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Obama re-election divides US metals industry

Keywords: Tags  steel, Gary Stein, Triple-S Steel Supply, Dave Phelps, AIIS, Obama, Romney, election fiscal cliff

NEW YORK — Metals industry participants who were hoping a change in power at the White House would stimulate fundamental change in the marketplace may have to reconsider their next moves.

On Tuesday, the nation—including many metal-heavy manufacturing states, such as Ohio and Pennsylvania—re-elected President Barack Obama over former Massachusetts Gov. Mitt Romney.

In the weeks and months leading up to Tuesday’s election, some market participants had said they were reining in capital spending as they awaited the results of the race—and subsequent clarity on the future of the regulatory climate (, Oct. 31). But while the outcome of the election is now a reality, any newfound clarity may not be enough to stimulate activity after all, some market players said.

"We now know what the government looks like. I suppose part of the uncertainty is gone," said David Phelps, president of the American Institute for International Steel. "The second part, however, about the tax and regulatory structure and how companies and employers can make decisions, that uncertainty hasn’t changed."

And while some had previously said that buying patterns and metal demand likely would pick up after the election, many agreed Wednesday that the outlook is still unclear.

"I told our people that if Obama got re-elected, there would be a major change to the way we did things. We have to hunker down (since) selling steel at next to nothing makes no sense," said a source at one steel distributor, noting that it doesn’t yet appear the outcome of the election will have much impact on buying activity. "As far as I can see, no one is buying steel. I don’t think anyone was buying before the election and I certainly don’t think anyone will buy now because of it."

Overall, players in the metals sector were mixed on how the President’s re-election would impact the sector.

"I hate to be too dramatic, but nothing that comes out of Obama is good for steel. There’s a lot of steel that goes into the coal business ... and Obama’s view of the automotive business doesn’t really include the steel industry either," Gary Stein, president of Triple-S Steel Supply Co., Houston, told AMM Wednesday. "I’m not very optimistic, and I think the fiscal cliff is a mess."

But others said they were less concerned, especially having already lived four years under Obama’s policies.

"The fact is that when I look at where my business and my industry is as opposed to four years ago, things are significantly better," a source at one aluminum service center said. "It might not be under the leadership that people are happy with, but clearly things are moving in the right direction. I do think this will help the metals industry in the long term."

"Impartially, the Obama presidency has been pretty good for business," a nickel trader said. "It’s certainly been good for investors."

A steel trader said he remains cautious but believes that the worst of the recession may be behind us. "As long as the United States doesn’t go into default, I think things will be fine," he said. "I assume the fiscal cliff will get dealt with in some fashion. I think the economy is continuing to heal and continuing to get better. With it, steel demand should also get better."

Thorsten Schier, New York, contributed to this article.

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