Heard during President Donald Trump’s session with steel executives: “What’s been allowed to go on for decades is disgraceful. It’s disgraceful. And when it comes to a time when our country can’t make aluminum and steel … I will tell you, you almost don’t have much of a country. Because without steel and aluminum, your country is not the same. And we need it.”
Such talk — and it’s not the first time the president has made such remarks — has perpetuated a myth on Main Street that the U.S. no longer has a steel industry. So, let’s check the numbers:
Myth 1: The U.S. doesn’t make steel anymore.
Fact: The U.S. produced 82 million metric tons (mt) of steel in 2017. That ranks fourth among all steelmaking countries for 2017 — behind China (832 million mt), Japan (105 million mt) and India (101 million mt).
{mosads}Another statement made by President Trump during the same meeting: “When I was in China, I said, ‘Listen, President Xi … I don’t blame you.’ If you’re able to get away with making almost $500 billion a year off of our country, how could I blame you? Somebody agreed to these deals. And those people should be ashamed of themselves, what they’ve let happen.”
It is this rhetoric that helps gives rise to:
Myth 2: America’s steel sector is getting decimated by imported Chinese steel.
Fact: In 2017, the U.S. imported 34.5 million mt of steel in total from all countries. China’s direct share of that was just 2.1 percent, or 740,126 mt. In 2016, the U.S. imported nearly 30 million mt of steel from all countries. China accounted for 789,133 mt, or 2.6 percent.
The confusion comes when muddied with this fact: China is the world’s largest steelmaking country and exports around 100 million mt to the world. Further muddying can come from this fact: Often, Chinese steel is shipped to one country and then transshipped to the U.S. or another country.
Still, it is factual to say: U.S. imports of Chinese steel did peak in 2014 and 2015 at 2.9 million mt and 2.2 million mt, respectively.
Trump again, this time on China: “What they do is they dump massive amounts of product on our country, and it just kills — it destroys our companies and our jobs. And it’s been happening for so many years, and we are not the beneficiary.”
The president added: “People have no idea how badly our country has been treated by other countries, by people representing us that didn’t have a clue. Or if they did, then they should be ashamed of themselves because they’ve destroyed the steel industry…”
Myth 3: The U.S. has not faced its steel trade problem.
Fact: Steel companies in the U.S. have a long history in litigating the unfair steel trading practices of other countries, especially in recent years. Industry producers, after petitioning the U.S. government (Commerce Department), have received many favorable rulings, claiming they have been injured by illegal trade.
As a result, antidumping and countervailing duties are already in place for 142 steel trade cases — accounting for 43 percent of all trade remedies (330 total) now in place by the U.S. International Trade Commission.
Myth 4: Steel imports are all detrimental.
Fact: The U.S. relies on steel imports to meet both qualitative and quantitative demand. In fact, the biggest U.S. importers, as a group, are several American mills themselves, which brought in 7.5 million mt of semi-finished steel last year.
Such products were further processed into finished steels. Importation of such semi-finished steel gives the U.S. domestic mills not only production flexibility but can also shave production costs.
Myth 5: The steel industry in the U.S. is uncompetitive.
Fact: Steel labor productivity has seen a more than five-fold increase since the early 1980s, going from an average of 10.1 man-hours per finished ton — the standard industry benchmark — to an average of 1.5 man-hours per finished ton of steel in 2015. A number of the most efficient mills in the U.S. can make finished steel in 0.5 man-hours per ton.
The S&P Global Platts daily price assessment for U.S.-made hot-rolled steel coil — the benchmark, bellwether product — closed Monday at $800/short ton, ex-works, unchanged from Friday, after gaining $46/st last week — as talk of tariffs began to spread.
Myth 6: The forthcoming steel tariff of 25 percent will surely lead to trade wars, higher prices, etc.
There’s too much room for confusion. The dust needs to settle a bit. First, the president said details are still being worked out. Things could change. While administration officials on Sunday’s political talk shows said there would be no country exclusions, there is room for certain steel product exemptions.
This would be a process by which companies can request a particular steel product be exempted from tariffs — if U.S. producers do not supply it.
Second, as noted above, more than 100 steel trade cases are already covered by existing duties. There has been trade tension because of these, but for the most part, affected trading partners and the U.S. have co-existed peacefully. There has been no steel-trade Armageddon.
Third, consider the big-picture numbers, empathize on a small scale: Based on the Commerce Department’s recommendations, the goal is to reduce total steel imports of nearly 35 million mt in 2017 by about 13 million mt.
But this is a world market that routinely consumes about 1.5 billion mt of steel, and 13 million mt seems fairly paltry in such context. Those tons will need to find a home elsewhere, but given improving global economies in Europe, Latin America and Asia, it’s likely such tonnage can be easily absorbed.
Assessing the smaller picture is not easy, however; hence all the trepidation. The major steel producers in the U.S. want those 13 million tons to go away. There are compelling reasons to vanquish them, as the Commerce Department and Trump have determined.
But fractions of those 13 million mt mean a lot more to many smaller companies than just an examination of the big data shows. There are small businesses — steel traders in the U.S., independent service centers, small manufacturers — who are extremely nervous about the impact.
They deserve more clarity. And hopefully, soon.
Joe Innace is the content director of Metals/Americas for S&P Global Platts. He’s also an award-winning business writer, recognized as Steel Journalist of 2015 by the World Steel Association.