Steel Execs Want More Protection, Less Regulation

Trade laws and energy policy top policy objectives for domestic steelmakers

Several of North America’s steel industry leaders shared a platform Monday to tout their common policy objectives as they staged a joint press conference at the American Iron and Steel Institute’s annual General Meeting. They lead with the comparative good news — U.S. steel shipments total 25 million tons in Q1 2012, and the trade association’s official outlook predicts that steel demand will strengthen in the second half so that total 2012 shipments will reach 97 million tons. That would be an increase of about 5%, noted Cliffs Natural Resources chairman Joe Carrabba – the new chairman of the AISI.

“Domestic capacity utilization rose to 79% in the first quarter, a 6% improvement from the previous quarter, when it was at 73%,” the iron ore mining executive noted. However, Carrabba said the total U.S. market share for imports of finished steel products is 23%, which presents “a significant concern” in view of the fact that domestic mill’s capacity utilization is approximately 80%. “The most recent steel import monitoring and analysis data for the month of April recorded another sharp rise in finished imports to the highest level since October of 2008,” he continued.

“We are urging the U.S. government to be more proactive regarding any surges in unfair trade that can harm our recovery,” Carrabba said.

He said the Institute is advocating that the federal government implement a “strong pro-manufacturing strategy” that would assist U.S. manufacturers to compete globally, and he listed several action items that would constitute such a policy: establishing fair trade standards by enacting and enforcing strong trade laws; avoiding excessive federal regulation that reduces competitiveness; investing in transportation and infrastructure; developing tax policies that support globally competitive U.S. manufacturing; implement a “national energy strategy that promotes development of an affordable and abundant energy supply.”

“Our primary focus in support of that is to do the following – one, enforce fair trade by keeping our trade laws strong and strictly enforced; two, encourage government to avoid excessive regulation that reduces industrial competitiveness; three, invest in transportation and infrastructure; four, develop tax policies that support U.S. manufacturing competitiveness; and, five, put in place a national energy strategy that promotes development of an affordable and abundant energy supply.

The action items had been enunciated previously by AISI’s outgoing chairman, U.S. Steel chairman John Surma and the group’s president Thomas J. Gibson, in April. At the more recent press availability, Surma emphasized the importance of promoting industrial competitiveness by emphasizing the economic opportunity of domestic natural gas resources. “Our industry's international competitiveness depends on our ability to capitalize on the discovery and development of North America's shale energy resources,” Surma said. “Our companies consume large amounts of natural gas, and we will benefit from the increased supply resulting from shale production, which keeps gas both reliable and available at competitive costs.”

Noting USS’s capital investment in supplying steel tubular products to the market, he said regulatory policies relating to shale gas should be left to individual states, for the sake of competitiveness and regulatory effectiveness. “This process is working,” according to the U.S. Steel chairman, “and regulations on shale gas resource developments are best dealt with at the state, rather than the federal level, in our view.

“On a related energy matter, our industry is concerned about new regulations from the Environmental Protection Agency dealing with electric utilities,” Surma continued. “AISI and other industrial groups are concerned that the rules could have a negative impact on the availability and reliability of electricity supply. The rules would also likely result in higher power costs, which for an energy-intensive sector such as steel would detrimentally impact the domestic steel industry's competitiveness.”

Nucor Corp. chairman and CEO Dan DiMicco took the microphone and returned to the subject of the domestic steel industry’s global competiveness. Noting the steelmakers’ role in the domestic manufacturing recovery, he said that the federal government's “approach to trade policy is critical to our global competitiveness. Our priorities are to expand rules-based free trade, keep strong our laws against unfair and illegal trade, and injurious surges, strictly enforce trade agreements, and combat Chinese currency manipulation and other protectionist foreign government policies,” DiMicco said.

“The fact is, U.S. steelmakers and their workers can compete with anyone in the world on any level as long as we have a level playing field,” he said. “But we cannot compete against governments that rig the market to their advantage. That's why strong U.S. anti-dumping and countervailing (duty) laws provide essential discipline against unfair and illegal trade.”

DiMicco offered particularly pointed arguments against China's state-owned enterprises, which he said “have advantages that most shareholder-owned companies do not. They get access to massive and often illegal subsidies, such as cheap capital from state-owned banks. They get free land and subsidized energy. These protectionist trade practices create one-sided market distortions. It's OK if the product is produced and sold at home, but when it's exported, it's another matter, and it goes against country and WTO rules and laws if exported.”

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