‘The world is not going to grow itself out of the excess capacity situation. So, for those harping about China cutting capacity, it’s not going to happen.
Big River Steel LLC is gaining business from automakers concerned about the reliability of a North American supply chain based on aging integrated mills, the companys top executive said.
Some of the worlds automotive manufacturers (are) beating a path to our door despite the Osceola, Arkansas-based steelmaker being in business for little more than three years, Big River chief executive officer David Stickler said in mid-November during a keynote address at American Metal Markets 5th DRI & Mini-mills Conference in Chicago.
When I ask why ... its clear that they are concerned about the long-term viability of their current North American supplier base.
Thats because some U.S. mills are relying on 70- to 80-year-old technology and make the argument in Washington and elsewhere that they need Chinese steelmaking capacity to be cut in half. Those same mills also make the case that they need tariffs to be in place forever in order to survive and avoid bankruptcy, he said.
The world is not going to grow itself out of the excess capacity situation. ... So for those who are out harping about the Chinese needing to cut their capacity in halfits not going to happen, Stickler said.
World steelmaking capacity totaled 2.39 billion tonnes last year, up 1.4 percent from 2.35 billion tonnes in 2015, the Organization for Economic Cooperation and Development (OECD) steel committee has said. Of that, an estimated 700 million tonnes is unnecessary, with much of the excess production capacity in China.
But China cant afford to cut capacity in half because some of its steelmakers have 100,000 or more employees, and forcing them to scale back would create social unrest. You are not going to have those people out in the street without jobs, Stickler said.
Given that reality, it is little wonder then that automakers and other end-users are spooked by what they are hearing from their steel suppliers. The situation in China also begs the question of why the U.S. needs another steel mill, he added.
The reason for this is that if you do it right, you can make a heck of a lot of money, Stickler said. And so its only a matter of time before Big River Steel will double in capacity.
Big River Steel broke ground in July 2014 and made its first coil in December 2016. Stickler did not specify when the company might double output.