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Trade remains high up on list of metals concerns

Keywords: Tags  steel, trade, global, Donald Trump, TPP, Nafta, Dan DiMicco, China Mexico

Global steel competition, concerns about overcapacity, unfair trade practices and potential new export opportunities frequently are weighed into day-to-day moves that steelmakers consider.

When making decisions about production, marketing, expansion, acquisitions, products, research and development and a whole host of additional business issues, global competition and trade are never far from the minds of steel executives.

But early this year optimism is as high as it has been in a long time, as the U.S. metals sector welcomes the start of the Donald J. Trump administration and what it may mean for domestic manufacturing in general and metals makers in particular.

Sentiment over the direction of the global economy had taken a downward turn the past couple of years, moderating optimism for the domestic outlook. This was based to a large degree on concerns over the impact of trade, especially less expensive foreign-made steel and other metals.

But President Trump won the election thanks partly to protectionist trade positions, and numerous executives have expressed the view that they believe his campaign rhetoric will become policy.

Adding to that confidence is the fact that a number of executives and lawyers with long-standing ties to the steel industry have been and are expected to continue to be a vital part of the new White House’s take on trade, manufacturing and American commodities and materials. Key figures include former Nucor head Dan DiMicco, steel financier and industry veteran Wilbur Ross and several high-profile trade attorneys and economists who have successfully tackled steel-related issues in recent years.

Since the election, prices are higher and first-quarter order books are overflowing. Meanwhile, executives have praised Trump’s plans for fiscal stimulus, corporate tax reform and deregulation.

The new administration believes it can attract manufacturing jobs back to the United States by scrapping multinational free-trade deals, including the Trans-Pacific Partnership (TPP) and the North American Free Trade Agreement (Nafta).

But as a number of sources have told AMM since the election, there also is some skepticism out there.

“There’s a big difference between what’s said during the campaign and actual governance. (Trump) does have the advantage of (the Republicans) holding both houses of Congress, but the global economy is a complex machine that can’t be fixed with 140 characters,” one U.S. base-metal trader said.

“Metal prices are up and (equity) prices are moving higher, so industry seems to be on board for now. But there are still so many landmines that the new administration could trip over in 2017. (Trump) wants to pressure China and Mexico, but at the end of the day, no one wins in a trade war,” another trader added.

Meanwhile, trade rulings that have emerged in the waning months and days of the Obama administration have been welcomed as potential signs of even better things to come.

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