliffs management.

Speaking up for recycling

Trade and merger activities are not the only policy issues on steel producers’ minds, particularly for the recycled-content electric arc furnace (EAF) operators that comprise the membership of the Washington-based Steel Manufacturers Association (SMA).

In September, an SMA delegation met with government officials, including United States Trade Representative Ambassador Katherine Tai and representatives from the U.S. Environmental Protection Agency and the Office of Climate Policy to advocate for policies that are favorable to recycled-content EAF steel production.

SMA board Chairman Ty Garrison of Texas-based CMC led the delegation, which included SMA board member and Global Steel Climate Council Chair Greg Murphy of North Carolina-based Nucor Corp., SMA board member Ed Goettl of Texas-based Optimus Steel, SMA President Philip Bell and SMA Vice President of Government Affairs Brandon Farris.

In July, SMA joined six other organizations to urge House Speaker Mike Johnson to include the Leveling the Playing Field 2.0 Act in a proposed legislative package designed to address China’s perceived unfair trade practices, such as transshipment of heavily subsidized steel products that are then “illegally dumped in the U.S. market,” Bell says.

Also in July, Bell testified before a Congressional committee regarding the Buy Clean Act, urging the General Service Administration (GSA) guidelines for the program not to set a second, less strict emissions standard.

“We have serious concerns with the GSA’s implementation of its Buy Clean program and their adoption of a dual emissions standard for steel,” Bell said. “A single standard is simple and transparent. A single standard is fair to all producers and encourages innovation and investment. A single standard results in the greatest emissions reductions and will further our global advantage on low emissions steel. A single standard is the only way to comply with the statute.”

The author is senior editor with the Recycling Today Media Group and can be reached at btaylor@gie.net.