PJSC Novolipetsk Steel is biding its time to make "decent" investments in the U.S. in light of 25% tariffs on imports imposed in 2018, according to the Russian steelmaker's controlling shareholder and chairman, Vladimir Lisin, Interfax reported May 31.
NLMK suspended plans to inject US$664 million into its U.S. operations in May 2018 while it applied, unsuccessfully, for exemptions from the tariffs imposed at President Donald Trump's behest in March of the same year. The U.S. Department of Commerce refused to exclude NLMK from the tariffs again in April 2019.
Lisin does not see the need to ask the Commerce Department for another exemption from the 25% tariff on slabs unless the situation in the American market changes, he told journalists at a conference in the company's hometown of Lipetsk on Friday, according to Interfax.
The company said at its capital markets day in March that it would target high-value-added sales growth of 1.7 million tonnes by 2022 through investing in rolling operations in the U.S., Russia and Europe.
Though NLMK was planning to improve certain kinds of rolled products in the U.S. and invest about US$400 million, according to Interfax, it will pause for now, Lisin said.
"The projects are ready, we know the cost, [and] what needs to be done," said Lisin, who is one of Russia's richest men. NLMK is constantly monitoring the situation, he added.
The tariffs will lead to a deficit of semifinished products in the U.S., raising prices, Lisin said. Prices are rising for semifinished and finished products, which are already 40% more expensive than in Europe, he continued, adding that restrictions will lead to a shortage of slabs in the U.S.
NLMK's U.S. operations, in Indiana and Pennsylvania, have been buying slabs from Brazil and the U.S. since tariffs disrupted supplies from Russia, according to CEO Grigory Fedorishin, Interfax reported from the sidelines of the conference in Lipetsk.
"We live in the market at the moment, every two months we decide again where to source materials from," Fedorishin said. The steelmaker could look to Canada and Mexico for slabs after the U.S. lifts tariffs against its two neighbors this month, the CEO said.
"We are looking very carefully at our strategy, how to be successful in the [U.S.]," Fedorishin concluded.
"Relations [with the U.S.] will probably improve at some point, and everything will get back on track," Lisin said. "It's a question of time."