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Springfield, MO

Steel import tariff dries up domestic supply

Some steelworkers cite shortage on ‘panic buying’

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For Springfield metalworker Merle Ash, it took only rumors of new a U.S. tariff on imported steel to toss the industry – even its domestic resources – into the apparent throws of stressed supply and spiked prices.

“Everyone purchasing steel has panicked,” said Ash, co-owner of Ozark Mountain Steel Inc., as he explained a resulting dig to buy up available steel stocks. “And the mills ... they’re not taking any orders.”

The resulting spike in prices isn’t the heart of the matter, Ash said. The issue lies with where buyers like him can even get steel.

On March 8, President Donald Trump exercised authority under the Trade Expansion Act of 1962 to impose a new 25 percent tariff on steel imports, excluding Canada and Mexico, as well as a 10 percent tariff on imported aluminum.

U.S. Customs and Border Protection was then set to begin collecting the added steel duties on March 23, according to the U.S. Department of Commerce.

At Ozark Mountain Steel, Ash’s company is in the business of so-called cees and bees – two of many shapes of pressed steel – as well as angles, beams and, really, “all things metal,” as its website touts.

Two issues come to mind for the Springfield business owner when talking steel duties.

First, Ash said, the new tariff has resulted in at least a 25 percent hike in steel prices – domestic and imported. But still, it’s not the main issue as the hustle of spring and summer construction nears.

“There is a tariff now where there wasn’t,” Ash said. “So, I mean, the price has increased, but the mills have an influx of orders, and they can’t handle them. For the second quarter, they’re not taking orders.”

For the third quarter that starts in July, he said, “They’re sold out.”

Ash, who declined to disclose the mills with which he deals, said his company now remains at the sellers’ mercy. Steel, he said, is now bought from wherever possible.

At Springfield’s Fimco Steel Supply Co., Vice President and General Manager Nathan Arbeitman said he’s not yet turning away customers from the structural steel and pipe producer.

Nonetheless, Arbeitman said the company is dealing with price gouging that changes on a daily basis.

In January, well before the steel tariff, a quarter-inch-wide, 4-by-8-foot plate of steel sold for about $170, Arbeitman said. The same steel plate, he said, now runs upwards of $260.

“There’s no certainty of what’s going to be available in the short term,” Arbeitman said. “When this [tariff] happened, there wasn’t an abundant supply.”

He recalled steel tariffs of up to 30 percent emplaced in March 2002 – and removed in December 2003 – by President George W. Bush.

At that time, Arbeitman said, domestic steel was abundant. Now, with limited steel, the timing of the new tariff could prove even more detrimental for the industry. It’s construction season.

“Well, No. 1, here we’re at springtime, and all of the sudden you’ve got the idea of homebuilding, all of the concrete work and so forth,” he said. “Production usually starts to pick up once springtime hits, and if there isn’t an abundant supply to help with that demand, then it’s going to make (steel) worth gold.”

Others, however, are feeling less pinched on steel supplies.

“Prices have gone up, substantially,” said Falcon Steel Inc. owner and President Terry Heinz. “I don’t know that I could say there’s a real shortage yet.”

“I think there’s a perception that there might be a shortage, but I think that’s caused by some panic buying,” Heinz added. “If you’re afraid that you’re not going to be able to get supply, you tend to overbuy.”

He said steel prices generally have increased by 25-40 percent. Another issue, Heinz said, is the time it takes for an order to arrive. Those lead times are increasing, he said.

As far as the new steel tariff, Heinz described the new duty as more of a “ratcheted up negotiation,” not necessarily a standard tax on imports at the border.

For instance, Heinz said, an undisclosed supplier of German steel recently notified his company of an incoming shipment. The supplier offered Falcon Steel the option to cancel its order if the U.S. tariff was imposed at port, he said.

“That boat came in last week – you know, it had $2-$3 million worth of steel on it – got in, and no tariff – came in as planned,” Heinz said. “Two more boats that they have are on the way. There’s a possible tariff that could be imposed, but that hasn’t happened yet.”

All told, Heinz said buyers of foreign steel might be more hesitant to place orders, but the real effect of the tariff is that it essentially forced consumers to buy up domestic steel.

“That’s really what’s going on right now,” he said.

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