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Section 232 And What It Means

To Our Valued Customers:

Section 232 and What It Means

As of March 2, 2018

This will be the first of many communications on Section 232. As information develops, we want to keep you informed. Here is what we know as of today:

We have reviewed the US Department of Commerce Report: The Effect of Imports of Steel on the National Security (An Investigation Conducted Under Section 232 of the Trade Expansion Act of 1962, as Amended, dated January 11, 2018.) A copy of the report and its attachments can be found at the US Department of Commerce website. This investigation was initiated to determine if the importation of steel and other metals is threatening our national security.

Yesterday, the President stated his intention to impose 25% tariffs on all steel coming in to the country. We have heard that there may be some countries exempted from this requirement. As we write this, we do not know the timing of the proposed tariffs.

We are very concerned that enactment of the tariffs, or any of the recommendations in the report, by the President will cause serious financial hardship to our customer base and will do more harm than good for national security. It is our intention to oppose the tariff. We will also attempt to seek some exceptions on products and countries where we think our customers will be hurt the most.

We will also argue that much more thought and analysis has to go into this issue before any decision should be made. As it stands, we feel the recommended actions are much too broad. A blanket approach fails to take the specifics of each product into account. For example, we are not aware of significant production of 17-7 rod in the USA.

As you know, we do give preference to domestic mills wherever possible. We enjoy long outstanding relationships with many domestic mills. We want them to thrive. We constantly work with them to improve all aspects of quality and competitiveness. In some cases, however, we find that domestic mills cannot meet the quality standards or quality standards at a competitive cost required by our customers. In those cases, we will buy foreign material.

We recognize that there are instances of unfair competition by foreign countries. We applaud efforts to protect our domestic steel industry. But as pointed out above, let’s approach the problem by looking very closely at each product and each country.

We encourage all of you to immediately contact your elected representatives if you share our view that the proposed actions will significantly increase your costs of doing business and limit the competitiveness of US manufacturing.

We know that you will have many questions on the cost and availability of material. We are diligently looking at all of our items. It will be difficult for us to provide answers until we have more information on the timing of the proposed tariffs.

We will keep updating you as we learn more information.

Sincerely,

William J. Torres
President & CEO

Carbon Steel Prices Expected To Rise Soon

Carbon Steel Wire Prices to Rise Soon Due to Factors Related to Increased Costs

By: John Mintun

There are very significant price increases coming for carbon wire products. Over the past few months our rod mills have experienced a number of increases in their costs that have become too burdensome to absorb and, as a result, have been passed along to our wire producing sources. The majority of our domestic sources have published price increase letters to us, and because of the nature of these increases, they will need to be passed along.

Historically, when the calendar turns to a new year, our domestic sources are generally looking for increases based on scrap costs.  January usually starts the cycle. The difference in 2018, compared to many of the proceeding years, is that these initial increases are not based on the fluctuation of scrap pricing.  In fact, scrap movement had been the only justification the rod mills used over the past several years to move on pricing. This year is very different. The following article shows the causes the rod mills are using to justify price increases.

Get a Price on Carbon Steel Spring Wire

Graphite Electrodes and Needle Coke

In the steel making process, (it should be pointed out that steel is the most recycled product in the world) scrap is melted down along with other fortifying elements to produce new steel.  Graphite electrodes are used in the process to get the scrap to melt to above 3000 degrees Celsius.  These electrodes are a necessity whether you are making carbon steel or stainless steel in an electric arc furnace. In the late summer and early fall, a shortage developed on electrodes. The three major contributing factors were a consolidation of domestic producing plants, changes in environmental law in China and, more importantly, a shortage of a key ingredient of these electrodes called needle coke.

Needle coke is produced as a by-product in the petroleum industry. It is a process heavy (time consuming) product that involves baking and re-baking the “pet-coke” until it becomes needle coke. One of the larger producing facilities in Texas sustained significant damage during Hurricane Harvey, shuttering production for several weeks.

During this time, costs for the graphite electrodes surged from $1.00/lb. to $16.00/lb.. Most mills buy the graphite electrodes on a yearly contract.  Fortunately, most of the mills were protected on price until the end of 2017. Price had retreated during the negotiation period; however, the costs are still much higher for the producing mills than in previous years.

At this point it appears that the carbon mills are putting this into the base price while the stainless mills are including it in their surcharges, if applicable.

Freight

With the economy improving at the same time a driver shortage, as well as, new government regulation on how long a driver can drive, has created capacity constraints. The mandatory use of the Electronic Logging Device (ELD) may prove to be problematic for drivers, as it applies even when they are waiting to be loaded/unloaded. This will now count against their daily allotted time. As a result, pricing is on the rise and the mills are suggesting again, these are costs that add to their increased production costs.

Trade Cases

Another factor putting the wind at the rod mills back is the fact that the domestic produces, Nucor, Keystone, Gerdau, and Charter, have pursued 13 countries for duties on imported rod. To date, the Commerce Department has ruled primarily in favor of establishing duties. This has eliminated a great deal of foreign rod coming in to the US, as there is a fear duties may be retroactively applied to the importers.

Also, the Trump administration is still investigating a ‘232 case’ on all steel products. This is an effort to prove that foreign steel impacts our national security. A decision to pursue or drop 232 is scheduled to be made by January 16th.

These two protectionist measures add to the confidence of the rod mills that they can successfully increase pricing as the importation of foreign material decreases.

What does this mean?

The wire mills, captive to the increase in rod costs, are mostly in lockstep and are seeking increases in mid-January for around $4.00/cwt.  As a result, we will be forced to raise our pricing accordingly.

Also, as these current increases are not based on scrap. It should be pointed out that scrap has recently increased and the mills are pointing to this for potential further increases for February/March.

Pencils and Smiles: A Personal Effort To Help School Children in Zimbabwe

Pencils & Smiles: A Personal Effort To Bring School Supplies to Students in Zimbabwe

By:  Fadzai Mavindidze

Moved by the story of a grandmother who walked over 5 miles to my grandfather’s homestead to borrow a pencil so that her grandchild could attend school, I made the decision to make a difference. Pencils and Smiles is an initiative that aims to ease the adverse effects of unimaginable situations and circumstances such as these, caused by poverty, which are robbing children in this little village, Mazvihwa in Zvishavane Zimbabwe, of their basic right to education.

Pencils and Smiles seeks to bridge the gap between education and poverty. We endeavor to motivate and encourage those less privileged, giving them hope for a better future and an opportunity to tower above the effects of the poverty they are born into.

Mission of Pencils and Smiles:

To make the learning process an enjoyable and fruitful experience through provision of necessary tools and equipment  for every child. 

  • We want to equip these children and give them hope, we want to plant smiles on each and every one of them and keep them looking forward to going to school.
  • We believe every child deserves a chance and an opportunity to reach their fullest potential regardless of their financial backgrounds. We believe we can do something to make it happen.
  • We started out by making sure each child had a pencil so they wouldn’t stay at home because they had nothing to write with.
  • We then moved on to distributing not only pencils but other stationery too for the upper grades (grades 3 to 7).

In October 2017,  we launched the first library system for the younger grades, kindergarten to grade 3 and we also distributed toys and visual aids that help to stimulate the little ones’ minds. 

Pencils and Smiles has also been privileged as guest of honor at Gwamadube primary school for 2 consecutive years starting in 2016. We provide prizes for excelling and outstanding students and also award a semester’s worth of school fees and supply uniforms for every top student from kindergarten to the 7th grade.

We are not stopping here.

To find out how you can help Fadzai in this personal effort* to help these children. Contact: pencils.smiles@gmail.com 

#GibbsPeopleCare

*Pencils and Smiles is a personal effort and not a registered 501 c3.  It has no affiliation with Gibbs Wire & Steel.

The Gibbs Team ‘Toys for Tots’ Toy Drive

The Gibbs Connecticut Team Exceeded Goals For Annual “Toys for Tots” Campaign

The generous staff and community of people at Gibbs came together this Holiday Season to collect a near truckload of toys for the Marine’s, ‘Toys for Tots’ campaign.  A friendly, competitive spirit, between the office and manufacturing department, proved to be the catalyst for a successful toy drive.   

We’re proud of the efforts of all that coordinated and donated. 

#GibbsPeopleCare

 

Gibbs Launches A Contest of Ideas! Win $1000, $500, or $300!

 

Invent or Create a Product or Service Utilizing Stainless Steel Coil Scrap and/or Excess Inventory and Win Up to $1000.00!

Gibbs is looking for a creative use of our scrap and excess inventory created from our slitting process. Slitting is a metal cutting process that ‘slices’ narrower coils from a wider coil.  The coil cutting process requires us to take an outer edge cut or a “side-cut” that frequently becomes scrap. In addition, the coil cutting process can produce shavings, which also become scrap. The ‘middle material’, or prime coil material, is utilized for many applications but, we may have overages of excess of prime coil inventory on our shelves, that goes unused.

Rather than scrap the side-cuts, shavings, and prime excess inventory, we’d like you to suggest a use, re-use, re-purpose, creation, service, or invention!  You may suggest an idea from one or all of the forms of excess material we have!

We want your ideas and we’re giving away $1000.00, $500.00, and $300.00 prizes!

Visit the Contest Website: GibbsMetalsContest.com

Contest begins on December 1, 2017, at 8:00am EST and ends at 5:00pm EST on March 1, 2018. Only three Entries per person allowed. NO PURCHASE NECESSARY TO ENTER OR WIN. PURCHASE DOES NOT INCREASE YOUR CHANCES OF WINNING. VOID WHERE PROHIBITED BY LAW. Open to legal residents of the 50 United States, D.C., Mexico, and Canada (excluding Quebec) who have reached the age of majority. Prizes consist of a $1000 USD award for to the best idea (Grand Prize), $500 USD for Second Place, and $300 USD for Third Place. Odds of winning depend on the number and caliber of entries received; winning Entries will be chosen according to judging criteria. Total ARV of all Prizes is $1800 USD. Winners are responsible for all taxes associated with the prize. Subject to full Official Rules at . Sponsor: Gibbs Wire & Steel Co., Inc.  Void in Quebec, and where prohibited by law.