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Tariffs on Steel & Aluminum taking a toll in Wire & Cable?

The Steel and Aluminum tariffs are taking their toll all across the wire & cable industry effectively keeping China companies from importing their products to the United States.

The tariffs are 25% on Steel are most felt by large companies in the wire & cable industry who import steel to make their product or who bring in finished products as part of their wares. Examples of finished products is galvanized guy wire & stay wire, steel wire rolls, steel wire mesh, and many other types of the finished metal.

China is the #1 producer of steel in the world, making over 10 times that of the United States but the tariffs are definitely taking their toll.

Image result for steel wire and cable

Bloomberg recently published this piece:

The problem: This year, with the global economy cooling, demand — and prices — have fallen. That’s given an added incentive to EAF companies with superior profit margins and balance sheets to aggressively grab a bigger share of the market.

“Not all plants are the same,” said Mark Millett, CEO of Steel Dynamics Inc., who in November announced a new $1.8 billion EAF mill to be built in the U.S. southwest. “Not all projects are the same.”

Suppliers to blast furnaces are sounding the alarm. In laying out his vision for iron-ore miner Cleveland-Cliffs Inc. at a recent conference, CEO Lourenco Goncalves painted a bleak future for what makes up the overwhelming majority of his current customers.

That’s why Cliffs is investing $830 million in a Toledo, Ohio-based plant that will produce hot briquetted iron for electronic-arc furnaces run by firms such as Nucor, Goncalves said. They invested in the plant because “we were able to see the future of steelmaking in the United States,” Goncalves said in New York last month.

Many “blast furnaces will shut down,” he added.

U.S. Steel is trying to show investors it can move past its legacy blast furnaces. In February, it announced the restart of construction on an EAF facility in Alabama. And in May, the company said it would spend $1 billion upgrading facilities in Pennsylvania to produce more high-strength steel for the automotive industry.

“Less efficient capacity should go away, but there is no guarantee that it permanently goes away,” Bank of America’s Tanners said. “It probably doesn’t go down without a fight.”

Speaking with companies at many of the latest trade shows it sounds like everyone is digging in preparing for the long haul with no easing of tariffs any time soon.

If the trade war continues we might actually see a major shift of product not only out of China into other countries like South Korea and Taiwan, but also back to the United States.

It seems only time will tell!

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