Head of Liberty Steel USA on the negative impact of steel tariffs

US Section 232 tariffs on US steel imports were introduced last year to support US steel producers, but tariffs are not necessarily a good long-term solution for the industry, Liberty Steel Holdings USA President Vikrant Sharma said Thursday.

Freight logistics is "one of the biggest problems in the US," according to the president of Liberty Steel Holdings USA, adding that it costs more to transport a ton of steel from Illinois to Pennsylvania than from China to New Orleans.

Instead, the US government could take a number of steps to help the domestic steel industry succeed without relying on import restrictions, Sharma said at the S&P Global Platts Steel Markets conference in North America in Chicago on Thursday. It is more profitable for steel companies to access lower funding, support workforce development, and improve infrastructure and logistics in the United States, he said.

Liberty, which entered the US steel market in 2017 with the acquisition of the former ArcelorMittal wire rod facility in Georgetown, South Carolina, plans to increase its North American capacity from its current installed annual capacity from 1.8 million to 5 million by 2020.

“North America is critical to our business and growth strategy,” Sharma said. “There is a shortage of freight and railroad cars,” he said.

In early 2019, Liberty closed its acquisition of Keystone Steel and Wire and plans to become the largest wire rod manufacturer in the United States next year. However, to get up to 5 million units a year, the company is looking for more products, Sharma says.

“Our goal is to reach 5 million, and we understand that we cannot do this with just long pieces; we have to have a combination of long and flat products, ”he said.

Noting the widespread availability of scrap and low electricity costs in the US, Sharma said Liberty's acquisition strategy is aimed at targeting electric arc furnace manufacturers.

“We are trying to go to areas where there is scrap metal and low energy costs,” he said.