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Page added on November 18, 2016
US infrastructure may soon have its Nixon-to-China triumph
For many it’s just another day in the Untied States of America, but for the American steel industry things are looking great.
Steelmakers’ share prices surged in the wake of Republican Donald Trump’s election as US President last week, presumably on his commitment to put America first by fighting unfair trade deals and imports. He specifically vowed to “bring back steel.”
On top of that, his commitment to boosting infrastructure spending in a big way is sustaining the outlook for American steel. There would be a lot of steel needed for those new roads and bridges, locks and dams, airports and railways.
Here’s what Morgan Stanley had to say about it this week: “We conservatively estimate Trump’s $550 billion stimulus plan would increase steel demand by 20% annually for 5 years . . . We have analyzed how spending could affect steel use in highways, bridges, buildings (such as airports), rails, and other infrastructure projects. We calculate an incremental 22 million tons of demand in each year the program is in effect.”
Yes, these were merely campaign promises, but big infrastructure spending is looking increasingly plausible in part because so many other issues continue to divide the country, which president-elect Trump said he wants to unite.
What better way to do it than with a national infrastructure program, presumably carried out with all-American steel? You get good-paying jobs, a sense of common purpose, a renewed commitment to public safety and maintenance and an end to suggestions that the eminently First World USA is starting to look like a Third World country.
There may even be a sense of urgency about getting a big infrastructure program off the ground. Americans may continue to lose faith in government given the rocky start to the Trump presidential transition, whose original chief, Chris Christie (with infrastructure problems of his own), has already had his “You’re fired!” moment with Trump.
Then there are the widespread and justifiable criticisms of Trump’s controversial pick of far-right chief strategist Steve Bannon. Already, more than 160 members of the US Congress have urged Trump to rescind Bannon’s appointment because of his ties to the white nationalist movement. And even though the US House and Senate have a Republican majority, passage of legislation around infrastructure and other matters may not be automatic. Economic nationalism is one thing, but white nationalism quite another.
Trump is a builder, so construction is something he understands.
Getting a huge infrastructure program passed by congress is no easy feat. It was denied the Barack Obama administration for years by Republicans, Trump’s own party. But this is the key. We have a “Nixon- to-China” situation here.
Back in 1972, US President Richard Nixon made a surprising move to open relations with Red China. Nixon, a reliably old-school crusader against communism, pulled it off. Could a left-leaning Democrat president have made the historic move? No way. It would have looked too much like accommodation. Ironically, only the hard-liner Nixon had enough cover to make a breakthrough.
Similarly, it seems only a Republican could push through massive infrastructure spending, something politicians of all stripes know in the back of their minds is the single best way to help America.
In other words, if Democrat Obama had succeeded it would have been socialism. If Trump succeeds he’s Making America Great Again.
Platts news and news analysis is independent, objective and neutral.
17 Comments on "US infrastructure may soon have its Nixon-to-China triumph"
Apneaman on Fri, 18th Nov 2016 12:14 pm
Don’t forget the sand
SAND’S END
Miami Beach has run out of sand. Now what?
“But this would be false: the beach is every bit as artificial as the towers and turquoise pools. For years the sea has been eating away at the shore, and the city has spent millions of dollars pumping up sand from the seafloor to replace it, only to have it wash away again. Every handful of sand on Miami Beach was placed there by someone.
That sand is washing away ever faster. The sea around Miami is rising a third of an inch a year, and it’s accelerating. The region is far from alone in its predicament, or in its response to an eroding coast: it’s becoming hard to find a populated beach in the United States that doesn’t require regular infusions of sand…”
http://www.theverge.com/2016/11/17/13660014/miami-beach-sand-erosion-nourishment-climate-change
Anonymous on Fri, 18th Nov 2016 12:17 pm
I have to ask, what ‘unfair trade deal and imports’ is Plattys bitching about here? Last time I checked, the exceptional nation was the one that put itself in charge of setting the terms and conditions of pretty much ALL trade deals(everywhere), you know, even ones involving imports into the united snakes.
And in pretty much every instance, these terms and conditions are always titled to benefit the exceptional nation.
In the case of steel, Im pretty sure the owners of all those leaky tar pipelines, cheap office towers and crappy cars the amerikans chose to build with all that steel, think all those imports are just dandy. Platts doenst seem unaware that the loyalty of the amerikan ‘FTA-industrial-complex’, is to the dollar, and not to ‘amerika’.
Anonymous on Fri, 18th Nov 2016 12:18 pm
seem ‘aware’ rather
Davy on Fri, 18th Nov 2016 12:19 pm
There is infrastructure with a future and the other kind. It is pretty obvious what kind of infrastructure is going to be chosen by Trump’s team. So this reference from the article is pretty lame concerning reality of what is ahead: “massive infrastructure spending, something politicians of all stripes know in the back of their minds is the single best way to help America.”
rockman on Fri, 18th Nov 2016 12:59 pm
Not sure how legal in might be but one potential way for the US to help our steel industry is to stop exporting cheap US coal from govt leases. According to the Washington Post: During President Obama’s terms nearly half a billion tons of this U.S.-owned fuel were hauled from vast western strip mines and millions of tons are shipped overseas for other countries to burn. According to govt stats overall during President Obama’s first term US coal exports to China increased 40X…from 240,000 tons to over 10 million tons. Since then Australian has taken market share from the US.
But the numbers are somewhat misleading. As a result of President Obama’s stalled efforts to build 3 new west coast coal export tertminals much western govt coal is railed to Vancouver (and thus counted as exports to Canada) and then shipped from there to China. Fortunately the POTUS did expedite approval of permits to expand Texas coal export terminals. Thus for the first time in history western coal, shipped by train, has been exported from the Lone Star state.
BTW most of the US private coal is exported to the EU thru terminals in Belgium. In fact the US exports more coal to the “green” EU then any other region.
As a side note a couple of years ago a German specialty steel maker moved to S Texas to take advantage of our low NG prices. Not many local jobs of course. But did add some. And an EU chemical company did also for the same reason.
Plantagenet on Fri, 18th Nov 2016 1:20 pm
Actually obama got almost a trillion dollars for infrastructure spending —- he just didn’t spend it on infrstructure. Much of it went into a one-time boost in government spending in existing programs
Cheers
tahoe1780 on Fri, 18th Nov 2016 1:46 pm
Enough oil to do this? http://www.zerohedge.com/news/2016-11-18/steve-bannon-interviewed-issue-now-about-americans-looking-not-get-f%E2%80%94ed-over
Anonymous on Fri, 18th Nov 2016 2:25 pm
Platts news and news analysis is independent, objective and neutral.
Reality check: Platts is none of these things.
Jerome Purtzer on Fri, 18th Nov 2016 2:28 pm
By infrastructure The Donald is referring to luxury hotels, resorts, golf courses, helipads and private jet runways for the uber rich. However, the people needed to maintain them are all being deported so there will be jobs. Who says no plan is not a plan?
A disinterested observer of Earth's destruction on Fri, 18th Nov 2016 2:52 pm
Financing all that is going to be really interesting given the direction of US treasuries lately.
But don’t mind me – carry on with the fantasies.
onlooker on Fri, 18th Nov 2016 2:58 pm
But don’t mind me – carry on with the fantasies. Yep, disinterested fantasies, the US economy has been on the decline now for years and the dollar is fast losing its preferred status. So yes where is the financing going to come from. Your not going to repeat what China just did, not enough energy, economic stability or resources. Plus, you sold out the domestic industries for Globalization. Too late to undo what has been done
Apneaman on Fri, 18th Nov 2016 3:04 pm
What y’all need infrastructure for? The Arctic is in melt down right now – 50-100 years faster than the scientific models predicted from only 10 years ago. Your kids and grandkids won’t need all that infrastructure. Most of them are not going to be around for it’s 40 60 year lifespan. But go ahead and keep pretending there is a future for all your spawn.
onlooker on Fri, 18th Nov 2016 3:18 pm
Amen to that cold truth AP
makati1 on Fri, 18th Nov 2016 5:23 pm
Obama’s National Debt addition for 2016 …
$2,400,000,000,000.00* in round numbers.
Infrastructure repairs? About zero.
Donald Trump’s debt? Who can guess?
Donald Trump’s Infrastructure repairs? Probably not much. Politicians lie, or did you forget?
*BTW: That is $7,500.00 added for every man, woman and child in the U$. Plus what your state and local government borrowed in your name. What did YOU get for that debt? The shaft? LMAO.
Truth Has A Liberal Bias on Fri, 18th Nov 2016 7:07 pm
http://econimica.blogspot.ca/2016/11/trump-lies-no-different-than-obama-or.html?m=1
Trumps smart enough to know that most Americans are fucking morons and by saying stupid angry shit you can get a lot of votes. Other than that he doesn’t have a clue. USA is officially the laughing stock of the planet. When Trump supporters realize they’ve been duped they’re gonna get angry. I can’t wait to see you morons kill each other.
Mark Ziegler on Sat, 19th Nov 2016 7:04 am
Only the problem is that we need a comprehensive rail system. Would eliminate the consumption of megatons of oil. A rail system would increase the use of steel if that is what floats your boat.
Davy on Sat, 19th Nov 2016 8:04 am
Slow trains, street cars of old, and reintroduction of freight moved on water ways where possible would be a huge step forward in preparation for a collapsing world. What we will get is more car infrastructure and airports. Maybe sewer systems and water systems will be worked on. Pipelines and gas distribution systems would be a good dollar spent. For the most part it will be a huge investment in infrastructure with no future.
This investment policy will likely not get off the ground because economics will Trump the Trump so to speak. This is a multi-year effort that will not succeed for 5 years at a minimum. We don’t have 5 years of an economy that can support it. In the meantime it is all about talk and basically that is all the markets are at the top. It is about the central bank’s jawboning policy as Main Street dissolves before our eyes. The markets are already gyrating at the thought of lower taxes and higher spending of this program. Bond vigilantes are licking their chops in anticipation. What a mess this will be if they really try to make it happen. It will be a sure bet recessionary policy considering the state of the global economy currently.