June 22, 2016
 
Speakers Tell It Like It Is at Steel Success Strategies

Foreign countries are often accused of exporting their economic and social problems, along with their steel, to the United States. Some of the more eyebrow-raising comments by industry executives at the Steel Success Strategies conference last week in New York touched on that theme:

“People say we have to worry about China’s overpopulation, that they have to keep everyone working or they’re going to have a revolution. That’s nonsense when we have a revolution in the United States. Look at the streets of Baltimore, Chicago and St. Louis. These are communities that used to have steel mills. We must have the commitment and resolve to keep our worker’s safe and allow them to have jobs,” said Mike Siegal, CEO of Olympic Steel.

“China should be treated as a non-market economy. Any other outcome would be disastrous for steel,” said U.S. Steel President Mario Longhi, commenting on the debate over China’s status with the World Trade Organization. His company is currently pursuing historic Section 337 trade action against China, alleging theft of trade secrets among other violations of international law.

“You’re not just importing steel, you’re importing carbon,” noted Gerdau President Peter Campo, alluding to the critical environmental issues caused by steelmaking, and other forms of manufacturing, especially in foreign countries with little or no regulation.

According to some industry watchers, Russia has become the low-cost steel producer in the world. Among all mills, Severstal claims to lead the pack. “If all the hot-rolled coil in the world was produced in Russia, we would see $50 billion in savings,” said Severstal’s Head of Corporate Strategy Andrey Laptev. “This is just a thought experiment. It’s not our goal to do this,” he added.

“Unfortunately, there’s only one sure way to cut steel production, and that is war,” said Yurly Ryzhenkov, the CEO of Metinvest, a steel producer in Ukraine, a country whose economy has been disrupted by armed conflict with its neighbor Russia. Among the world’s 30-largest steel producing countries, Ukraine had the biggest decline in production from 2014 to 2015 of 15.6 percent.

“Is mercantilism the panacea for the steel industry? In fact, to many manufacturing companies, the answer is yes. Mercantilism has worked for those who have practiced it. Whether you like it or not, that's the way it goes,” said World Steel Dynamics Founder Peter Marcus. Domestic steelmakers in countries around the globe have historically benefited from government intervention--be it subsidies or restrictions on foreign imports--and that is likely to continue despite pleas for free and fair trade.

For more coverage of this year's AMM/World Steel Dynamics Steel Success Strategies Conference, see the July issue of Metal Center News.
 

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