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15 Feb 2017 | 10:31 UTC — Insight Blog
Featuring Tom Balcerek
What some are describing as the Trump Factor appears to be emboldening US steel producers to embark on new capital projects.
Since the November 8 election of Donald Trump as US president, several mills have announced restarts of idled operations as well as major mill upgrades and expansions.
Trump’s steel-friendly administration is boosting confidence on both the supply and demand sides, the former via the likelihood of more or continued import restrictions and the latter by way of a generally more optimistic market and the possibility of huge infrastructure and pipeline projects, not to mention The Wall.
US Steel, whose CEO Mario Longhi is among a group of business leaders selected to advise President Trump on increasing US manufacturing jobs, announced in mid-December it would restart the 3.6 million tons/year capacity hot-strip mill at its Granite City, Illinois works. USS is also reopening its Keetac iron ore mine in Minnesota and has earmarked an extra $200 million this year for asset revitalization in its sheet operations.
Nucor, whose CEO John Ferriola is also in the select group, will spend $335 million to purchase North American pipe maker Republic Conduit and another $130 million to purchase Southland Tube, thereby expanding its presence in the structural tube market
Also announced since Trump’s election:
It’s not all smooth sailing for America’s steelmakers. The American Institute for International Steel, representing steel traders, has come out in opposition to Trump’s “Buy America” plans for new pipeline and infrastructure projects, calling the provisions “nothing more than a subsidy.”
Nucor’s CEO said a Trump plan to impose a 20% tariff on imports from Mexico, to build the southern US border wall, could prompt its 50-50 JV with Japan’s JFE Steel to scratch plans for a Mexican sheet processing plant. Nucor said the JV has options to move the project elsewhere.
There are also some general concerns about the new administration’s potential for shape-shifting, but most market observers believe Trump’s presidency will be good for American steelmakers.