Maintaining protectionist measures such as Section 232 tariffs is necessary to create a “level playing field”, since steel producers in Canada and the European Union receive government subsidies for decarbonization, unlike other steel producers. United States steelmakers who are deploying their own capital, two major US steel producers said at a virtual roundtable.
Major domestic producers including Cleveland-Cliffs, Nucor Corp and Steel Dynamics Inc (SDI) hosted a virtual roundtable on Thursday, September 30, alongside members of Congress and industry leaders, making arguments for maintaining Section 232 customs duties against imports from the EU.
Cleveland-Cliffs President and CEO Lourenco Gonçalves and SDI President and CEO Mark Millett noted that Canadian producer Algoma Steel has received government funding to support its pivot to manufacturing of steel in electric arc furnace (EAF).
In addition, Millett and Gonçalves said that ArcelorMittal, the world’s largest steelmaker, based in Luxembourg, received external funding, while steel producers in the United States were reinvesting their own money in the “green” steel industry. .
ArcelorMittal has secured a € 280 million ($ 327 million) loan from the European Investment Bank to support its decarbonization targets, while the German Federal Government plans to fund € 55 million ($ 65 million ) for the construction of the first direct hydrogen on an industrial scale. the reduced iron plant (DRI) of the ArcelorMittal steelworks in Hamburg.
“I have called China the enemy since 2016, but sometimes friends are worse than enemies,” Gonçalves said during the roundtable. “We invest our own money, while they invest the government money.”
The domestic producers agreed that the huge increase in profits that U.S. steel producers saw this year was made possible in part by the implementation of Section 232 tariffs in 2018, but said most American steelmakers have announced new plans for modern steelmaking as a result of the profits.
Thomas Conway, the leader of the United Steelworkers, the largest industrial union in North America, gave his support to domestic steel producers, noting that steel plants operating at an average capacity utilization rate of 85% were the sign of a “healthy industry”.
“This industry makes money once a decade, and they reinvest it,” Conway said.
Roundtable participants also feared that the EU could become a back door for Chinese steel exporters seeking to circumvent the ban measures, especially as the US price of steel products remains the highest in the world. , attracting imports.
A recent presentation from Nucor showed that imports of steel plate to the United States declined to 13% market share in 2020 from 19% in 2015.
The U.S. Trade Representative and U.S. Department of Commerce aim to reach an agreement with Europe regarding Section 232 of the 1962 Trade Expansion Act by November 1.
Section 232 tariffs – which came into effect on March 23, 2018 – imposed a tax of 25% on imported steel and 10% on imported aluminum.
The EU suggests that the United States impose tariff rate quotas on steel and aluminum imports from the trading bloc, although switching to tariff rate quotas is not the only solution being considered, sources told Fastmarkets.
Biden administration could borrow from the US-Mexico-Canada Accord’s trade pact manual when negotiating with the EU over the future of Section 232 tariffs, a lobbying firm told Fastmarkets and government relations based in Washington DC.
Following the implementation of Section 232 tariffs in 2018, Fastmarkets’ daily hot-rolled steel coil index, the US fob plant jumped to $ 45.84 per cwt (916, $ 80 per short ton) in early July of the same year – a high of nearly 10 years at the time.
Fastmarkets’ daily hot-rolled steel coil index, fob mill US, was calculated at $ 98.08 per cwt ($ 1,961.60 per tonne) on Thursday, September 30.
The index hit an all-time high of $ 98.25 per cwt on September 20 and 27.