But if Canada wants to retain a manufacturing industry, then the steel
industry will need to be a part of it, he said, because steel is the
materials backbone of manufacturing.
Dr. Peter Warrian, a University of Toronto professor and Canada’s leading academic expert on the Canadian steel industry, told city council that the industry will always have a volatile market but the need for steel in the future could certainly increase.
While prices rose substantially – 40 per cent – between October 2016 and March 2017, allowing cash flow improvements for steelmakers like Algoma, the problem remains that the cyclical nature of the industry will not see those high prices be sustained for long periods of time. And that means, investments into pension plans, injections of capital improvements and maintenance plans will not get the long-term attention they need, he said.
And while this has been a problem experienced to Algoma, the local steelmaker found itself in a serious cash crunch because of the long-term contacts it had inked that found itself paying for raw materials at exceptionally high prices – much higher prices than actual market values, Warrian said. He expects the market prices, which have got ahead of themselves, to self-correct in the latter part of this year, with hot rolled coil steel dropping to $600 per ton.
The good news, despite the heightened awareness of U.S. President Donald Trump wanting to rewrite the North American Free Trade Agreement and affecting industries like steel, is that the steel producers themselves have met and agreed to the issues it needs to protect the industry, preventing themselves from being targets or falling under regulation 232, he said.
The regulations requires that at least 60 per cent of the steel have its orgin in its country or region. “I don’t think this is going to be as bad as people first thought,” Warrian said. The professor, who has also penned several papers on Canada’s steel industry and is a former researcher with the United Steelworkers Union, said he doesn’t believe steel dumping is the biggest problem of Canada’s steel industry itself.
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