Speaking at the SteelOrbis 2019 Fall Conference & 81st IREPAS Meeting held in Düsseldorf on September 22-24, Dr. Matthias Bauer, senior economist at the European Centre for International Political Economy (ECIPE), said that the steel industry has always been a favorite sector for governments to interfere with, ranking at the top for all restrictive measures. He added that a great number of trade measures have been seen in the steel industry in the past decade, though they gained momentum after 2014.
Commenting on the US tariffs, Dr. Bauer said that it is too early to assess the medium- to long-term impacts on trade, production and prices, while adding, however, that in the first seven months of 2019 total steel imports in the US were down 10.6 percent year on year and that the US steel industry capacity utilization increased to above 80 percent - after remaining below that level for years. He went on to say that the tariffs initially provided a boost to US steel prices last year, driving the 2018 profits and cash flows of American steelmakers. He pointed out that global protectionism is caused by overcapacities in steel production and that overcapacities are unlikely to disappear soon.
The ECIPE official stated that trade restrictive measures are often considered a legitimate tool to contain imports from countries with heavy government involvement in the economy. Trade diversion and knock-on effects have a negative impact on downstream sectors’ competitiveness and innovative capacities, Dr. Bauer noted.
Regarding the rebar market, Dr. Bauer said that global rebar demand is expected to increase with an estimated demand growth in the Middle East and Africa. He indicated that one major driver of rebar consumption is construction output, especially in emerging countries, where construction output keeps rising.