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EAF producers expect Trump bump

President Trump’s first days in office have proven fruitful for the steel industry, and his stated policy goals should present further boosts down the road, according to top steel executives.

Thorsten Schier
American Metal Market

DALLAS — President Trump’s first days in office have proven fruitful for the steel industry, and his stated policy goals should present further boosts down the road, according to top steel executives.

“I think this optimism that we’re seeing is a very good thing. The reason people are so excited is the focus on the economy, job creation, the manufacturing industry and investment in infrastructure,” Charlotte, N.C.-based Nucor Corp. executive vice president James R. Darsey said Jan. 26.

“And people understand that and that (it) provides Americans opportunities. It provides domestic manufacturers opportunities. We had a seven- or eight-year void where we heard about climate change and other things,” he told attendees of a news conference held during the Steel Manufacturers Association’s (SMA’s) winter board meeting in Dallas.

Domestic steelmakers now expect to see higher duty margins assessed in trade cases, according to Tracy L. Porter, executive vice president of operations at Irving, Texas-based Commercial Metals Co. “President Trump is saying what we’ve been saying for a very long time” in terms of trade.

Another area where electric-arc furnace (EAF) steelmakers could benefit is a relaxation of environmental regulations, according to Porter. “We can talk ourselves back into a prosperous economy if people have a level of confidence that (Trump’s policies) are going to go forward,” he said.

For example, domestic EAF producers have been “taking a pounding” from environmental regulators in recent years despite being the most efficient producers in the world, Porter said. He believes a more “common sense” approach to regulation will return under a Trump presidency.

The SMA is “cautiously optimistic” about the Trump presidency, Philip K. Bell, president of the Washington-based organization, said during the conference. “Steelmakers are very pragmatic people. And while we see stock prices soaring to record levels, we also see capacity utilization still in the 70-percent range,” Bell said.

And some of Trump’s policies will need bipartisan support that will take some time to garner, Porter noted. “It takes Congress to do a lot of these things.”

Finally, steel imports are still quite high despite having come down from record levels, and circumvention of duty orders is another key challenge for steelmakers, Bell said.

But that could change. “We’ve got a leader that is focused on enforcing the trade laws that we have. In the past, part of the decisions were politicized,” Darsey said.

On the other hand, executives were not too concerned about global blowback from Trump’s policies, saying that fixing the U.S. economy should take top priority.

“A vibrant economy is key to our success in the future, and we have to have a strong economy to be a leader in the world,” Darsey said.

Still, despite the improved rhetoric around trade and infrastructure, steelmakers shouldn’t rest on their laurels regarding their work in Washington, one trade attorney warned. EAF mills, which are represented by the SMA and now make up a majority share of domestic steelmaking, should continue to assert their primacy in the U.S. supply chain and emphasize the vitality of the industry.

“Don’t have a member of Congress show up when you’re not actually producing steel,” Dustin J. Painter, a partner at Washington law firm Kelley Drye & Warren LLP, told attendees during the meeting. “Let them feel the heat of what’s happening in these mills.”

Painter believes the Trump administration will not hesitate to challenge the World Trade Organization on issues such as Buy America, and may have little interest in a cordial relationship with the organization.

“They (the Trump administration) genuinely aren’t going to shy away from trade fights at this point. In fact, I think they’re looking to provoke them” in an attempt to ”completely reorganize how global trade works for the United States,” Painter said.

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