Heavy imports hinder domestic steel industry

2013-03-23T15:24:00Z Heavy imports hinder domestic steel industryBy Sonali Basak and Aubrey Pringle Medill News Service nwitimes.com

Despite recovery in key sectors like housing, automotive and energy, trade imbalances continue to plague the North American steel sector, industry leaders contended at a high-profile gathering recently.

"There is a tremendous invasion of products into this country," said Mario Longhi, executive vice president of United States Steel Corp., adding that U.S. Steel thinks the trade issue is "not being handled fairly."

Industry leaders, meeting in Chicago, all sounded the same theme that greater pressure must be placed on the federal government to create what they characterize as a fairer environment for North American steel.

Steel executives from across the continent met March 13 to discuss the current state of the industry – as well as its future – at the ninth annual Platts Steel Markets North America Conference.

Like many industries, steel has been struggling since the 2008 recession. Steel executives claim unfair trade practices have offset any positive effect that growth in steel-using sectors might have on the steel industry.

In a presentation on the relationship between the auto and steel industries, P.K. Rastogi, head of global automotive marketing for ArcelorMittal USA, pointed out that auto production in North America has almost doubled since 2009 as demand for vehicles is rising.

"It's amazing how the industry has recovered," Rastogi said.

Competition from imports

The auto recovery coupled with higher numbers of housing starts and the abundance of cheap North American natural gas should equate to a surging domestic steel industry. Unfortunately for domestic producers, this new demand is increasingly being met by foreign producers. North American steel executives voiced their frustration with the import pressure.

"This is our time," said Mike Rehwinkel, CEO of Chicago-based Evraz North America Inc. "Foreign imports should not enjoy this" domestic resurgence.

"I go to Home Depot in Detroit and I see a pipe from India," said Sergei Kuznetsov, CEO of Severstal North America Inc. "There's something wrong here."

Besides India, imports from Vietnam, Saudi Arabia, South Korea and Taiwan have increased exponentially in the last few years, officials at the meeting emphasized.

Industry officials are set to appear before Congress next week in a push for trade practices that they say would be more fair to North American steel mills.

"We have to be loud in Washington," Rehwinkel said. U.S. Steel's Longhi reiterated the need "to create a wake-up call."

Steel producers also stressed the need for Congress to invest in infrastructure as the U.S. economy rebounds. "Businesses are demonstrating a tremendous ability to navigate troubled waters," Longhi said. "For that, we're going to need infrastructure in place."

Rebuilding, rebranding

Infrastructural improvement has been a key element on Congressional agendas since President Obama's first term, and a federally funded expansion could be the next opportunity for growth in the steel industry. Executives are optimistic about the timeline for such projects.

"Infrastructure spending is going to happen," Rehwinkel said. "I think it's going to happen soon."

Steel executives predict that with the current trade situation, 2013 promises to be a difficult year industry wide. The five-year outlook is positive, however, due to projected growth in the non-residential construction sector and anticipated progress in Washington concerning the trade issue.

Leaders also identified a growing need to transform the way steel is perceived. As a substance that is often taken for granted, attendees said, steel should be marketed to consumers as a highly green product. Unlike aluminum, steel is 100 percent recyclable. It is also a longer-lasting alternative to wood.

Industry leaders agreed that getting young people to work in the steel industry has been a challenge, since more fashionable industries like the automotive sector tend to snatch up the nation's brightest young minds. Steel executives said they are placing a high priority on recruiting the industry's next-generation leaders.

Longhi spoke passionately about the ways steel is scientifically and technologically advancing, describing it as "an extraordinary product" with an "infinite lifestyle."

Rebranding is "not just important for our economic future, but important for the security of our nation so we are no longer dependent," the U.S. Steel exec said.

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