US steel Industry Sees Boost from CHIPS Act, Infrastructure Bills

SEATTLE (Scrap Monster):  A US law aimed at boosting computer chip manufacturers is providing a lift to steelmakers supplying the construction industry, executives said on earnings calls and analysts told S&P Global Commodity Insights.

The US CHIPS and Science Act, signed into law in August 2022, includes over $50 billion in direct incentives for activities including semiconductor manufacturing, with a 25% investment tax credit for capital expenses.

Since the beginning of 2022 through April 2023, real spending on construction for computer, electronic and electrical manufacturing nearly quadrupled, making it the dominant component of US manufacturing construction, with the CHIPS Act spending a key contributor to that jump, according to a US Treasury Department analysis released in June 2023.

The law's effects on the domestic steel industry are expected to be relatively brief as factories get built, but steelmakers see longer-lasting benefits on the horizon via two other laws passed during the Biden administration: the Bipartisan Infrastructure Law and the Inflation Reduction Act. The two laws are expected to drive further industrial construction while also increasing production of electric vehicles and other specialty items, broadening the benefits to more of the steel industry.

But the CHIPS Act is pumping in the money now.

"There has certainly been a benefit to steel and other construction materials [from CHIPS] right now; the factory construction boom is very real," said Scott Paul, president of business and labor group the Alliance for American Manufacturing. "All of those places where the construction of these chip fabrication facilities are underway are bringing in demand for steel and other construction materials."

 Courtesy: www.spglobal.com