It was a battle of “free trade” versus “fair trade” at SteelOrbis’ 7th annual Rebar & Wire Rod conference, held February 1, 2016 in Las Vegas. Philip Bell, President of the Steel Manufacturers Association (SMA), represented the interests of US domestic steel producers; Matthew Nolan, a partner at trade law firm Arent Fox LLP, represented free trade on the other end of the stage.
Centering around imports in general and long product imports in specific, the debate explored issues including the effectiveness of existing trade legislation, alternative options for trade relief, and the role of capacity utilization and demand in the 29 percent market share steel imports overall have in the US steel market.
Bell touted the efficiency of US EAF steel producers, stating that many can produce steel at a rate of less than one man-hour per ton, whereas the World Steel Association benchmark is 1.9 man-hours per ton. Bell was also optimistic about the chances of US steelmakers increasing capacity, although Nolan stated that it would be “impossible” to reach 85 percent capacity utilization, as he has seen in many foreign steelmakers.
Nolan said that globalization is forcing steelmakers all over the world to increase competitiveness, and the US is not exempt. However, Bell agreed with Nolan that the era of integrated mills such as US Steel and AK Steel might be over—blast furnace steelmakers have been affected the most by imports, evidenced in quarterly and full-year financial results in 2015, along with widespread mill idling and layoffs.
Both debaters also agreed that Chinese overcapacity is the most prevalent problem in not only the US steel industry, but the global industry overall. If China graduates to market economy status with the WTO, it would severely affect the US’ ability to implement prohibitive duties on Chinese steel. Bell expanded on the existing influence of Chinese steel, noting that even though the US already has several duties against it, Chinese steelmakers are circumventing duties with the use of billet—China exports billet to other countries such as South Korea and Turkey, who then produces long products from the billet to be exported to the US. Bell also expressed concern about a Chinese state-run mill already operating in the US: TPCO America Corp, a pipe mill in Corpus Christi, Texas run by Tianjin Pipe.
Although there was no “winner” of the debate, several attendees stated during the cocktail reception afterward that they were glad to see representatives from both sides of the import issue coming together to state their case.