A welder at Kurts Ironworks in Medicine Hat works on a building support beam for a local construction project. Local fabrication shops are concerned that price uncertainty for steel during a North American trade dispute will slow construction activity.--News Photo Collin Gallant
@@CollinGallant
Less Canadian steel heading south during a trade dispute would theoretically translate to higher supply and potentially lower prices domestically, but local fabricators say grappling with an ever-changing array of tariffs isn’t a simple equation.
The greater threat to their bottom lines, they said, is that customers will pause orders and put projects on hold until price stability returns rather than moving ahead with potentially more price shocks on the horizon.
“There’s no outcome where prices go down, not up,” said Andrew Hilgendorf, the general manager of Kurts Ironworks in Medicine Hat, whose company only fabricates and instals structural steel components on large building projects in southern Alberta.
They don’t sell into the United States, and therefore don’t face a direct 25 per cent import tariff laid down by U.S. President Donald Trump, or Canadian counter-tariffs on their domestic sales.
Where their raw steel arrives from however, is at whim of where suppliers source their stock, which Hilgendorf says is almost entirely out of the U.S.
If that steel enters the U.S. from Canada, then crosses back, cost increases are compounded.
“Every one is in the same boat because costs go up for everybody,” said Hilgendorf. “Where the damage comes from is a lack of confidence in our customers to move ahead and sign contracts on large projects, because things change hourly, daily – who knows?
“There’s steel, but nothing to spend it on.”
Dustin Ziegenhagel, of RedArc Manufacturing, said the situation is very unsettled, but the supply of Canadian produced steel could back up without an export market.
“The biggest current effect to us directly is repricing of all major projects we have quoted over the last three months,” he told the News, citing that current prices are fixed for two weeks, rather than six weeks before trade tensions and tariff threats arose in late January.
Longer-term, he sees the biggest factors as U.S. demand, the response of Canadian governments to support domestic steel production and the actions of mills.
“The net effect will hinge on how Canadian producers balance these forces, but historical patterns suggest U.S. buyers will bear much of the tariff burden, potentially stabilizing Canadian prices at lower levels unless significant market shifts occur,” he wrote in a letter to customers.
“The situation remains fluid, with outcomes depending on negotiations, retaliation specifics and global steel market responses by March 2025.”
He felt a oversupply in Canada, created by losing U.S. market share, could put downward pressure on prices, but, “Conversely, retaliatory tariffs or supply chain disruptions could push prices up slightly by increasing costs.”
Canadian-based steel producers could also push domestic prices up to offset costs usually made up on export revenue, or lower production.
This month, oilpatch services association Enserva called for exemptions on piping, steel and other supplies critical for petroleum capital spending, stating a slowdown would magnify economic impact of a general recession.
The Canadian Steel Producers Association, representing major mills, stated it supports retaliatory tariffs from Ottawa and continued negotiations, but also moves to address what it says is steel dumping from China and implementing a Buy Canadian steel policy in all publicly funded infrastructure projects.
“This would be a strong and timely show of support for Canada’s steel industry, and the workers and communities that depend on it,” reads a statement. “We are long overdue for ensuring that Canadian-made steel is being prioritized for domestic projects.”
