Monday, 22 January 2018 16:57

Is the US Steel Industry Becoming Dependent on Russia?

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When President Trump laid out his significant objectives shortly after his January 20, 2017 inauguration, he signed a number of executive orders to ignite a reversal of America’s increasing dependence on overseas manufacturers, especially those products that would put American “blue collar” workers back on the assembly lines.

Chief among these was the revival of the U.S. steel industry, that had lost its global superiority several decades ago. Much of the emanating products would be the badly-needed steel pipelines, which had languished in the backlog of a non-existent infrastructure, waiting to be bigger and better than ever— after a hiatus of more than a quarter century or more.

Unfortunately, this idle promise has yet to gain reality, as more than half must come from a major Russian steel company, and a mix of other foreign sources.

By the end of 2017,this promise had remained unfulfilled, as have an embryonic revival of a U.S. steel industry, that provided the backbone of America’s “Marshall Plan” to rebuild the Western World, destroyed in World War II. Ironically, within the current Russian-American involvement investigation, much of current U.S. steel demands continue to be supplied by cheap foreign steel, with imports rising 24% in 2017, the greatest expansion since the end of the 20th century. To add to this embarrassment, the largest single supplier of U.S. steel imports is Evraz, PLC, Russia’s second-largest steel maker. That company has two factories in the U.S., in Colorado and Oregon, and four in Western Canada. The latter is especially deeply involved in producing steel and large domestic steel pipe.

Furthermore, Evraz won a major contract with America’s largest liquified natural gas company, Cheniere Energy, to supply the steel pipe for a 200 mile pipeline to bring natural gas from Oklahoma to the Gulf Coast conversion facilities and ports. To the Administration’s embarrassment, the resultant major U.S. partially-owned Florida-based company, Borg Steel Pipe Corporation, the U.S. producer was not able to come close to Evraz, in bidding for the $100 million contract.

In September, Commerce Secretary, Wilbur Ross, said the Administration will defer a decision to impose tariffs on foreign steel, so that it could focus full attention on tax reform. This has upset American steel executives, who are verbalizing their growing frustration with U.S. Administration promises, while planning domestic expansion, as promised by the Trump Administration.

With 2018 mid-term Congressional elections already casting their November 6 forthcoming shadows, further digression from American steel product usage could prove counter-productive to thousands of steelworkers, whose votes were instrumental in electing President Trump in a half-dozen steel producing states. The inability to fulfill a substantial steel industry comeback promise in the months ahead could instigate negative political action in states that elected President Trump in his upset 2016 presidential victory.

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Morrie Beschloss

Morris R. Beschloss is a global economic analyst, award-winning long-term top business executive, and avid blogger.

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