Episode Transcript
[00:00:08] Speaker A: Welcome to another show, Steal the Show where we're going to talk about current events and the flat roll core manufacturing section of the United States for roll formers. Specifically prepainted galvalume. Galvanized.
Yeah, this is our second show and so but anyway, yeah, we want to welcome our guests and hope these stick around for sure. We're going to talk about the debate today and tariffs anti dumping the market where we are today. And anyway, with that, here's Matt Mitchell.
[00:00:57] Speaker B: How you doing?
[00:00:57] Speaker A: Co host. Good.
[00:01:00] Speaker B: Yeah, kind of.
Things are moving along all the time. That's one thing about the steel industry. It's never quite boring. There's always something moving along. Even when it's slow, it seems like there's wheels turning in the background. So there's always something to talk about, always something to be looking for, you know, especially if you're, if you're buying or trading steel in the industry, there's always something to be learning or knowing about. It's ever changing. It's like a living organism. It's like having farm animals, you gotta, you gotta tend it all the time.
[00:01:35] Speaker A: Right, right. So our goal of the show is just to bring people up to date on the latest and greatest because just like you said, it's ever changing.
I think, you know, I joined 20 over 20 years ago and the first thing that happened to me there was a Section 201 by Bush that was lifted. And at the time everybody thought, hey, you know, now that these foreign products are going to be coming in, the price should naturally go down. But I was only 25 years old, I had no idea what I was doing and. But instead things went crazy. Right. 2005, 6, 7, all leading up to the big bang.
[00:02:22] Speaker B: Yeah, that was a really volatile time in the steel industry was the first one or the first cycle that we'd really seen probably since after World War II. Quite honestly, I don't know if there was ever a more volatile time in the steel industry than that specific timeframe that you were just discussing.
Up until that point, you know, the steel industry had kind of produced steel after wartime. Once that was kind of settled, you know, and the resources went more to the open market, steel got produced, it became a regular thing. And we started the, you know, industrial revolution, if you will.
And it seemed to progress along, but born boy, when you hit that timeframe, 2004, 2005, it's been kind of a wild ride ever since. And we're in one of those cycles right now where ups and downs and there's lots of Things that affect the market, which is obviously what we want to talk about today.
[00:03:26] Speaker A: Right, Exactly. I mean I think that's probably the, I mean basically that's our hope with the show is just to bring people up to date on what's happening because you know, just, just like you said, I mean it's one of those things to where it sounds pretty romantic. In the old days, you know, when I was a kid, hot roll was 8 cents and it stayed 8 cents forever. But yeah, since, I mean we've been doing this since I've known you for over 20 years, it's been nothing but a circus and unfortunately I hate hearing the words that oh, I've never seen this before. Yeah, but yeah, we had section 201 and then when Obama came in he had anti dumping which kind of goes, you know, to the point of our show a little bit or today's topic on, you know, I, I know that myself experienced as a trader, I would give a quote to a customer in South Carolina and the owner would at these days fax me back new offers that he's gotten from mills from China. And it was just overnight and it was very scary because number one I never heard of these mills and the numbers were really cheap. So I think we were fortunate in the fact that the government did step in, in China's case. They gave a 238% duty which basically kicked them out. And I really, I've never personally, I've never seen China or a Chinese mill enter back into the U.S. i have never gotten another fax or an email, anything citing a Chinese mill.
So you know, and that was back in, you know, 2010. And then real quick, you know, we, I think that was about it really. And then, and then we, and then we had these tariffs. Am I missing something?
[00:05:26] Speaker B: Yeah, well, one thing I wanted to bring out there, you know, I said that these Chinese mills didn't directly bring material in. However, we also know, and this is part of the equation of what's going on, we know that China found ways to route their steel into the United States and other countries like ours, but primarily into the, into the west, the United States.
I mean it's, it's a fact that China produces 50% of the world's steel production. So that's a hard thing to wrap your mind around when you've got a one single country that produces that much steel. So that kind of illustrates how important it is that one country doesn't kind of have the monopoly on the steel market if you will. And kind of dictate the price globally. I mean, when you produce 50% of the world's steel, you're kind of in that position. Right.
And so the things that we're going to talk about is how that kind of a monopoly is kind of being controlled and handled. And there's two ways to do that.
Kind of an anti dumping or in this case, we're going to talk a little bit about an executive order too.
So those have been the two methods that we've been accustomed to in our tenure in the steel industry, at least.
[00:06:50] Speaker A: Right. So let's get into the debates.
I'm really, really, really happy that our little issue, steel and tariffs, have become brought to the mainstream. I mean, it's on, they're finally talking about it and I've been complaining to you since they've been in that the repercussions that tariffs have. But so the debate started out, first question, you know, what, you know, are you going to continue which the Biden administration did continue the tariffs and you know, I think people are finally linking this stuff up that tariffs cause inflation.
Now both the question was given to Harris and she dodged it really well. Professional, professional politician. Instead of answering the question, she went right in to, let me tell you about myself, she totally dodged the question. She's dodged it and dodged it and dodged it. Where Trump, on the other hand, even in the debates, he said, look, I'm an open book.
He said, absolutely, I'm going to put tariffs in.
[00:08:10] Speaker B: Sure.
[00:08:12] Speaker A: And so I'm happy that it's just getting brought up because I do think that there are kids in school right now learning to become cooks, learning to become some type of profession. And in college they boil everything down to basically a science. And you know, the economics of, of a tariff are just that, that it will cause inflation.
The one thing I'll just say that, you know, every administration since the short time I've been alive always takes credit for the good stuff that they pass on to the next administration.
[00:08:54] Speaker B: Right.
[00:08:54] Speaker A: And then blames it on, you know, if anything's bad, blames it on their administration.
[00:08:59] Speaker B: Sure. And, and that was no different last night with the, or two nights ago with the, with this debate. It went exactly like you described. You know, they, they blame each other, take credit for each other's wins and blame each other for their losses. And so, you know, it's, it's, it's very common. But at the end of the day, what we're really trying to determine here is how much damage or effect or whatever tariffs have had on, you know, the common person, the common economy. That's kind of the question. And I think there's, there really is two sides to that.
They are inflationary, but they also, they also serve a purpose. And so it's kind of hard to decide, you know, what's the true value of it.
[00:09:56] Speaker A: Well, you know, being still guys, we like to think that we're the center of the earth. Sure.
But it's kind of true. You know, I see the Trump camp or his side aggressively going after energy cost.
[00:10:12] Speaker B: Right.
[00:10:13] Speaker A: You know, one thing, you know, here's the other kicker. I'm not going to contend that steel, the steel tariffs in aluminum tariffs were solely responsible for inflation because one thing we got to keep in mind is the mass amounts of money that was dumped into the economy.
[00:10:32] Speaker B: Right.
[00:10:33] Speaker A: During COVID Right. And, you know, if you look, I'm looking right now at the graphs, I mean, in 2020, inflation was 1.4. The following year it was all the way up to 7.7%. So it jumped real high. So I think you got a combination of a bunch of things. However, you know, today they're trying to figure out, well, how do we, how do we get rid of these inflation costs? You hear Biden or Harris talking about the, look, I'm gonna, I, I want to get rid of food costs, for example. Yeah, but how, how are you going to do that? And I think that's why both of them, especially her, kind of tiptoes around the subject because she knows that one of the answers is going to be tariffs.
And she doesn't want to tick off her base, her union base, by suggesting to the fact that she would get rid of the tariffs or at least do something about it.
[00:11:34] Speaker B: Right. And I personally don't think that they've got. When I say they, I would say probably the Harris camp.
I don't think they've got the stomach to get rid of the tariffs. Number one, I don't even know what the numbers are. As far as the income to the.
[00:11:51] Speaker A: United States from these tariffs, it's 3.5 billion.
[00:11:58] Speaker B: Yeah. I highly doubt that they're going to turn that away.
They're too used to spending money. They've proven that they're on a spending spree. We all know that it's, it's spend, spend, spend. We're going to fund all of these freebies, you know, and the money's got to come from somewhere. I can't imagine that they're just going to cut off, you know, some of their revenue, if you will. From foreign countries.
Definitely it has an inflationary element to it, although I would. I'm not an economist, but just judging by what we saw when President Trump was in office, you know, immediately following his implementation on. Of the tariffs and, you know, going throughout his presidency, there were a lot of things that, that went down in crop, in cost. So one of those was the cost of energy and fuel. I feel like he had us in a really good position there, which does offset to some degree tariffs and the inflation impact that they have on the economy.
But when you add the tariffs, when you add the price of fuel on energy, natural gas, all of those things, it just snowballs into transportation and on and on and on, and then we get these giant inflationary numbers.
[00:13:28] Speaker A: Yeah, I think, you know, again, I was surprised.
You know, that was the first thing they basically went after as far as the economy is concerned. The. He had David Cohen, the CEO of Goldman Sachs, on his team. And my understanding there was a big fight literally in the OLA office that they talk about today about. They call it the nationalist versus the globalist. And, you know, the globalists argued that, hey, if you do this, you're gonna, you're gonna, you're gonna cause inflation and you're gonna cost the US Consumer a lot of money. There was a fight, and ultimately, let's. Let's just educate our listeners real quick about section 232, what it was. Yeah, So I. I don't know if you want to, but sure.
[00:14:22] Speaker B: Well, let me introduce it just by saying that, first of all, if you want facts about it, you can go to the U.S. department of Commerce website and search section 232 investigation. And essentially it gives what the facts are or were.
So essentially, you've got the President requesting an investigation and front to the secretary, Secretary Ross, and says, hey, Mr. Secretary, I need you to investigate the effects of incoming steel imports, the price of it.
And just in layman's terms, he says, I want to know basically, has it hurt our domestic steel industry as far as the mills and their ability to have a profitable output?
But a lot of the emphasis that he put on it was about national security. And we can argue both sides of this, especially as I studied up on it.
So, you know, President Trump basically signed this order on the premise that it was a matter of national security, that we keep our steel industry in the United States healthy in case of, you know, war breaking out or needing to build the military up. That. That was kind of his big talking point all the way through this. And so, of course, they, they set the rules, they go through this investigation. At the end of the investigation, the, the president has the opportunity to either agree or disagree with the Secretary's findings. And in this case, you know, he decides to sign an executive order, section 232, which immediately implements a 25% tariff on all foreign incoming steel from all countries.
[00:16:25] Speaker A: You know, yeah, that's good.
Real quick. You know, just going back to the debates, I mean, that's one thing I don't like about. My dad told me that when Kennedy was running for president that his dad. So my grandpa told him that, look, these politicians will play Santa Claus. And yeah, we live in a country to where we don't have a king.
So every four years somebody gets up there and says, look, if you vote for me, I'm gonna give you $50,000 and this and that. And they promise you all kinds, you know, we're gonna get rid of student loan debt, we're gonna do this and do this. But the fact is they can't.
They have a process to do that and they ask to go through Congress. Which was pointed out in the debate as well. It was pointed out that Trump pointed out that, look, you're not going to be able to get rid of these tariffs. He said, we're making so much money that, that you're not going to be able to.
[00:17:26] Speaker B: Right.
[00:17:27] Speaker A: Which is another key, you know, another dangerous thing about tariffs. Just from my little layman viewpoint. I mean, I walk into guys warehouse and I see, you know, rows and rows of steel, of steel coils. How the heck are you going to pull out the rug that from 25%?
You can, you can't.
And so now we're kind of stuck with this.
I just know that. Or go ahead.
[00:17:56] Speaker B: Well, I'm just going to say, you know, and I keep coming back to this, and this is the domestic suppliers were begging Trump for help. They wanted to be able to make a profit. And I don't disagree with their plea.
And I can't even say that I completely disagree with the way it went or the it was implemented simply be because Trump basically put, he slapped it on everybody worldwide, which stopped countries like China, for example, from rerouting their material through another country, another process into the United States.
Anyway, it put everybody on a even playing field.
What I still struggle with is that the domestic suppliers took the liberty to raise their own prices up the same 25%. And so that's the part where we really felt the inflationary hit on this deal was, you know, they raised their prices. And then the thing that was kind of a stab to the heart for me is in the steel industry was here's a president who really worked hard to get some money for the steel industry and boosted it. And then when it came time for reelection, you know, the, the union camps all, they all jumped the fence and they went over to said, Biden's our guy, and raised him up, you know, like, wait a minute, who, who's the one that helped you the most? So anyway, just one more reason why I don't think the, the Harris campaign is, is going to. If she wins, I just don't see her doing that because there's, there's too much union connection there.
[00:19:50] Speaker A: Yeah, you're right. And the first thing they do, my understanding, is once they win, they go right to their, their next step, which is reelection.
[00:19:58] Speaker B: Yeah.
[00:19:59] Speaker A: So.
But, you know, real quick, though, I think that my understanding, going through all of this with section 232 before it happened, and, and, you know, a lot of this stuff is educating to me. I've never been alive. This is my first time I've been alive, first time of being in the US and seeing the way our country operates. But basically what I saw was, and the way I believe in a layman's term, the way our country works is that you set up, you have a company, and that company contributes to a candidate. That candidate hopefully wins with the money that you gave them because it's a very, very costly thing to run for office in the United States.
[00:20:42] Speaker B: Sure.
[00:20:43] Speaker A: Whoever basically, whoever makes, you know, gets the most money has a better chance of winning.
[00:20:48] Speaker B: Yeah.
[00:20:49] Speaker A: Once you win, then it's your obligation to scratch their back. Now it's time for you to scratch their back. And so what I personally saw is I saw them pull into the archives some Arcadic law. I think it was from set. I think it was used during World War II and then during the Civil War, which basically just saying, look, we cannot have a steel industry in this country that's not capable of being on a war footing. That it's not capable. If we ever did go to World War 3, we absolutely have to have enough steel to make the planes, the ships, the bullets, and have enough steel to make all the machines that make the steel and the planes and the bullets. Right. And so they did do a review, and my understanding was that the Pentagon came back, gave him the report and said, you know, currently we're fine. We're only going to need about. I think it was like 1.4% of what we're already producing even on a war footing. But the politicians being what they were, the Wilbur Ross being a former steel guy, obviously had connections. There's no doubt about it. I mean, that's the thing. And why we're doing the show a little bit is to educate people because it sounds sexy to keep the, you know, we want US Steel and we don't want to buy foreign steel and we want US Steel on our airplanes.
Right. And it doesn't sound good at all politically to say that, you know, we're bringing all the steel in and converting it into airplanes and stuff like that. But the facts are the facts. We were producing enough steel. But, and it's, it's, it's an interesting subject and it's why we're doing the show, I think, because, you know, a lot of these mills got to take responsibility for themselves. I think in some sense that, yeah, you know, if someone offshore is eating their lunch and able to produce something or equivalent at a lower price, then my thought is, then that's better for the consumer at the end of the day, which is better for my business.
Real quick, I just wanted. So this is from the Tax Foundation, Key findings on section 232, that the jobs saved, quote on the industries from the tariffs, cost consumers roughly $650,000 per job saved. This is according to the Peterson Institute and for international economics, it just goes on to say that, you know, according to the. Again, section 232 creates 4,000 jobs. On the other side of the coin, it loses 75,000 jobs.
So.
[00:23:54] Speaker B: Yeah, and I know that was, that's part of the investigation. Actually. One of the key points of the investigation is actually to make sure that the, you know, number one, one of the things is, you know, do we have enough domestic industry capacity to meet the requirements? But it does. Also in the section 232, when you read it, one of the other points is related to human material resources.
Are we losing skills and the investment of substantial employment and, you know, decreasing revenue?
You know, those are all, those are all factors that were also taken into consideration in the investigation. Now, you know, statistics are what they are. I mean, you can spin statistics so that they can, you know, basically they're for or against you, whichever. But, you know, or to make your own point. But anyway, yeah, that the, the human factor was, was really part, was, was a part of all that. And so, you know, looking at those jobs and I, I don't know, I don't know how you. There again, how do you balance that out you know, you save X amount of jobs, but it costs X amount of money to save those jobs.
You know, I don't know where you put that, but I do know this.
When we're talking about. You mentioned the responsibility of the mills.
We're. We're in that situation again here, U.S. steel. And I've kind of called them out, you know, in our conversations and with other people a few times.
I just feel like they are not upholding their end of the bargain. And so not to go deep in the weeds with this potential merger with. Or buyout, excuse me, with Nippon Steel. But basically, US Steel has made more money since the terms were implemented than its history. Right. But yet they have also mothballed more operations.
[00:26:00] Speaker A: They.
[00:26:00] Speaker B: They've shut down more capacity than any one other steel mill that I'm aware of. And right here, they're threatening that if the government doesn't allow Nippon Steel to buy them out, they're going to move their headquarters out of Pittsburgh and they're going to close facilities and cut jobs.
[00:26:19] Speaker A: Yeah. So I think just today, the.
The shutdown.
[00:26:25] Speaker B: Where.
[00:26:26] Speaker A: Where'd it go? Cliffs. Right.
Where did it go?
[00:26:31] Speaker B: These.
[00:26:31] Speaker A: Shut down. Well, they're shutting down one of their mills today, I think their number six line in Cleveland.
Did you see that?
[00:26:40] Speaker B: I didn't.
[00:26:41] Speaker A: Yeah. So, you know, again, in a nutshell, I just. And, you know, this may be wrong. I just feel like we're being a little hypocritical in the fact that we're using our government. I mean, these mills, basically, what I'm going to say is that they're not going to stop till they have a complete monopoly.
They do not want foreign competition in this country. They don't.
[00:27:05] Speaker B: Yeah.
[00:27:06] Speaker A: Period. And they're going to do everything they can do, which.
[00:27:10] Speaker B: Which you and I, we both understand that. And to anybody who might, the one or two people who might ever listen to our show might feel like we're un American. Trust us, we are not. You know, we're the first guys with our hand in the air saying, hey, we want to buy steel made in America. And we, for me, we buy a lot of steel made in America. Right. And we have done for a lot of years. However, the truth remains, and we discussed this in our first show a little bit. The truth remains that some of these foreign mills do a fantastic job of steel production, fantastic job of painting and a fantastic job of delivering product that you can use from one end to the other of the coil with very little scrap loss and very little fear of, you know, defects. And those kinds of things, those are the kinds of things that make a production company feel comfortable and make money. You know, when you're using all of your steel and you're not scrapping stuff, that's a big deal. So. Right.
[00:28:20] Speaker A: And I think again I just, what I understand about tariffs is it is a tax. It's a tax.
[00:28:29] Speaker B: Yeah.
[00:28:30] Speaker A: And it ends up hurting basically mainstream America. And again, why I said that we're the nucleus, you know, steel guys are the nucleus because at the end of the day that T shirt or that can of soup and Walmart costs more because it's a tax. I mean they end up taxing.
And then the other thing too is that it's a double sided sword because if you're going to tariff me, okay, then I'm going to, then I'm going to tariff you. And so once you start putting up these tariffs, number one, listen, when, when they put sec. When they put these tariffs on section 232, did your prices still go up or down? It went way up.
[00:29:20] Speaker B: Well, it wasn't very long till the price of steel went up.
[00:29:24] Speaker A: When they put the, when they, when they put the 25% tariff on this is why it's a tax is because the mill didn't, the mill didn't lower their price 25% or keep it the same. Everybody increased their price. And so at the end of the day the end user ends up paying that price. So somebody goes into Walmart because there's, there wasn't only, you know, section 232, there was section 301, 302 and then those ones, I mean the list of chemicals and stuff that's on the back of your shampoo that you can't pronounce and you have no idea what it is that went up in cost and therefore you're pertinent. I'm not using pert, I don't have dandruff. But the cost of goods went up and therefore it's a tax.
Well then the other side of a tariff is this, is that it creates a trade war. It's not as if a country is not going to retaliate with their own tariffs on her own. I think if you remember section 232, I can't remember what country it was, but they said, look, we're not going to buy your maker's mark anymore, we're not going to buy your whiskey.
And that affected Tennessee. Tennessee said, well wait a second, you got me, okay. And so it's a double edged sword and I Think, you know, I just kind of ended on this with the tariff subject that, that it, it ends up costing basically the middle class in this country on a tax. It ends up making inflation.
I don't think that we, in fact, we do know that we make enough steel in this country to supply our military to go to war.
[00:31:20] Speaker B: Yeah, well, and just, just to build on that, it's, it's a snowball effect too, because, yes, the, the tariff is inflationary, but it affects the cost of steel, which affects. Steel is a, is a base product. I mean, it's, it's, it's like food and water. We have to have it. And air. Well, steel is, is kind of a base product to the world. And so when the price of steel goes up, it's not only just the price of the steel itself that goes up.
It affects energy, it affects all these other sectors. And so it's a snowballing effect, not just like a single use. I mean, yeah, you could take a hit on one item. You could take an increase on one item, but we're not taking an increase on only one item. It's affecting multiple items. Eventually, it takes a little while for it to ramp up. But, you know, we could go on and on about all the other things that it affects.
[00:32:20] Speaker A: It's the nucleus. And I think that's why they went after it right away. I mean, they didn't go after cheese. They went after steel day one. And again, I just want to reiterate that, you know, well, it's a messy, it's a messy bag in the sense that you're, you're com. You're fighting countries that aren't fighting fair either.
[00:32:41] Speaker B: Yeah, well, just.
And they've been fighting this all along. I mean, there's, there's still over 150 countervailing lawsuits in play on top of section 232. So I don't want our listeners to think that, you know, Section 232 is solely the only, you know, influence on the price of steel. I mean, there's, there's countervailing and other lawsuits in play. And there has been far since way before 232 and after.
[00:33:14] Speaker A: So, yeah, and I think that, I mean, a Republican philosophy is to have a free market and if you can get a group of guys, countries in this case that will all follow the rules.
But again, this is why we're doing this show, is to educate our listeners on the facts. Because I know, you know, one quick argument is, hey, you know, these guys aren't playing by the rules or they can just go on their back and you know, dump, dump their nasty chemicals in the rivers and we can't do that. But that, that's not true. I mean I've been to Vietnam, I've seen, I mean I actually was shocked at how environmentally conscientious these Vietnam Vietnamese mills were. And the fact, the fact at the end of the day I, I want the most efficient producer to win. And as long as they're following by the rules. But the guilty party in all of this is China. Like you started to show it. They're making 50% of the world's steel. That's way too much steel. I mean real quick look, this is a good ad lib into our next subject about these anti dumping lawsuits that were brought, filed last week by the U.S.
the fact that, that these mills, the. So the market hasn't reacted at all. You looked at the futures of Hot Roll last week it was $800 for hot roll. You look at it today, it's probably down. I haven't, I haven't looked since Monday, but It was down $15. Why the heck is that? If you see the countries like Canada, Mexico, Brazil, Taiwan, Vietnam, Netherlands, United, all these countries are suddenly paused or on alert that their days are numbered, then that would obviously naturally make the price of steel go up. But instead it hasn't gone, it hasn't done anything. Well, why is that? Because there's too much steel in the market right now and not enough demand.
[00:35:23] Speaker B: Right. Well and, and that's just it. I mean I think that, you know, we talked a little bit about it before but you know, back in the days of some of these other market indicators, you know, it went by supply and demand.
When you have, when you have these things happen in the industry that are trying to artificially raise the prices of steel or another product, for example, you know, there is a supply and demand factor that's, that's involved in there. And I just don't think that the demand is holding up with some of these other things that they're trying to use to influence the price in the market. So.
[00:36:14] Speaker A: Well, real quick, I mean I want to talk about this, the anti dumping and then I want to get into the market and get some more information from you. But in regards to the anti dumping, I just want to bring our listeners up. I mean Thursday morning I woke up with the news that basically no more buying steel from Taiwan, no more buying steel from Vietnam, no more buying from Mexico, Canada, etc is pretty shocking the list. And then even the scope, because the scope was on core steel, you know, corrosive resistant steel.
And seeing the name Taiwan in there again was shocking. But you fast forward a week later to today, it seems to be very ineffective and these mills have basically blown them off. And one reason why, you know, specifically as a micro point with Taiwan, they're already under ad review.
So it's confusing because. And real quick, what's real confusing and it's something that still hasn't been answered is all right, you committed murder, I charge you with murder. Can I come back and charge you with the same murder again on the, you know, a couple days or a couple years later? I mean, basically what I'm saying is that if somebody's already under anti dumping investigation, they're already under review, then how, how are these sued again? Right?
[00:37:50] Speaker B: Yeah, they can't do it twice. And that's, that's another point, you know, when you talk about section 232 being an executive order versus these anti dumping lawsuits.
You know, in our tenure in the steel industry we've seen a lot of anti dumping lawsuits and they just, they drag on and on and on and on forever. And some are effective and some are not. And half the time, by the time, you know, the anti dumping lawsuit review is complete, why the steel has been produced, shipped at the end user, turned into product and it's down the road and some of it even to the recycling company, you know, by the time the dust settles on that. Whereas section 232 was almost immediate effect on the market and a big effect and happened immediately. So I don't know. So these anti dumping lawsuits, are they effective? Yes, to a point. But like you just pointed out, you know, if there's already a ruling through anti dumping on a country or you know, named mills and so on, to come back and hit them again with another one, like you said, they're just kind of blowing them off. It's just there's like what's the point, you know.
[00:39:17] Speaker A: Right.
[00:39:17] Speaker B: Thanks for the phone call, but we're done talking.
[00:39:21] Speaker A: Well, and again, the other thing that it does is I'll give you just a real life, real time example.
A mill in Taiwan that I'm buying from is, is obviously in Taiwan enlisted in this, this probe. Did these stop shipping to the us did they stop offering? The answer is no, they didn't. All they did is increase their price. That's it. So all that's happening with this is that you're not stopping any foreign steel coming in. Now I take that back you might, you know, the Viet, the, excuse me, the Taiwanese are well rehearsed in this exercise. They feel very confident that they're going to be able to get out of it. Whereas this is, as you both know, as we both know that we've been anticipating this for a long time with Vietnam there. I mean it's been coming, I mean I've been hearing for, for over five years that anti dumping has come into Vietnam, but here it is. And so, and I don't really necessarily oppose it because I think Taiwan is playing by the rules. In fact, you know, Cisco just came back into the market.
They've been out of the market for five years. How the heck have they been dumping? They haven't even been selling.
[00:40:42] Speaker B: Yeah, yeah. If they haven't been bringing stuff in, you know, how can you accuse them of something that they haven't been doing at all?
[00:40:50] Speaker A: So I don't know the law firm that's, you know, representing these mills, these mills being New Core Steel Dynamics, there was a bunch of use in there for union, but I mean, come on, I mean that's a waste of money. At least in my layman point of view that what are you doing? You've, you're suing somebody twice, you're wasting your, your clients kind of, it kind.
[00:41:14] Speaker B: Of makes you wonder if it's just a scare tactic in order to artificially increase the price of steel.
You know, we've seen all season long we've seen no matter what the price of steel was, there was this upward pressure on the price from, from the producers. And anytime they can get foreign mills to take a hit or an increase or up their price, then obviously the domestic mills go up with it. They never seem to come down. I only remember one point, really. I only remember one or maybe two times in the whole time that I've been doing this where you could buy domestic steel at an equal price to the foreign material. And that was for a very short time, it was very short lived.
[00:42:10] Speaker A: So you know, so we're on the west coast. I mean we're suing core, which is corrosive resistant steel, but I mean we don't even make, I mean it's not like we got a lot of capacity out here on the west for Galvalume, for example.
So there's one player in town, Steelscape, right, that's making it down to Rancho, but they're not even a fully integrated mill. So all that still is foreign in a sense.
[00:42:41] Speaker B: Well, yes, in a sense it is because they bring slabs in or Bands in from other countries. And so it's not like that truly is US made steel anyway.
On the flip side, you've got SDIA that is just getting their cent in Texas facility trucking along pretty good now where they're melting steel scrap and producing it from there. So even though you know that there's some Toyota, you know, there's foreign steel mixed in with that scrap, but still, I mean on the big picture it's more American made steel than say the stuff you're going to get off of West Coast.
But to the, to those who don't know that the steel industry is kind of split, you know, east and west, but the line isn't in the middle. The line is like all the way, you know, way, way, way offset. So. Right. They don't consider it, you know, the west coast until, or the west until you get to Colorado. Everything else.
[00:43:54] Speaker A: Till you start smelling the weed.
[00:43:55] Speaker B: Yeah, yeah, until you start smelling that funny stuff. But yeah. Anyway, the point is, is that there's different views. East and west have different views.
And so from the east they consider Texas or Sinton, Texas, which is clear to the bottom of Texas. Even they consider that a western mill and a western supplier, which in some sense it is. But you know, quite frankly it's not, it's not much different mileage wise from Sit in Texas to you know, the Rocky Mountain region versus say the Mississippi river to the Rocky Mountain region. It's, it's not that much different.
[00:44:40] Speaker A: Matt, do you think, and I should know this and we should have somebody on still SDI on here sometime. It'd be fun.
[00:44:46] Speaker B: Yeah.
[00:44:48] Speaker A: But let's say, and I. Because I love it. I love the whole concept of, and it's, it's an awesome thing to see, to see old steel picked up by a crane put into a pot and come out a long line of beautiful galvan. There's nothing more cool.
And then on top of that, my understanding is that these mills are ran on solar and wind.
Is that right? Isn't that right?
[00:45:16] Speaker B: There's a percentage of it that. Yeah, they are.
I don't know what that percentage is, but it's cool.
[00:45:23] Speaker A: I mean it's really environmentally, I mean, how can you complain with that? I mean it's, it's, it's beautiful.
[00:45:30] Speaker B: It, it, it's very true.
Let's make no mistake here. It's, it's a proven fact that the United States as a whole creates the greenest steel in the world.
You know, we take a lot of pride in, you know, creating Environmentally friendly materials, do a lot of recycling, all that kind of thing. So for sure, I think that's one of the things that we can take some pride in.
I love that about US Steel making, honestly.
[00:46:01] Speaker A: Yeah, I agree.
[00:46:02] Speaker B: But it comes with a cost, too. You know, people, you know, people think that, you know, you just put up some solar panels and flip a switch. Well, I'm here to tell you it's not like that.
[00:46:12] Speaker A: Right.
[00:46:12] Speaker B: You know, I just recently had news.
[00:46:16] Speaker A: About US Steel shutting down that, that, that, that line today, or I should say the cliffs are shutting down that line today. It's not coming back.
[00:46:24] Speaker B: Yeah, yeah. That's capacity out of, out of the, you know, we mentioned that in our last show, but 2018, the capacity that our steel mills had in 2018 versus today, it's on a diminishing rate. And even though the mills that are, that are open and are producing, you know, are, you know, reaching numbers between, you know, depends on which, which charts you look at. Anywhere from 75 to 82% capacity.
I don't think they're running, most of them are not running above 80% right now.
[00:47:00] Speaker A: Right. But, but real quick, going back to the SDI in Texas, are they going to be able to produce enough steel, let's just say enough prepainted Gavlin.
Let's just go to our bread butter, 26 and 29 gauge. Are they going to produce enough to supply the entire West Coast?
[00:47:23] Speaker B: That's a loaded question. And my, and here's, here's the reason it's a bit loaded. It does require a lot of scrap steel in order to do that. And so therefore, at this point in the game, I think there's the potential for them to run that much material because they are, they are getting a second line up and running, but I really don't know that they have the capacity to supply the entire West Coast.
[00:47:58] Speaker A: But on, you know, if you're drawn, drawing a map and sitting down with all the levers, the people that have the levers to pull the, pull the levers, can't you say, look, I'm going to put these two mills in Texas, I'm going to be able to supply the entire west coast with their demand. So therefore, please shut out these other mills coming in because we don't need their competition in order for us to succeed. You got to help us kick out our competition in a sense. Correct.
So.
[00:48:30] Speaker B: Well, you know, in my discussions with the mills, when I'm in front of them in person, you know, I'm asking questions similar to that and saying, hey, we want to support you. How can we do this and how can we do it cost effectively? Because if we could do it cost effectively, we would be on board.
A lot of the domestic mills are supplying people kind of on a, almost a just in time type of delivery system, which almost doesn't exist in the steel industry.
You can't just order it now and expect it in two weeks and have it show up on your doorstep. Or if you do, it's at a premium rate, you know, so at a competitive price, on an ongoing basis, you know, the domestic suppliers, the price is better if you get kind of, on a, kind of on a contract basis with them. You know, say they're going to produce you, you know, 5,000 tons of whatever per month.
You know, you can get some much better pricing doing that, but you're committed to that whether the market's good or bad. And so they're, they're wanting to produce and ship and sell and they expect that revenue in even if the market tanks. So.
[00:49:47] Speaker A: So not to get flanked, if you will. You got it. Especially on the west coast, you're going to get flanked if you have steel coming in from Vietnam, Taiwan, Korea.
Right.
So it goes to the point to why you want these tariffs in place.
But their behavior, like you pointed out, is not.
They should end up on American Greed, the TV show, because you give them, you give them a tariff, you put the 25% in and they just end up making record profits quarter after quarter after quarter, year after year. And so they're not, they're not, they're just, they did not not pass that on.
And so the truth is that you're never going to really be able to outflank foreign steel. I don't think so. I mean, what am I doing today? Am I. Where am I getting quotes from? I'm getting quotes from Indonesia for gallery.
[00:50:51] Speaker B: Well, and a really unpopular question is, you know, if we did stop the flow of offshore material coming in and went solely on domestic produced material, what price would we have to pay? Where would it end? I mean, we're almost at that breaking point right now. We have so many other inflationary factors that steel's already to the point where it's so expensive that people are backing out and saying, no, it's too expensive. I'm going to wait, I'm going to. I got to find a different way to do this or I'm going to scrap the project or whatever just because the costs have gotten so out of hand. And so we're right on that. In my opinion. I feel like, you know, as a nation, we're right on that breaking point for a lot of this expansion. People are just like, man, I'm barely squeaking it out as it is because it's so expensive and. Right.
[00:51:47] Speaker A: And so I think that's the point that I was trying to make earlier is that you look at, you end up caught, you end up creating 4,000 jobs in the U.S. okay. But you end up eliminating 75,000 jobs. My point is, is that if you get cheaper steel, you're going to end up selling more steel because for a number of reasons. And that, you know, again, it's not as sexy. And we live, you know, steel and you know, made in America is sexy.
It's sung on country music songs and I get it. But like anything, a little bit of education, looking in, peeling back the onion and looking and saying, wait a second, maybe I do want these other countries that can make this product at a cheaper price than I can make it here. They can bring it in and then I can start my business and Harris will give me $50,000 for it.
[00:52:51] Speaker B: Yeah.
[00:52:54] Speaker A: So I think it's a tough thing. But I just, as a free market guy, I just want it to be free market. And if you boil this all down, China makes too much steel. They're not consuming as much steel as they used to. And I don't think they'll ever consume that much steel. They've already gone in and kicked out all the old mills.
So these mills that they got there are not like necessarily, you know, arcade mills. The and so.
But I think we need to focus on China.
I don't like picking on our little buddy Taiwan.
I don't like starting trade wars and I think it just ends up being a complete bloody mess. You just got to keep your partners. Like Mexico. If Mexico can make a product cheaper than what we can make it here, it actually ends up caught creating more jobs, more taxes that way than I believe. And I think that's a classical, classical economical argument between the left and the right. Sure.
[00:54:09] Speaker B: It's hard to find that balance.
[00:54:10] Speaker A: Yep, yep.
[00:54:12] Speaker B: I'm glad I'm not in Congress.
[00:54:14] Speaker A: Yeah.
But. And we just got to be careful. I mean again, it's, it's a double edged sword. If we throw up these tariffs and they're going to throw up tariffs on us and then it ends up, at the end of the day, it just ends up causing, costing Susie who's just trying to go buy a shirt and some soup for her kids it ends up costing her more, more money and it shouldn't. The price is still right now. I mean, do you, I mean do you really think it should be that? I mean at the level that it's at, I guess, you know, right now it's pretty flat though.
[00:54:43] Speaker B: Right.
[00:54:43] Speaker A: This is a good ad lib into the end of our show as far as the market's concerned.
[00:54:47] Speaker B: Right.
[00:54:47] Speaker A: So where are you seeing prices?
[00:54:49] Speaker B: It is pretty flat right now and it's, it's maintained a pretty even keel for a little while. Like I said, there's always that pressure, that upward pressure you feel every, every time you talk to somebody who's connected to a mill that there's us upward pressure reason for the price to go up. But it just doesn't seem to hold. And I really believe that it's just simply that it's gotten so high that there's just certain people and products that are just backing down saying no.
So there's equal resistance to that downward push too in the prices.
[00:55:29] Speaker A: Which is why this tool of the anti dumping, it's helpful in a sense because the market needs traction. Like you said, it can't seem to really just get good traction, good stable traction. I mean it's just, it's a bloody nightmare. It's up and down and up and down. How the heck are you supposed to price your project on that or even buy a project?
So I think with these new rounds of anti dumping should eliminate a lot of steel. I was surprised that Canada was involved with that.
[00:56:02] Speaker B: Yeah.
[00:56:03] Speaker A: But you know, ultimately I think it will push out a lot of supply. I mean Vietnam in little time, out of nowhere. I mean there's a lot of Vietnam steel coming into the country and it may not necessarily be a bad thing to get it out, but.
So at the end of the day I would say that the price is going to go up. I think again as soon as this election's done. I don't care if who wins, the price will go up. That's my prediction. I'm going to predict that Harris is going to win and I'm going to predict that the price of steel will go up.
[00:56:44] Speaker B: Yeah, that's the way it's looking right now. Yeah, you know, so I wouldn't say that I wish that's the way it's going to go. But I think that might be the reality that's coming at us. So I agree anyway, but.
[00:57:03] Speaker A: So you think you should buy steel today?
[00:57:07] Speaker B: Buy steel today?
[00:57:09] Speaker A: I mean, do you think it's a good time to buy I saw that Nucor went up, what, like I think 15 on the Midwest and 10 bucks.
[00:57:16] Speaker B: I think everyone.
I think everyone is buying basically only what they need. And I think that's kind of the trend, and I think that that's the trend to stick with. And the reason I do is just simply because timeout isn't real long.
Capacity seems to be pretty decent material flow. You know, all those things are not a major. A major issue at this point in time.
You can kind of count on it. When. When the prices are escalating and the order books are getting really far out there, you know, that changes things as well. I think they've done some things to try to incite panic buying, and people have just bought enough material that they're not having to do that. That panic buying type thing.
So people are just kind of saying, hey, Mr. Customer, this is the price today.
And if they get the order, they are just passing on along whatever the price is to the customer.
I don't think people are stockpiling right now. I don't think they're doing a lot of big buys. And I. And I'm not. For us, we're not inclined to. To make big buys right now.
[00:58:34] Speaker A: It's amazing that, you know, got a freight train headed right towards you and. But yeah, I. That's what I see. Slow every. Everywhere slow.
[00:58:42] Speaker B: Well, and, And. And we bought heavy. You know, our inventories are in. In pretty good shape, and so that puts us in a completely different position, so.
[00:58:53] Speaker A: All right, bud. Well, we filled another hour.
[00:58:55] Speaker B: Okay.
[00:58:56] Speaker A: You're the man. Well, thank you.
[00:58:58] Speaker B: Thanks. It's good to chat with you.
[00:59:00] Speaker A: It was good. Yeah.
Yep.
[00:59:03] Speaker B: He's Nate. I'm Matt, and this is Steal the Show.
[00:59:07] Speaker A: Steal the Show. You think we should put a comma in there? Steal, comma, the show.
[00:59:12] Speaker B: Steal, comma, the Show.
[00:59:13] Speaker A: I think that's probably proper.
[00:59:15] Speaker B: Proper. That'd be proper.
[00:59:17] Speaker A: All right. But we're still guys. We don't need commas.
All right, brother. Anyway, thank you.
[00:59:21] Speaker B: Thanks. All right. See you next time.
[00:59:23] Speaker A: All right, buddy. Bye.
