In Commodity News 20/01/2017
The expected increase in infrastructure spending once Donald Trump becomes US president should be positive for US long steel producers, according to steel industry executives, although exactly how big a boost the sector will see is an open question.
For decades, investing in infrastructure was a nonpartisan issue, however in recent years it has been difficult to secure longterm infrastructure investment, Steel Manufacturers Association President Phillip Bell said Monday, speaking on a panel at SteelOrbis’ 8th Annual Rebar and Wire Rod Conference in Las Vegas.
“It remains to be seen how much will be spent, but infrastructure investment is a rare area where we may see some consensus,” Bell said.
He added that while it is easy to get both sides of the political aisle to agree that investment is needed, it is more difficult to figure out how to pay for it.
Throughout his campaign, Trump said he wanted to spend $1 trillion on infrastructure. Even if only half of that amount is spent, it would still a boon for rebar producers, said Independent Steel Alliance President Chris Casey.
US steelmaker Nucor is pleased with the president-elect’s stance on the need for increased infrastructure spending, said Eileen Bradner, the company’s senior director and counsel, federal government affairs.
Bradner said she is optimistic that financing will be figured out with the Republican party controlling both the White House and Congress. Additionally, with Elaine Chao tapped to head the US Department of Transportation, it presents an opportunity for a unique partnership as she is married to Senate majority leader Mitch McConnel, she said.
What would likely be the largest boost for rebar producers would be construction of Trump’s proposed wall at the US-Mexico border, the panel agreed. A 1,000-mile reinforced concrete border wall would require roughly 2.5 million st of rebar, Casey said. To put this into perspective, total US rebar consumption was 8.5 million in 2015 and is expected to have been around 8.9 million st in 2016, he said.
“[The wall] would have a big impact,” Casey said, but acknowledged that any planning by steelmakers for that potential project would require making a lot of assumptions at this point — the first assumption being that a wall would actually be built, and the second, that it would be built with American-made steel.
Bell said SMA would prefer to see infrastructure investments focused on more “realistic projects,” like improvements to the US energy grid or water distribution systems. Additionally, Bell said, a physical wall dividing the US and Mexico border may send the wrong message to trading partners in North America, which is the largest export market for US steelmakers.
But wall or no wall, panelists said they were optimistic that more money would be spent on projects requiring steel.
“We think longs producers should be poised to take advantage,” Bell.
Source: Platts
