Aug. 31, 2016
 
SMA: China Should Reduce Capacity the American Way

The Chinese steel industry, and other global suppliers, continue to look to the United States as an attractive outlet for their material. Executives with the Steel Manufacturers Association would prefer they look here for an example of how to pare their steel production glut.

The world faces a significant oversupply situation, with anywhere from 300 million to 700 million tons of excess capacity plaguing the health of the industry. China is the chief culprit, responsible for a majority of that unnecessary tonnage.

Shuttering some of that outdated and polluting steel production capacity is imperative for both China and the rest of the global steel industry to enjoy more profitable returns. It can be done, SMA President Phil Bell said in a conference call last week, and the U.S. can serve as the blueprint.

Between 2000 and 2015, the number of North American companies producing two million or more tons of steel was reduced from 22 to eight. Such an effort was done without central planning or government intervention, but through bankruptcy laws and free market principles, he said. “That’s the type of capacity reduction that needs to take place globally.”

Bell, who was joined on the call by Tracy Porter, president of Commercial Metals Co., and chairman of the SMA, believes that getting China to act requires commitment from our government leaders. It has to be a central element of multilateral trade discussions, such as the upcoming G20 summit. And the Chinese steel industry’s questionable practices have to be a key argument against the country’s desire to earn market economy status.

The two SMA executives are encouraged by the way manufacturing and trade issues have been front and center in the ongoing presidential campaign season.

“I think what you’re going to see, regardless who is in the White House, is a strong emphasis on trade enforcement and trade deals that are scrutinized more heavily and truly benefit American manufacturing,” Bell said. “This is the first time in my lifetime where you have both candidates from both political parties opposed to a significant trade deal, the Trans Pacific Partnership.”

Though the SMA has no official position on TPP, Bell said it’s hard to see how it would benefit American steelmakers. He also noted that, based on his D.C.-based organization’s knowledge of the Beltway, the current iteration of the TPP does not have the support of a majority of Congress.


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Monday, October 23, 2017