Home / Main / Steel finds itself at the center of political debate in the United States during an election year

Steel finds itself at the center of political debate in the United States during an election year

Main / North America

The outcome of the US presidential election and the prospect of lower interest rates later this year are likely to have a decisive impact on demand growth and higher steel prices.

Steel finds itself at the center of political debate in the United States during an election year

Steel has become the subject of fierce political debate in the United States amid Japan's proposed takeover of US Steel by Nippon Steel. Additionally, a political campaign to protect U.S. steel producers from cheap steel imports began in March, with senators calling for protective tariffs on imports of metal products from Mexico on the grounds of protecting U.S. national security (Section 232).

Nippon Steel has confirmed that it is committed to completing its US$14.9 billion acquisition of US Steel. At the same time, current President Joe Biden said that it is “vital” for the company to remain “domestically owned and operated.” He is currently campaigning for re-election against Donald Trump, who has said that if elected he would immediately block Nippon's acquisition of US Steel.

Meetings between Japanese steel company executives and the union are reported of the United Steelworkers were short and unproductive. The union wants assurances about workers' contracts, but also raised concerns about supply chains and national defense.

Nippon's acquisition of US Steel is being investigated by the Committee on Foreign Investment in the United States (Cfius). The body is scrutinizing the potential impact of foreign acquisitions of U.S. companies to determine the national security impact of such transactions.

Senators Oppose Mexican Imports

U.S. Senators Alliance Calls for Reinstatement of 25% of Imports Section 232 duties on materials imported from Mexico. Earlier this month, they introduced a bill to Congress called the Mexico Steel Industry Stopping Growth Act.

Mexican steel producers are currently exempt from tariffs because the country is a party to the USMCA free trade agreement, which replaced NAFTA.

Limiting the volume of materials crossing the border could ease the downward pressure on prices that have driven further declines since the start of the year. In March, MEPS respondents reported “extremely short” lead times and “ample inventory” of coils and rebar. Capacity exceeds current US demand.

The American Iron and Steel Institute (AISI) supports the senators' bill. Market participants noted that the tariff could continue, although they expected the tariff to be applied temporarily for 12 months.

Rising rebar volumes

Data published by AISI in late February showed that Mexico was the third-largest source of US steel imports in January. Volumes were up 36% from the previous month to 396,000 short tons.

However, preliminary 2023 import data showed imports from Mexico overall were down 21.1% in 2023 and amounted to 4.2 million short tons. Imports of rebar and semi-finished products grew by 1,732% (to 222,416 short tons) and 108% (to 1.60 million short tons), respectively, from the 2015-2017 period that determined USMCA terms.

Steel buyers reported to MEPS that imports from Mexico would become uneconomic if Section 232 tariffs were applied. In a market where supply currently exceeds demand, the loss of this material may have a limited impact on prices.

Add a comment
Сomments (0)
To comment
Войти с ВК Войти с ФБ Войти с Яндекс
Sign in with:
Войти с ВК Войти с ФБ Войти с Яндекс