US steelmakers have already been stung by tariff-related business moves that have backfired. Now they seem to be facing an unexpected new problem: a bad vegetable harvest. United States Steel Corp. and ArcelorMittal SA ramped up production and improved the quality of the tin-coated steel sheet they make for food cans, expecting domestic demand to increase after foreign metal became more expensive following the 25% duty the US applied to those imports. But imports of steel for cans have hardly dropped since the tariff was implemented in March 2018.
Now, the dropping demand for cans is a fresh ding to producers. The wettest twelve months on record have wreaked havoc across the Farm Belt and hurt this year's crop of peas, beans and other vegetables packed in steel cans. Halfway through the packing season, canned vegetable volumes are running 10% below last year's level. At that pace, about one billion fewer cans will be needed this year, leaving can makers with an excess of steel sheet.
"There is an inventory glut building," James Peterson, chief executive of Ball Metalpack in Colorado, a partially owned unit of aluminum-can giant Ball Corp. told marketscreener.com.