RWR 2017: US new political landscape, new steel opportunities
The 8th annual Rebar & Wire Rod conference was hosted by SteelOrbis on January 16 and held at the Caesar’s Palace in Las Vegas. Backed by an expert panel, the well attended event facilitated a lively and informative discussion that focused on key aspects of an industry marked by transition. Industry thought leaders included Philip Bell, President of the Steel Manufacturers Association (SMA); Chris Casey, Executive Director of the Independent Steel Alliance (ISA); and Eileen Bradner, Senior Director and Counsel, Federal Government Affairs-Nucor. The final reception enabled many of the world’s leading industry participants to mingle under one roof and was reported as a favorite aspect of the conference.
In light of the forthcoming administration change in Washington, political and regulatory considerations occupied a central theme of the ongoing discussions. Nucor’s Eileen Bradner, for instance, voiced strong optimism that the incoming Trump administration would benefit the US steel industry in light of actions already taken to retain industries, list of nominees to key roles, and desire for action. SteelOrbis’ expert panel voiced the importance of tax reform and infrastructure development. Mr. Bell noted the importance of the commitment to publically fund infrastructure investments and limit the role of interest bearing financing which at times restricts the long-term perspective. Long-term projects of the magnitude needed may not immediately provide sizable benefits but can greatly support US commerce in the long run.
The industry benefits of President-elect Trump’s proposed infrastructure bill–and the overall emphasis upon buying American made products–were duly noted throughout the conference. Simultaneously, the importance of maximizing consumer welfare by maintaining the availability of fairly traded imports was also noted by Mr. Casey. While they concurred that the North American Free Trade Agreement (NAFTA) was largely successful, they also noted that it required adjustments 20 years after its original implementation.
The controversial wall–a project proposed repeatedly throughout the campaign by President-elect Trump as a means of enforcing existing immigration laws–was also briefly discussed. Despite any potential industry benefits, as due to the requirements for steel products, speakers suggested that any long-term industry benefits stemming from this hypothetical project seem negligible. As a more viable and attractive alternative, SteelOrbis’ expert panel emphasized the importance of innovation as a means of combating imports and gaining market share.
The discussion also focused on the ability of US producers to meet domestic steel demand. While SteelOrbis’ expert panel agreed that US producers possess sufficient capacity to satisfy domestic demand, they also noted that capacity utilization ratios -in the 60-70 percent in some mill types and as low as 30-50 percent in others recently- need to be around 80 percent to assure long-term profitability, employment growth, and investment in R&D. In terms of domestic policies to benefit the US steel industry, panelists echoed the importance of introducing free market principles, permitting inefficient firms to fail, and of scaling back counter-productive Environmental Protection Agency (EPA) and Occupational Safety and Health Administration (OSHA) regulations.