Stelco Holdings Inc. is poised to benefit from the steel tariff battle between Canada and the United States because as much as 85 per cent of the steel it makes is sold in Canada and not subject to tariffs.
“Trade cases are tightening the market here in Canada and giving us a good opportunity,” Stelco chief executive officer Alan Kestenbaum told analysts on the company’s second-quarter financial results conference call on Wednesday. “We will continue to focus on Canada. That includes potentially benefiting from demand created by declining sales of U.S.-produced steel into Canada due to Canada’s recently implemented 25 per cent tariffs against U.S.-made steel.”
Stelco, which emerged from protection under the Companies’ Creditors Arrangement Act about a year ago, will also gain from trade cases Canada has launched against China, South Korea, Vietnam and other countries on cold rolled steel and corrosion resistant steel, Mr. Kestenbaum said.
Safeguard trade actions that the federal government is considering to block countries from shipping steel into the United States through Canada will also help, he said.
“These safeguards seal the border” and should convince the United States that cheap steel is not being diverted to the U.S. market through Canada, he said.
He noted that Stelco’s upgrades of its cold mill coincide with the trade actions and “will expand our presence and product capability in the cold rolled steel market – now the most profitable market on a per ton basis in our portfolio.”
The tariff war on metals began on June 1 with the United States imposing levies of 25 per cent on steel imported from Canada and several other countries and 10 per cent on aluminum imports from Canada and elsewhere.
Canada retaliated with tariffs of the same percentages on imports of the U.S. metals beginning in July.
The tariff battle has sent prices surging. The price of hot-rolled coil in the U.S. midwest market has risen by 40 per cent since June.
Canada has taken several trade actions.
The Canadian International Trade Tribunal has found that cold rolled steel from China, South Korea and Vietnam that is not used for automotive applications is being dumped.
The government has begun an inquiry into imports of corrosion-resistant steel from China, Taiwan, India and South Korea.
And in another move, Canada Border Services Agency has assessed a retroactive anti-dumping fine of $1.8-million against two Turkish steel makers for shipments of concrete reinforcing bar that were exported to Canada in 2017.