Canada’s choosing high

The Canadian Steel Producers Association (CSPA) is calling on the federal government to take swift action to safeguard domestic jobs and protect the competitiveness of the industry because it is losing market share at an unprecedented rate to high-carbon offshore product being imported into the country.

"The thing we have to keep in mind is that as offshore steel imports continue to rise, it's to the very detriment of the Canadian industry and jobs and to our communities. But it's also detrimental to the climate agenda," explains Catherine Cobden, president and CEO of the association, which represents companies that produce primary steel and pipe and tube products and directly employs some 23,000 workers.

"For some reason, though, we are not winning the game on high-carbon imports in the marketplace. What we are trying to do is raise the conversation because we don't believe that is what Canadians want."

The CSPA wants the federal government to introduce measures to curb the higher-carbon offshore imports as the situation is very challenging for domestic producers who are aggressively striving to achieve a more than a 45 per cent reduction of greenhouse gas emissions by 2030 and be net-zero by 2050.

"We’re trying to do our part for the planet. We’re trying to do our part to meet our customers’ needs, but it's really becoming an issue in terms of maintaining our competitiveness," says Cobden.

At the very time Canadian steel producers are investing in action to reduce climate emissions by at least six million tonnes by 2030, imports of high-carbon offshore steel are growing dramatically. Offshore imports into Canada have increased to 41 per cent of the country's market share from 19 per cent in 2014.

The CSPA maintains Canadian companies — which benchmarking studies have shown produce some of the greenest steel in the world — are being undercut by countries with a history of unfair trade practices.

In 2022, hundreds of thousands of tonnes came from countries with active anti-dumping cases against them.

The association has outlined a number of recommendations it wants the federal government to act on to keep the domestic industry competitive.

Specifically, it wants the feds to adopt an industrial strategy that supports the use of lower carbon steel and take steps to further improve Canada's trade defences.

Cobden says it's inherently unfair to be importing higher-carbon steel while Canadian companies are trying to become greener.

"We tend to be losing market share to high-carbon, offshore steel. We are definitely seeing offshore imports rise and we are facing in our industry in Canada a lot of costs and acceleration of carbon-pricing and that sort of thing that offshore imports are not facing. So it really makes it hard for us to compete."

According to the CSPA, offshore imports have doubled over the last decade which is hurting Canadian producers. As the global steel market faces recessionary and inflationary headwinds, the association says protecting the domestic competitiveness of the Canadian steel industry has never been more important.

Cobden says domestic producers are doing the right thing by going green but other nations that are supplying Canada do not have a similar track record.

"That is at the crux of it. As we import high-carbon steel, it's basically choosing those high-carbon imports over greener steel options."

Some of the recommendations suggested by the CSPA can be implemented right away, while others will take longer.

The association maintains the existing regulatory standards are working and in recognition of the sector's progress the government should not impose any more carbon emission tightening standards until at least 2030. Finance Canada and the Canada Border Services Agency should hold consultations on how to further defend the country's market from rising unfair steel imports from offshore markets.

In the meantime, the association wants the federal government to use its purchasing power to generate market demand for greener steel and limit the import of carbon-intensive steel products from places like China and Russia by allowing only countries that Canada has free trade with to bid on federal steel projects.

"We would expect all levels of government, for all of their procurement, to start layering the carbon piece and that's not happening yet," says Corben. "There's been small moves in this regard but there's a lot more to be done."

Compounding matters is the Inflation Reduction Act passed in the U.S. which provides American companies with climate subsidies while Canadian producers face carbon costs. As a result, Canadian producers will have to figure out how to remain competitive, or it will only exacerbate a widening competitiveness gap.

"While we appreciate the partnerships fostered to date, it must be recognized that the U.S. and other governments are moving aggressively to attract climate investments and support its industries," notes Cobden.

"To remain competitive and build on our climate leadership, we are calling on the government to adopt an industrial strategy that is comprehensive in investment supports, prioritizes the use of today's lower carbon steel, takes additional steps to further improve our trade defences, and maintains carbon pricing regimes in a manner that enable rather than threaten decarbonization investments in Canada."