MIAMI Boosting U.S. steel
production while consuming raw materials, such as ferrous
scrap, domestically rather than shipping them overseas will
shrink the U.S. trade deficit while generating more tax
revenue, according to a joint analysis by two trade groups.
"The key conclusions of this
analysis ... based on standard modeling is that if we were to
increase steel production, it would create tens of thousands of
new jobs, add billions of dollars to GDP (gross domestic
product) and reduce the trade deficit," Alan Price, president
of the American Scrap Coalition and partner at Washington-based
Wiley Rein LP, told executives Jan. 24 during a presentation at
the Steel Manufacturers Associations (SMAs) annual
board meeting, held in Miami.
Between 2006 and 2011, U.S.
steel production averaged some 15.9 million tonnes less than
consumption each year, according to the study by SMA and the
coalition. By increasing domestic steel production to fill that
gap, some 99,000 new jobs could be created in the steel
industry, according to the study, which is scheduled to be
released in the coming days.
Increased domestic production
could reduce the U.S. trade deficit by some $9 billion and
generate more than $800 million annually in tax revenue,
according to Price.
Currently, monthly U.S. steel
imports are almost double that of U.S. exports, according to
data from the U.S. Census Bureau.
Encouraging the use of domestic
scrap instead of exporting the material could be a win-win
situation, Price added.
"Not all exports are beneficial
to the economy. In this case, increased domestic steel
production might lead to decreased U.S. scrap exports," he
said. "Overall, though, you would get a net economic benefit
because the trade deficit numbers would fall. (In addition),
steel imports would also fall by much more than the value of
scrap exports. The bottom line is that the increase of domestic
consumption of scrap would benefit the domestic scrap
Steel interests have noted that
natural gas, including shale gas, has increasingly helped U.S.
steelmakers gain an advantage over foreign counterparts in the
Steelmakers need to capitalize
on the advantage by consuming domestic raw materials rather
than sending them overseas, SMA president Thomas Danjczek said.
"The message were saying is, Why not make it
here?" he added.