US steelmakers working to pass USMCA, finalize regulations in 2020: AISI

The US-Mexico-Canada agreement is the alpha and omega -- the beginning and end -- for US steelmakers. While the end of 2019 saw the passage of the trade agreement by the House of Representatives, the beginning of 2020 brings the push to get the agreement passed by the Senate, Thomas Gibson, CEO of the American Iron and Steel Institute, said in a recent interview with S&P Global Platts.

Gibson said the USMCA, which was passed by the House December 19, creates greater opportunities for US steelmakers and is expected to have a lot of support in the Senate.

"[USMCA has] a lot of changes that the industry has been advocating for for a long time and we're very encouraged that it becomes the model for future trade agreements," Gibson said.

The agreement aims to incentivze the use of North American steel in automotive production in addition to strengthening rules of origin and regional value content requirements. It also includes provisions to promote increased cooperation and information sharing among the three North American governments to address circumvention and evasion of trade remedy orders.

While Gibson sees the agreement as a positive for North American steel, by its nature it does not address the most pressing issue facing the steel industry - global excess capacity.

"It's a great start, but there's nothing in USMCA alone that is going to solve overcapacity," he said.

Gibson noted that Chinese steel production is expected to hit a record for 2019 once the final numbers are in.

"That continues to put pressure on the entire world steel trading system both through their direct imports, but also importantly through indirect imports, fabricated products, circumvention and all of the other ways their overcapacity is challenging world steel markets," Gibson said.

In October, China withdrew its participation in the G20-led Global Forum on Steel Excess Capacity, a move Gibson called "disappointing." For its part, the US government has remained committed to the forum and is meeting with like-minded governments on creating a path forward to continue the work with or without China, Gibson said.

"We continue to have a need for a place to talk about developments and policy mechanisms to deal with overcapacity and to confront overcapacity," he said.

Beyond what is happening globally, the US steel market needs to look at some of its own market opportunities, and like every year, a focus of 2020 will be pushing for robust federal infrastructure spending.

"One of the best [drivers of steel demand] out there still is infrastructure funding," Gibson said. "... It would be great if we could get one of the large infrastructure bills the president has proposed, but likely it will have to be something more incremental like a transportation bill, but even that will be a heavy lift."

However, one thing that could help move infrastructure to top of mind for lawmakers is the fact that 2020 is an election year, Gibson noted.

"I'm hoping lawmakers going back to face the voters in what appears to be a very competitive race for control of the Congress...will find it in their interest to go home with an accomplishment like a robustly funded transportation bill," Gibson said.

With 2020 being an election year, the AISI is also focusing on continuing to work with Trump administration's regulatory agencies, especially the Environmental Protection Agency, to cement some of the policy changes they have started during the first term, Gibson said.

-- Justine Coyne, justine.coyne@spglobal.com

-- Edited by Tom Balcerek, newsdesk@spglobal.com