The US’ agreement to remove tariffs against Canada and Mexico immediately makes North America’s steel industry more efficient, Welded Tube president and chief executive officer Robert “Butch” Mandel told Fastmarkets AMM on Friday May 17.
“It’s a big burden lifted off the steelmakers and the downstream steel consumers on both sides of the border and for all of Mexico, the US and Canada,” Mandel said after Friday’s announcement, adding that the Section 232 tariffs, which US President Donald Trump announced in March 2018, “was a lose-lose, to be blunt.”
The deal announced by the three national governments will likely restore the competitiveness of Mandel’s energy tubular products mill in Lackawanna. Production at the mill was scaled back in 2018 after it became clear that Canada would be subject to Section 232 tariffs. Pre-Section 232 employment there was 150 at its peak but fell to less than 90 later in the year, he said.
As a result of Canada’s countermeasures, energy tubular products marketed to Canadian customers were shifted to Welded Tube’s home-office mill in Concord, Ontario, and also to Welland, Ontario.
“We were obliged to move the production up to Canada,” Mandel said. “It was less efficient this way but there was no way we could afford the tariffs.”
At the Lackawanna mill, “there were expansion plans that we put on hold while these tariffs were in place,” Mandel said. His intention now is to resurrect the expansion idea now that the mill can competitively sell in both countries again.
Fastmarkets AMM’s price assessment for US domestic J55 casing was last at $1,150-1,200 per short ton fob mill, down for a third consecutive month and off from $1,250-1,350 per ton in September.
At the same time, Welded Tube’s Canadian-made hollow structural sections became more expensive for US customers as a result of the Section 232 tariffs, and prices declined in the Canadian domestic market.
Section 232 is exerting less direct influence on prices now anyway because “general market forces seem to have taken over in the past few months,” Mandel said.
Mandel was still studying an apparent mechanism in Friday’s trilateral agreement to address “surges” in import flows among the neighboring countries but his initial reaction was “I don’t think that’s inappropriate.”