Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Catherine Cobden, president, CSPA

The Canadian steel industry is in recovery mode and will emerge stronger after it was hit by the COVID-19 pandemic in H1 2020. In conversation with Davis Index, Catherine Cobden, president of the Canadian Steel Producers Association (CSPA) said that the plan for Canada’s steel industry now was to forge ahead and take the opportunities to surface as a more competitive sector while acknowledging the long road to recovery for some industry segments.


Post-pandemic recovery

“CSPA represents the 11 Canadian steel producers, who produce a total of 13mn mt of primary steel per year between them. The priority for the Canadian steel industry as COVID-19 came into the picture was working with health officials and establishing proper health and safety procedures to protect the essential steel workforce,” Cobden said about the effects of the pandemic on the industry. 


She added that as an essential industry, Canadian steel mills continued producing steel through H1 2020 and though some layoffs were necessary, they were mitigated by the base wage support systems. “Steel shipments dropped by 50pc in North America due to the pandemic and Canada’s capacity declined to 60pc from 80pc. The pandemic affected steel production and demand hard in Q2 2020, but recovery has begun,” she observed. 


Cobden expects the North American economies to recover completely by early 2023, even though this period could extend for some market segments. Describing the way forward, she noted that the bounce-back would be like driving over bumpy terrain. “The recovery is dependent on government support through proactive stimulus investments to revive steel relevant industries such as commercial construction and automotive purchases,” Cobden said. 


Issues at hand for the steel industry

Cobden said that while Canada’s government has started on the right path, the CSPA is hoping for more support such as “programs to move older cars off the roads and support for the energy sector that is a key economic driver and would help shore up the nation’s steel recovery.”


For the steel industry particularly, Cobden listed several key issues being addressed by the CSPA. “The growth of global excess capacity, especially, by China, is a strong concern,” she said. “To put in perspective, China’s excess capacity reflects 46 times the entire Canadian production. CSPA is actively working on trade remedy systems as well as other North American governments to mitigate the issue that may eventually try to make it to Canadian shores.” 


Another area, where the CSPA is working closely to voice the interests of the steel industry is the recently ratified United States Mexico Canada Agreement (USMCA). Cobden noted that the association has welcomed the new agreement as it supports regional steel production with its new provisions for auto steel. However, she said that the association would push back against claims by some market participants who are seeking to postpone some aspects of the USMCA for a few years. “Canada’s steel suppliers are concerned with the effectiveness of the agreement if delays are allowed,” Cobden noted, “They are ready to supply steel as needed throughout North America.”


The current import monitoring system in Canada also needs to evolve to capture every detail of imported steel to ensure fair trading practices she told Davis Index. “Canada’s steel mills are committed to aggressively pursue 100pc of unfairly traded steel cases through the Canada Border Services Agency (CBSA) as such transactions hurt the local communities. An improved import tracking system will reinforce an effective trade remedy system,” she said.


The green steel initiatives

Finally, the CSPA embraces environmental sustainability, according to Cobden. Canada’s steel producers set a goal to achieve net-zero carbon emissions by 2050 in March 2020 and though the industry has acknowledged its contribution to greenhouse gas emissions and its commitment to green development, more needs to be done. Cobden said, “More work is needed for Canada to adopt a comprehensive Green Deal, but good signs are surfacing. While a detailed plan has not emerged, Canada’s government rhetoric doubled down on its commitment and support for helping big carbon emitters, in proceedings held last week.”


That said, transferring the present steel-making practices will require partnerships with technology leaders, government, regulators, and communities given the high complexity of mill operations, according to Cobden. In the purview are bio-mass technologies, which can be adopted sooner, and hydrogen once technologically feasible.

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