NEW YORK It will take more than an improving economy to cure a global steel production glut and a "tsunami" of imports slamming the U.S. steel industry, Nucor Corp.s top executive said.
Economic growth has yet to recover to levels seen before the financial crisis and steel consumption has remained comparatively anemic, according to John J. Ferriola, chairman, president and chief executive officer of the Charlotte, N.C.-based steelmaker.
"Yet the world keeps adding steel capacity," he said during a keynote presentation June 18 at the Steel Success Strategies XXIX conference in New York sponsored by AMM and World Steel Dynamics Inc. "Excess global capacity is one of the greatest challenges facing our industry todayand it hasnt gotten any better since the global recession."
The global steel industry had more than 500 million tons of excess capacity in 2013, and hundreds of millions of tons of new capacity have been announced for the coming years, Ferriola said, meaning there could be more than 600 million tons of excess capacity worldwide by the end of 2014.
"All of that excess makes it hard to remain profitable, so pressure increases to close markets and implement protectionist policies, especially in markets where the excess capacity is supported or owned by the government," Ferriola said.
Largely due to the capacity glut, the U.S. industry is "experiencing a tsunami of imported steel"much of it dumpedeven as domestic operating rates hover at around 75 percent of capacity, Ferriola said. A system of trade free from government interference is needed to resolve the situation, he said, noting that Nucor supports free trade as long as it also is fair.
Competition increases efficiency, but companies cannot "compete against the power of entire governments," Ferriola said, adding that trade petitions were "legitimate and necessary responses to subsidized exports and dumping from nations with excess capacity."
But those laws may have failed domestic steelmakers in a reinforcing bar case brought by Nucor and other U.S. rebar producers, especially regards to imports from Turkey, Ferriola said.
Significant preliminary anti-dumping duties were levied on rebar imports from Mexico, but the U.S. Commerce Departments International Trade Administration was much easier on Turkish producers (amm.com, April 21).
Commerce said that Turkey was giving its industry energy subsidies but concluded that the subsidies were of no value, Ferriola said. "Frankly, considering the energy-intensive nature of steelmaking, it is impossible for me to swallow the logic that energy subsidies have no value."
Rebar imports from Mexico and Turkey have doubled since 2010 and "continue to surge this year," Ferriola said. With modest growth in the U.S. rebar market, domestic rebar producers should be benefiting. "But instead, the industry and its workers are being injured by dumped and subsidized imports."