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For decades, the history of American steel has been one of job losses, plant closures and the deadly effects of foreign competition. But now the industry is seeing a comeback that few would have predicted even months ago.
Steel prices are at record highs and demand is increasing, as companies ramp up production amid easing restrictions in the event of a pandemic. Steelmakers have consolidated over the past year, giving them greater control over supply. Tariffs on foreign steel imposed by the Trump administration have kept cheaper imports out. And the steel companies are hiring again.
Evidence of the boom can even be found on Wall Street: Nucor, the nation’s largest steel producer, is this year’s best-performing stock in the S & amp; P 500, and steelmaker stocks generate some of the best returns in the index.
âWe operate 24/7 everywhere,â said Lourenco Goncalves, general manager of Cleveland-Cliffs, an Ohio-based steel producer that reported a sharp increase in sales in its most recent quarter. âTeams that weren’t used, we use them,â Goncalves said. “This is why we are recruiting.”
It is not known how long the boom will last. This week, the Biden administration began discussions with European Union trade officials on global steel markets. Some steelmakers and executives believe this could lead to an eventual removal of Trump-era tariffs, which are widely credited with spurring the dramatic turnaround in the steel industry. However, any change could be politically unpleasant given that the steel industry is concentrated in the main electoral states.
In early May, futures prices for 20-ton domestic steel coils – the benchmark for most steel prices across the country – exceeded $ 1,600 per ton for the first time, and prices continue. to oscillate there.
Record steel prices will not reverse decades of job losses. Since the early 1960s, employment in the steel industry has fallen by more than 75%. More than 400,000 jobs have disappeared as foreign competition increased and the industry turned to production processes requiring fewer workers. But the surge in prices brings some optimism to steel towns across the country, especially after job losses during the pandemic pushed U.S. steel jobs to their lowest level on record.
âLast year we got laid off,â said Pete Trinidad, president of United Steelworkers Local 6787, which represents approximately 3,300 workers at a Cleveland-Cliffs steel plant in Burns Harbor, Indiana. âEveryone has been offered jobs. And we are hiring now. So, yes, it’s a 180 degree turn.
The rise in steel prices is in part the result of the national rush for commodities such as lumber, drywall and aluminum, as companies ramping up operations grapple with meager inventories , empty supply chains and long waits for raw materials.
But the price increases also reflect changes both in the steel industry, where bankruptcies and mergers have reorganized the country’s production base in recent years, and in Washington, where trade policies, including tariffs imposed under President Donald Trump, have changed the balance of the country. power between buyers and sellers of American steel.
Last year, Cleveland-Cliffs bought the majority of US factories from global steel giant ArcelorMittal, after buying ailing producer AK Steel, to create an integrated steel company that owns iron mines and blast furnaces. . In December, US Steel announced that it would take full control of Arkansas-based Big River Steel by buying shares in the company it did not already own. Goldman Sachs predicts that by 2023 about 80% of US steel production will be controlled by five companies, up from less than 50% in 2018. Consolidation gives companies in one industry greater capacity to sustain prices while maintaining strict control over production.
High steel prices also reflect the United States’ efforts to reduce steel imports in recent years, the latest in a long series of steel-related trade actions.
Steel, due to its historic concentration in key electoral states such as Pennsylvania and Ohio, has long been the focus of politicians. From the 1960s, as Europe and later Japan emerged from the post-war years as major steel producers, the industry pushed – and steadily gained – import protection under the administrations of the two political parties.
More recently, cheap imports from China have become the main target. Presidents George W. Bush and Barack Obama both imposed tariffs on Chinese-made steel. Trump has said steel protection is a cornerstone of his administration’s trade policy, and he imposed much higher tariffs on imported steel in 2018. Steel imports plummeted by ‘about a quarter from 2017 levels, according to Goldman Sachs, opening up an opportunity for the domestic market. producers, who capture prices up to $ 600 per tonne above those on world markets.
These tariffs have been relaxed somewhat by ad hoc agreements with trading partners such as Mexico and Canada, and by exemptions granted to businesses. But the tariffs are in place and continue to apply to imports from major competitors in the European Union and China.
Until very recently, there were few developments in the steel trade under the Biden administration. But on Monday, the United States and the European Union said they had started talks to resolve a conflict over steel and aluminum imports that had played a major role in the Trump administration’s trade wars.
It is not known whether the talks will lead to any significant progress. They could, however, make politics difficult for the White House. On Wednesday, a coalition of steel industry groups, including steelmaking trade groups and the United Steelworkers – whose leadership endorsed President Joe Biden in the 2020 election – called on the Biden administration to ensure that the tariffs remain in effect.
âEliminating steel tariffs now would jeopardize the viability of our industry,â they wrote in a letter to the president.
Adam Hodge, a spokesperson for the Office of the United States Trade Representative, who announced the trade talks, said the talks focused on “effective solutions that tackle the global overcapacity of steel and steel. aluminum from China and other countries while ensuring the long-term viability of our steel and aluminum industries. “
While producers rejoice, the price increases are painful for steel consumers.
At its plant in Plymouth, Michigan, Clips & amp; Clamps Industries employs approximately 50 workers who stamp and shape steel into components for cars, such as metal props which are used to hold the hood open when checking for oil.
âLast month, I can tell you, we lost money,â said Jeffrey Aznavorian, president of the manufacturer. He attributed the loss, in part, to the higher prices the company had to pay for the steel. Aznavorian said he was concerned his company would lose ground to foreign auto parts suppliers in Mexico and Canada, who can buy cheaper steel and offer lower prices.
And it doesn’t look like things are going to get any easier for steel buyers anytime soon. Wall Street analysts recently lifted forecasts for US steel prices, citing the combination of industry consolidation and sustainability, at least so far, of Trump-era tariffs under Biden. The two helped create what Citibank analysts called “the best backdrop for steel in a decade.”
Leon Topalian, chief executive of Nucor, said the economy was showing an ability to absorb high steel prices, reflecting the high demand nature of the recovery from the pandemic. “When Nucor is doing well, our customer segment is doing well,” Topalian said, “which means their customers are doing well.”
For their part, steel workers are enjoying a respite after being severely affected by the pandemic.
The city of Middletown in southeast Ohio was spared the worst of the recession, which killed 7,000 iron and steel production jobs across the country. Middletown Works – a sprawling Cleveland-Cliffs steel plant and one of the region’s largest employers – has managed to avoid layoffs. But as demand has increased, activity and hours at the plant pick up.
âWe’re doing really well,â said Neil Douglas, president of Local 1943 of the International Association of Machinists and Aerospace Workers, which represents more than 1,800 Middletown Works workers. The factory, Douglas said, is struggling to find additional workers to hire for positions that could make up to $ 85,000 a year.
And the buzz at the factory is spreading throughout the city. Douglas says he can’t walk into the building center without meeting someone from the factory who is embarking on a new home project.
âYou can certainly feel in the city that people are using up their disposable income,â he said. âWhen we’re running well and making money, people are going to spend it in the city, that’s for sure.
This article originally appeared in The New York Times.