Interview: US demand-side policy support key to steel's recovery: AISI CEO

Demand-side policy support measures from the US federal government could go a long way in helping the domestic steel industry recover in the wake of the coronavirus pandemic, American Iron and Steel Institute CEO Thomas Gibson said in an interview with S&P Global Platts this week.

In the short term, the current crisis in transpiration funding needs to be addressed, Gibson said. Under the current federal highway program, states have to come up with their own pool of funds in order to get a federal match from the federal highway trust fund. States typically raise these funds through gas taxes and tolling, but shelter-in place orders have people traveling less.

"Those fees have collapsed so the states have a very short-term problem right now and have asked for federal relief for about $50 billion to fill the gap in state funding this year owing to the collapse," Gibson said, adding that the AISI supports these efforts.

With construction the main industry helping support the current US steel mill utilization rates, getting these funds to states would help in the near term, as oil prices have crashed and automakers have halted production, he said.

Longer term, the AISI believes a broad federal infrastructure package should be included in the next set of COVID-19 relief bills, Gibson said, noting that President Donald Trump has voiced his support for infrastructure funding.

"I am pretty confident that ultimately, as there was in 2008, there is going to be an infrastructure component to recovery as we start passing bills that are less concerned with the immediate relief to businesses and small businesses that we have seen in the [first phases]," Gibson said.

With US auto production grinding to a halt in March, Congress may also take a hard look at how the government can help support the recovery of the auto sector, Gibson said. Following the 2008 financial crisis, President Barack Obama's administration introduced "cash for clunkers" legislation aimed at stimulating new car purchases, he noted.

The AISI is working with its partners in the auto industry to make sure they are able to open safely and allow for the supply chain to come up in a synchronized manner, Gibson said.

Ford on Thursday hosted a call with media to outline the steps it is taking to boost safety and health protocols as it looks to restart production in the US. The company said it plans to take a staggered, progressive approach to reopening, though no target dates were provided.