What’s Prompting American Steel Investments? It’s More Than Trade Policy, Executives Say
05/08/2019 - Although the Section 232 steel tariffs have given U.S. producers cover, the recent spate of capital investments is being driven more by other factors, including customer demand and good business sense, several steel executives said during the annual AISTech Town Hall Forum on Wednesday.
“We’re investing because we see demand, and see demand rising year over year. We’re certainly appreciative of what’s been taking place on the trade side, but we did not rely only on the 232 when we earmarked US$3.5 billion to go forward with into the next 30 years,” said Johnny Jacobs, vice president and general manager of Nucor Steel Kankakee Inc. in Illinois.
Among its investments, Nucor is building a US$180 million merchant bar mill at Jacobs’ plant. It also is building two new rebar micro-mills in Florida and Missouri, a $1.35 billion plate mill in Kentucky, and is expanding its Gallatin sheet mill in Kentucky.
Meanwhile, Nucor competitor Steel Dynamics Inc. is planning to build a US$1.8 billion greenfield sheet mill in the southern United States, possibly in Texas or Louisiana.
During the panel discussion, Barry Schneider, senior vice president of Steel Dynamics’ flat-roll division, said that project, too, is being driven by demand and an opportunity to fill unmet need. Steel Dynamics has said the project aims to fill demand in the southern and western U.S. flat-rolled markets as well as in Mexico.
“It’s really an opportunity to be much closer to where manufacturing is going in this country and where the manufacturing is going in North America,” Schneider said.
“This is a regional play. Being close to our customers is very important because that’s the timeliness of today’s supply chain,” he said.
To the north, plate, tube and rail manufacturer EVRAZ North America is eyeing a new state-of-the-art rail mill at its Pueblo, Colo., plant.
EVRAZ North America president and chief executive Conrad Winkler said that regulatory reform and tax policy changes, too, have enabled industry investments.
“The regulatory environment has dramatically improved, and it’s made these kinds of investments much easier to consider,” he said.
But in the end, it’s demand that’s driving the decisions, he said.
“If we’re not manufacturing in North America, we don’t need to make steel for North America. And if we have the kind of regulatory environment or the kind of tax policy that’s worse for manufacturers in the U.S. than in the rest of the world, it doesn’t really matter what happens. There’s no point in making steel if the customers aren’t going to use it.”
