WCA July 2018

From the Americas

until later this year. (“Why Steel Could Continue to Post Massive Gains All Through 2018,” 18 th April). Optimism was also apparent in a new Deutsche Bank research report on the American steel industry, cited by 24/7 Wall St . The bank makes the case for a solid first quarter but also for 2018 overall. It expects net income to increase 28 per cent year over year to $811 million, due to improved results expected from US Steel Co and the benefits of recent tax reform. The Deutsche Bank analysts identified two companies as uniquely poised to benefit from the current scenario: Nucor (Charlotte, North Carolina), with its 23 mini-mills throughout the USA; and Reliance Steel & Aluminum (Los Angeles), the largest metals service centre company in North America.  Nucor seems set for slow but steady growth next year and beyond, especially if the huge infrastructure build-out becomes a reality. Continued demand from the rebuilding of large parts of Houston after Hurricane Harvey and storm damage in Florida could also boost the company’s prospects.  Reliance, which distributes some 100,000 metal products, does about half of its business in warehousing; the rest involves value-added processing or fabricating. The company tends to sell small spot-priced tons to customers, the majority requiring delivery within 24 hours. Dependent on imported steel and aluminium, American companies injured by the Trump tariffs find relief to be elusive The encouraging signs described in the previous two items should not be taken to mean that all is well within the USA steel sector and associated industries. Federal tariffs on imported steel (25 per cent) and aluminium (10 per cent) are disrupting business for American companies that buy those metals, and many are voicing their grievances. The Trump administration imposed the tariffs in March, asserting that reliance on imported metals poses a threat to US security. But it promptly granted temporary exemptions to several key allies including the European Union, Canada and Mexico. Hundreds of domestic companies thereupon asked the Commerce Department to exempt them, as well, from the tariffs. Steel- and aluminium-consuming companies can appeal to Commerce for exemptions, provided they can show that the metals they need are not obtainable from US producers. Once the department posts a request for an exemption online, it has 90 days to reach a decision. As of 17 th April, the department had received 2,180 requests for exemptions from the steel tariffs and 240 requests for exemptions from the aluminium tariffs, but had posted only a few dozen requests. On 18 th April, a number of small and medium-size manufacturers gathered in Washington and announced the formation of a group – the Coalition of American Metal Manufacturers and Users – to protest the steel tariff. The Associated Press economics writers Paul Wiseman and Christopher Rugaber succinctly defined its main complaints: “Rising costs. Delayed shipments. A baffling bureaucracy.” (“US Manufacturers Seek Relief from Steel and Aluminum

Steel The steel industry, a gauge of world economic health, is buoyed by investment outlays in developed and developing economies According to the World Steel Association (worldsteel), global steel demand is set to grow 1.8 per cent this year and 0.7 per cent next year. On 17 th April the Brussels-based international trade body for the $900 billion iron and steel industry forecast that global steel demand will reach 1.616 billion metric tons (bmt) in 2018 and 1.627 bmt in 2019. worldsteel represents more than 160 steelmakers, accounting for 85 per cent of global output. worldsteel director Edwin Basson told reporters in London that the relatively positive outlook is informed by growth driven for the first time in many years by investment expenditure in developed and developing economies. The association sees steel demand growth in developed economies of 1.8 per cent this year and 1.1 per cent next year, and growth of 4.9 per cent and 4.5 per cent this year and next in emerging and developing economies, excluding China. “The exception to the rule is China,” said Mr Basson. “We think China is going to have sideways [growth] this year and actually decline next year.” Specifically, worldsteel expects steel demand in China, which consumes half the world’s steel, to remain flat at 736.8 million metric tons (mmt) in 2018 and fall two per cent to 722.1 mmt in 2019. This is to be expected as Beijing continues to steer the country away from investment-led toward consumption-led growth, producing a mild deceleration in growth in the world’s second-largest economy. “But consumption in China will be strong for years to come,” said Mr Basson. “We’re not concerned.” Reporting from London, Maytaal Angel of Reuters pointed out wordsteel’s warning of downside risks to its forecasts, including rising inflationary pressure, tightening of US and EU monetary policies and escalating trade tensions. Although, she wrote, “it expects as regards the latter that cooler heads will prevail in the end.”  worldsteel also said that demand in India – the world’s third-largest steel consumer and the industry’s best hope for growth, after China – is set to grow 5.5 per cent this year. The association sees India’s steel demand growth at six per cent in 2019. In the USA, a huge infrastructure build- out makes for a sunny outlook for steel companies “The upswing in construction and the beginning of what could be the biggest infrastructure projects in the United States since the 1950s have provided the steel industry with a very positive performance profile over the last year.” Noting that steel pricing is substantially higher, Lee Jackson of the financial news site 24/7 Wall St also pointed out that many US mills are not expected to fully realise the increases

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Wire & Cable ASIA – July/August 2018

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