| 12:37 PM EST

American Steel

There has been a disruption in the entire world economy for steel because the amount of over-capacity has had huge consequences on the steel industry elsewhere: “The export-oriented Chinese industry is undermining steel economies around the world.”


Facebook Share Icon LinkedIn Share Icon Twitter Share Icon Share by EMail icon Print Icon

“Unlike the auto industry, we’ve never fully recovered from the Great Recession,” says Thomas J. Gibson, president and CEO of the American Iron and Steel Institute (steel.org).  He enumerates: in the three years before the economic body slam of 2008-09, the U.S. steel industry shipped, on average, about 107-million tons of steel. He says that when all of the accounting is done for 2018, the shipments will be on the order of 95-million tons. Realize—and there are people in the auto industry who realize this without the needed suggestion—that tariffs on steel imports to the U.S. went into effect in April 2018 (the end of March, but effectively April), so there was a decrease in imports that helped boost the amount of domestic production in order to reach that number.

Another set of numbers to take into account is 78 and 87. According to Gibson, the capacity utilization in the U.S. steel industry in 2018 was (again, the full assessment hasn’t been made as we talk with Gibson) 78 percent. The 87? The percentage of U.S. steel industry capacity utilization in the three years prior to the Great Recession. “A healthy industry isn’t hovering around 80 percent. It should be higher, especially in an economy this strong,” Gibson says.

On the subject of capacity, Gibson says that in 2000, there was the ability to produce 130 million tons of steel in the U.S. The amount today is on the order of 122-million tons.

What happened?

“China happened,” Gibson says. He says that back in 2000 China had steel-making capacity on the order of 150- to 160-million tons. Today, he says, it is “well over a billion tons—much of it export-oriented.”

As a result, there has been a “disruption in the entire world economy for steel” because the amount of over-capacity has had huge consequences on the steel industry elsewhere: “The export-oriented Chinese industry is undermining steel economies around the world.”

While some might argue that it simply could be the steel manufacturers elsewhere are just more efficient than those in the U.S. and consequently their prices will be lower, Gibson ticks off metrics from man hour per ton to amount of energy per ton of steel produced to say that the U.S. industry is a benchmark when it comes to efficiency. What’s more, he points out that there are the raw materials for the production of steel in the U.S. low-cost energy, a skilled labor force, and available capital, all of which should make the U.S. “the best place to produce steel in the world.”

Yet as the official verbiage has it, “On March 8, 2018, the President issued Proclamations 9704 and 9705 on Adjusting Imports of Steel and Aluminum into the United States, under Section 232 of the Trade Expansion Act of 1962, as amended (19 U.S.C. 1862), providing for additional import duties for steel mill and aluminum articles, effective March 23, 2018.” A 25 percent tariff on imported steel.

Gibson says that there is a human cost to the over-capacity of steel. He says that there was a real surge in off-shore products coming in starting in 2014 which resulted in the loss of jobs: “We lost, at its peak, about 12,000 jobs.” He says that because of the renewed demand for domestic steel that has resulted from the tariffs, which has resulted in more shifts and plant restarts, they have “clawed back” some of those jobs, yet more than half have yet to be recovered.

But he acknowledges that like any advanced industry, the number of people who are actually working on the plant floor is greatly reduced from the number from back in the day: “These are high-tech jobs. We have highly trained operators working in controlled environments producing this steel.”

High tech is something that Gibson says is part and parcel of not only the steel industry but of what the steel industry has developed over the past few years, things like advanced high strength steel that is rated at 1,900 MPa. “The grades of steel we are talking about today didn’t exist five years ago.” He describes it as “A whole new engineered material.”

Gibson says that the automotive industry is extremely important to the member companies of the AISI. But there is another one that utilizes even more steel: construction. Just think of all of the rebar that’s used in road construction. Which brings him to another subject: “What we really need are some of the long-promised highway bills.” Driving home the substance of his point, he adds, “Just look at your roads in Michigan. You immediately know when you’ve crossed the border into the state.” And there is no arguing with that.


  • Steel, Aluminum & Sustainability

    If there’s one thing (and it may be the only thing) that the aluminum and steel industries agree upon, it’s this: We’re leaving the steel era and entering an age of automotive material options, where there are combinations of different materials, not just one dominant material.

  • What Heavy-Duty Truck Manufacturers Know About Aluminum

    While aluminum vs. steel is getting more contentious in the world of light-duty trucks, when it comes to creating structures, the heavy-duty truck people know something important about strength and mass.

  • Multiple Choices for Light, High-Performance Chassis

    How carbon fiber is utilized is as different as the vehicles on which it is used. From full carbon tubs to partial panels to welded steel tube sandwich structures, the only limitation is imagination.