Steel, Iron Ore Crisis Not Quite Over After All

8 October 2016

Tough U.S. trade sanctions on steel products from foreign countries have helped stem the tide of imports, but the U.S. domestic steel industry still appears slow to rebound.

The American Iron and Steel Institute reported this week that production through Oct. 1 this year sat at 67.17 million tons, down 1.8 percent from the 68.43 million tons at the same period in 2015, which was considered a dismal year for the U.S. steel industry and the Minnesota iron ore industry that supplies it.

The institute reported that U.S. steel mills produced about 1.6 million net tons in the week ending Oct. 1, down 4.5 percent from 1.69 million tons in the same week in 2015. The industry last week produced at 68.9 percent of its capacity, down from 70.5 percent for the same week last year.

Total industry utilization so far this year is at 71.8 percent of capacity, down from 72.1 percent at this time last year.

So why, if 2016 is seeing even less steel production in the U.S. than 2015, have some people claimed the crisis in the domestic steel and taconite industries is over?

Experts said Tuesday that’s not the case.

“No one is saying the surge is over. The surge (of foreign steel in the U.S.) is still going on,” said Thomas Gibson, president of the American Iron and Steel Institute.

Gibson was at Hibbing Taconite on Tuesday to present the institute’s 2016 Congressional Champion of Steel award to U.S. Rep. Rick Nolan, D-Crosby, who has rallied efforts to impose tough trade sanctions on steel from nations found to be illegally “dumping” their products here — selling them below cost in violation of trade laws.

Nolan was praised Tuesday for convincing the Obama administration to pursue illegal trade cases against foreign steel imports sold at below-cost prices, most of which have been successful. In some cases those tariffs have been 200, 300 and even 500 percent on specific steel products, especially from China. The tariffs and crackdown on unfairly traded steel have reportedly cut imports 30 percent. But foreign steel believed to be below cost continues to be sold in the U.S., and Gibson said more action is needed.

“We need to keep the pressure on” to get more production from U.S. mills, Gibson said.

“We’ve made progress. But this is not a victory parade. We’re not saying success has been achieved,” Gibson added Tuesday after the award ceremony for Nolan.

Steelworkers note that some 25,000 of their U.S. coworkers remain off the job. In some cases, it’s because some U.S. industry sectors are slow.

U.S. Steel’s Granite City Works near St. Louis, which makes oil industry pipeline, is idled because of the slowdown in new oil production. That’s forced the continued closure of the company’s Keetac taconite operations in Keewatin that supplied Granite City with taconite iron ore, with hundreds of Steelworkers remaining off the job in Keewatin.

Other steel-consuming U.S. industries are more robust and buying steel. But the glut of foreign steel that came into the U.S. in recent years also is having a lingering impact even after the trade sanctions were imposed, said Lourenco Goncalves, president and CEO of Cleveland-based Cliffs Natural Resources. Suppliers stockpiled that foreign steel when it was cheap, before the crackdown.

Even with the spigot closing, Goncalves said, “it’s going to take time for all that illegal steel to be flushed through the system. It’s happening. But it takes time.”

Cliffs co-owns and operates Hibbing Taconite and owns and operates United Taconite in Eveleth/Forbes, Northshore Mining in Silver Bay/Babbitt and the Tilden mine in Michigan’s Upper Peninsula.

Goncalves said that he expects more production from U.S. steel mills soon, certainly in 2017.

“As we get rid of the foreign stuff in the (U.S.) market, the buyers will have no choice (other than buying American steel). That’s when all the steelworkers will be back to work,’’ Goncalves predicted.

Until then, capacity at U.S. mills and some of the Minnesota mines that supply them will remain reduced, he said.

Nolan noted that U.S. trade laws don’t have a provision to “put that illegal steel back in ships and send it back where it came from.”

The congressman, who faces an election challenge from Republican Stewart Mills next month, said the U.S. government must continue to pursue cases against steel from other nations but noted that the U.S. must also negotiate with its largest trade partners, such as the G-20 group of nations, to stifle what he called the “ridiculous overcapacity” of global steel production. If that doesn’t happen, he said, the void left by illegal Chinese steel will simply be filled by cheap steel from some other nation.

“We need them to know that if they aren’t going to (cut back steel production) then they’re going to have to eat it, because no one else will take it,” Nolan said.

Frank Jenko, president of USW Local 2705, which represents workers at Hibbing Taconite, praised Nolan, Goncalves and Gibson for continuing to put pressure on imported steel from Asia made with iron ore from Australia or Brazil.

“All the Asians do is take their unemployment and export it here,” Jenko said of the imported steel.


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