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Biden’s Rustless Belt Revival Program Threatens More External Steel Temptation

Probably the biggest beneficiaries of President Biden to spend $ 620 billion on highways, roads and bridges are steelmakers.

The Brazilians, that is. And the Koreans. And Vietnamese and Taiwanese. But not so much the once powerful American steelmakers who promised to resurrect Biden and Donald Trump before him.

That is why American steel is too expensive. $ 300 more expensive, based on estimates by Bloomberg և Kallanish Commodities. It is so expensive that last week two ships transported thousands of tons of steel wire from Vietnam և Taiwan to Houston, while the US Steel Big River Steel Complex, just 10 hours from the port, does the exact same thing.

“Freight is fixed, regulated, moving,” said Anton Posner, chief executive of the Supplier Chain Involvement Consulting. “We are seeing a pickup of steel cargo from South East Asia, it is all due to demand.”

The import flood shows how difficult it will be for Biden to restore America’s rusty glory days, even after he suggested what could be the biggest breakdown for steelmakers since the construction of the Interstate Highway. And after the high cost of shutting down furnaces during the epidemic, the mills do not want to expand. They are more focused on making a profit from record prices than they can be.

There is no doubt that Biden’s stimulus will stimulate US growth. Ahead of the package, the Paris Organization for Economic Co-operation and Development (OECD) more than doubled its US growth forecast for 2021 earlier this month to 6.5%.

It is simply not clear how effective this will be in helping the rusty zone, which will help millions of Americans who have been feeling out of place for years. Some 110,000 steelmakers have lost their livelihoods since the 1990s, when steel jobs plummeted by almost 7%.

The United Steelmakers said after Biden’s announcement that large-scale infrastructure investments were “long overdue” and that aggressive investments, coupled with strong Buy America clauses, would provide a secure economic foundation for future generations. Tom Conway, president of the United Steel Company, said: “Companies will have a horizon now, and of course they need to develop their internal capabilities to invest in America’s future.”

But when it comes to new jobs, he admits, “it’s difficult.”

In Pittsburgh, where Biden announced his promotion plan on Wednesday, US Steel has no plans to return idle furnaces or hire more workers at the height of the epidemic, although the industry has long known the cost package was coming.

Asked if the company was ready to add new capacity, increase production or restart facilities, US Steel spokeswoman Amanda Malkowski said the company supported the investment in infrastructure for the benefit of the United States, “but we are not going to exploit beyond that.”

Nucor, the largest steel company in the United States, says it plans to expand its capacity at the Gallatin plant in Kentucky later this year by launching a new steel plate plant in 2022. infrastructure comes online. Cleveland-Cliffs և Steel Dynamics, two other major manufacturers, did not respond to similar requests.

At the same time, Coilplus, a steel processing plant based in Rosemont, Illinois, has to buy foreign steel because domestic factories simply cannot produce enough, said CEO Jim im Lehr. The steelmakers told him that some products would be on sale next year, meaning he would have to find tons elsewhere over the next two years, just as infrastructure projects would be available online.

As part of his $ 2.25 trillion infrastructure project, Biden also wants to allocate $ 300 billion to boost the manufacturing industry, which has urged his government to cut foreign steel tariffs.

Made in the USA, hot rolled coil steel costs more than $ 1,300, while its import costs, including tariffs and shipping charges, are about $ 1,000 per ton. The difference is the biggest reward for American steel since Trump introduced Section 232 tariffs to protect the industry in its national name.

The whole deal with Section 232 is that the mills promise, “If you protect us from imports, we will be enough to supply the market,” but the fact is that they were not ready when they were needed when the market came. back, “said Timna Tanners, an analyst at Bank of America. “This whole argument of a level playing field is no longer true, when the US price is $ 300 more than anywhere else in the world.”

Biden, steel executives պատ steelmakers want provisions that would require any federally sponsored program to use a high percentage of US-made steel, which would theoretically help get people back to work.

But American steelmakers are showing no signs of adding workers. After being hit hard by the epidemic, they do not want to risk increasing production, only to have to bear the high cost of shutting down inflatable stoves completely.

To be sure that the lead time of imported materials is four to five months, that is, it will take a lot of time for customers to finally deliver the goods shipped today. Steel executives say the large infrastructure project will not receive new orders until 2022 at the latest, as it will take several years for a design permit.

And if these are shovel-ready jobs, that is, you can recall workers to make minor adjustments to existing infrastructure, they do not require enough steel to move the needle.

Consumption of US steel this year will be about 104 million tons, and in 2022 – about 108 million tons, exceeding the supply of US steelmakers by 87 million և 91 million tons in the next two years, according to Bloomberg Intelligence analyst Andrew Cosgrow.

“If you want to revive US production, you have to make sure there is enough supply here,” said Tanners of Bank of America.

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