Nucor CEO Skeptical That China Will Cut Excess Steelmaking Capacity
02/26/2016 - Unfairly traded imports, along with low oil and gas prices, have “wiped out” energy sector demand for the types of steel grades made at Nucor Steel Gallatin, Nucor Corp. chairman and CEO John Ferriola said earlier this week.
Testifying before the U.S.-China Economic and Security Review Commission on 24 February, Ferriola said the world’s excess steelmaking capacity has put domestic investments, such as the US$770 million Nucor spent in 2014 to acquire the Kentucky sheet mill, at risk.
“Although we have been able to keep our no-layoff practice in place for our nearly 500 Nucor Steel Gallatin teammates, they are bringing considerably less money home to their families each week. That is not the case for every steel company,” he said in written testimony.
Ferriola was one of several executives, academics, analysts and lawyers who testified during the daylong hearing before the commission, which was created by Congress to keep tabs on national security implications arising from the economic relationship between the U.S. and China.
The hearing was called to examine China's shifting economy and the implications for the U.S.
Ferriola said that to bring capacity back in line with demand, the governments of major steel-producing countries must commit to exiting the business.
“No ownership, no control, and no subsidies,” he said.
Ferriola also said he and the industry are skeptical of China's recent statements that it would cut between 100 million and 150 million tons of capacity.
“In fact, the exact opposite may occur,” he said.
“Recent reports suggest that Chinese state-owned enterprises are buying and restarting money-losing capacity. Without meaningful trade relief as the hammer, China will always prioritize its internal need to maintain employment and Communist party control,” Ferriola said.
He said China should give a specific capacity-reduction plan, and the U.S. should verify that the reductions are being made.
“Although we have been able to keep our no-layoff practice in place for our nearly 500 Nucor Steel Gallatin teammates, they are bringing considerably less money home to their families each week. That is not the case for every steel company,” he said in written testimony.
Ferriola was one of several executives, academics, analysts and lawyers who testified during the daylong hearing before the commission, which was created by Congress to keep tabs on national security implications arising from the economic relationship between the U.S. and China.
The hearing was called to examine China's shifting economy and the implications for the U.S.
Ferriola said that to bring capacity back in line with demand, the governments of major steel-producing countries must commit to exiting the business.
“No ownership, no control, and no subsidies,” he said.
Ferriola also said he and the industry are skeptical of China's recent statements that it would cut between 100 million and 150 million tons of capacity.
“In fact, the exact opposite may occur,” he said.
“Recent reports suggest that Chinese state-owned enterprises are buying and restarting money-losing capacity. Without meaningful trade relief as the hammer, China will always prioritize its internal need to maintain employment and Communist party control,” Ferriola said.
He said China should give a specific capacity-reduction plan, and the U.S. should verify that the reductions are being made.
