August 2005
Association News

Japan Fines U.S. Exports
to Protest Byrd
Following the lead of other foreign countries, the Japanese government announced it will impose retaliatory tariffs on certain U.S. exports in protest of the Byrd Amendment, which it contends is a violation of World Trade Organization rules.

Foreign interests and steel consumer groups are urging Congress to repeal the amendment, also known as the Continued Dumping and Subsidy Offset Act of 2000, passed to compensate American manufacturers for goods illegally dumped by foreign competitors. Under the CDSOA, some duties on illegal imports go directly to “affected domestic producers” harmed by the dumping. Opponents of the legislation argue that this amounts to an unfair subsidy for a relative handful of companies and unnecessarily raises the cost of goods to users of steel and other products.

The WTO ruled the Byrd Amendment in violation of U.S. trade obligations last year, clearing the way for retaliatory sanctions unless the U.S. repeals the law. Japan and seven other WTO-member countries are authorized by the WTO to retaliate against the U. S.

Starting Sept. 1, Japan will impose a 15 percent duty on steel imports, targeting products such as ball bearings and airplane parts, which could amount to tariffs worth as much as $51 million.

Japan’s action follows the European Union and Canada’s decision to impose duties, which began May 1. The EU imposed a 15 percent duty on various types of paper, clothing, fabrics, footwear and machinery, amounting to about $28 million. Canada imposed like duties on cigarettes, oysters and live swine worth $14 million.

To date, American manufacturers, including steel producers, have received more than $1 billion in compensation from the federal government under the Byrd Amendment.

Business is Brisk for Ports of Indiana
The Ports of Indiana handled 3.8 million tons of cargo in the first half of 2005, a 19 percent increase vs. the same period last year—including a 39 percent increase in shipments of steel.

In 2004, the Ports of Indiana moved 7.6 million tons of cargo across their docks for the entire year—a 35 percent increase from 2003. The 2004 shipping total surpassed every year since 1998 by more than a million tons. 2005 may be poised to set a new record, as the ports generally handle more cargo in the second half of the year.

Midway through 2005, the Ports of Indiana had shipping increases in grain (up 52 percent), limestone (up 38 percent), miscellaneous cargoes (up 37 percent) and coal (up 18 percent), in addition to the 39 percent increase in steel.

“We are continuing to build on the momentum that was established during the fourth quarter of last year and the first quarter of this year,” says Rich Cooper, chief operating officer for the Ports of Indiana.

“Last year we handled just under 60 percent of our total tonnage in the final six months,” he adds. “It will be tough to match that this year, but we’re optimistic the strong shipping trends in steel, coal and grain will continue, and we hope to develop some new cargo as well.”

MSCI:
First-Half Steel Shipments Lag ‘04; Aluminum’s Ahead
June shipments of steel products from U.S. and Canadian service centers saw growth over the previous month, but were still below levels of June 2004. First-half 2005 steel shipments totaled 27.9 million tons, down 3.3 percent from the 28.9 million tons shipped in the first six months of 2004, according to data from the Metals Service Center Institute.

U.S. shipments of aluminum products in June, at 108,300 tons, exceeded May by 11.6 percent and last June by 6.5 percent. Year-to-date aluminum shipments of 600,100 tons by U.S. service centers were up 7.5 percent over the first six months of 2004.

U.S. service centers shipped 4.72 million tons of steel in June, up 2.9 percent from in May, but slightly below the 4.78 million tons shipped a year ago.
Service center steel product inventories totaled nearly 14.9 million tons in June, down 4 percent from May’s 15.5 million tons. Service centers have been steadily working down their inventories since January when stocks were at the 15.9 million ton level. June’s inventory was still well above the 13.4 million tons a year earlier, when steel supplies were much tighter.

U.S. aluminum product inventories totaled 373,900 tons, about the same as the previous month but up nearly 18 percent from the 317,600 tons in June 2004.

Canadian service centers shipped 364,200 tons of steel in June, up slightly from the previous month but down 5.5 percent from June 2004. Year-to-date shipments of steel totaling 2.1 million tons show 2005 lagging the first half of last year by over 7 percent.

Canadian shipments of aluminum products in the first half, however, were ahead of last year’s pace by more than 2 percent.

AIIS: June Steel Imports Show Decline
Steel imports declined in June by 3 percent vs. the previous month, and by 23.6 percent compared with June 2004. Year-to-date, however, steel imports increased by 7 percent in the first half of the year vs. first-half 2004, or from 15.6 million tons in 2004 to 16.7 million tons in 2005, according to preliminary steel import data from the U.S. Department of Commerce, as reported by the American Institute for International Steel.

Arrivals in June from non-NAFTA sources were ordered during the late first quarter when consumers were attempting to reduce inflated inventory levels.

“Current market developments give reason for optimism as the low levels of imports and the domestic mills’ reduction in production seem finally to have had the desired impact on inventories,” says David Phelps, president of AIIS, which represents foreign mills. “This trend is also reflected in the sharp declines in semifinished product imports.”

Underlying demand has remained strong in many markets. With the lower levels of imports and domestic production and shipments, inventories declined substantially in June and most likely in July.

“As a result, many analysts see the steel market turning around in the next few months and market conditions for domestic shipments and imports improving,” Phelps adds.

Total steel imports in June 2005 were 2.56 million tons compared to 2.64 million tons in May 2005. The data also show that imports of semifinished products fell 30.1 percent in June 2005 vs. June 2004. Year to date, however, semifinished imports grew from 3.4 million tons in 2004 to 3.49 million tons in 2005, a 2.4 percent increase.

AISI: May Steel Shipments
Decline 1.8 Percent
U.S. steel mills shipped 8,387,000 net tons in May, or 8.8 percent less than their May 2004 shipments of 9,194,000 net tons, and down 1.8 percent from the 8,545,000 net tons shipped in April, according to the latest data from the American Iron and Steel Institute.

A year-to-year comparison of year-to-date shipments shows the following changes within major market classifications: service centers and distributors, down 1.9 percent; automotive, down 1.3 percent; construction and contractors’ products, up 2.6 percent; oil and gas, up 11.0 percent; machinery, industrial equipment and tools, down 2.3 percent; appliances, utensils and cutlery, down 1.6 percent; containers, packaging and shipping materials, down 15.4 percent; and electrical equipment, down 6.4 percent.

In other action, AISI officials are applauding passage of H.R. 6, the first comprehensive federal energy legislation in nearly 13 years. The measure was well received by the U.S. domestic steel industry, which has been hit hard by high energy prices.

“Energy efficiency and greenhouse gas emissions are areas that the North American steel industry takes very seriously. Over the last 15 years, the steel industry has reduced its energy intensity, and by association its carbon emissions, by 23 percent per ton of steel shipped,” says Andrew G. Sharkey, president and CEO of AISI.

“Investments in new technologies, as well as research and development funding for cleaner approaches to existing technologies, will facilitate further strides in energy efficiency.”

The bill addresses domestic energy supply issues by initiating the most comprehensive oil and gas inventory ever conducted on the Outer Continental Shelf to determine the nation’s offshore resource potential, including natural gas.

IISI: World Steel Output Up,
U.S. Output Down
World crude steel production for the 61 countries reporting to the International Iron and Steel Institute totaled 89.7 million metric tons in June—5.2 percent higher than for the same month of 2004.

Total world crude steel production for the first six months of 2005 was 546.3 million tons, a rise of 7.6 percent vs. the same period in 2004. Excluding China, world production stands at 381.5 million tons for the first six months of 2005, just 0.6 percent higher than the first half of 2004.

Chinese production jumped 33 percent in June to 28.5 million metric tons, compared to June 2004. Total crude steel production in China was 164.9 million tons for the first half of 2005, an increase of 28.3 percent vs. the same period of 2004.

Provisional figures indicate that crude steel production in the United States was 7.3 million metric tons in June, down 11.3 percent compared to June 2004. First-half production in the United States was 47.0 million tons, 2.6 percent lower than for the first half of 2004.

CBSA: Copper Grows in June,
But Still Off Last Year
Service center shipments of coppermetal products in June were about 5 percent ahead of those in May. However, the average daily shipping rate month-to-month was flat, according to the latest data from the Copper and Brass Servicenter Association.

At the mid-point of the year, total red metal shipments were down 6.46 percent from 2004 levels, with alloy shipments down 7.97 percent and those for copper off 2.98 percent. The largest year-to-year drop was in alloy sheet (other than 200 series), off nearly 25 percent, CBSA reported.

CBSA anticipates further declines for July, which historically is the second slowest month of the year for the industry due to seasonal shutdowns in many consuming sectors.

Association members surveyed recently by CBSA, including distributors and mills, predict little change in shipments to major markets in the second half (see table). Viewed most favorably were the telecommunications and electric/electronics industries. Least favorable is the outlook for automotive, expected to dip by nearly 3 percent in the second half.

SSINA Specialty Imports Up for the Year
Total specialty steel imports—including stainless steel, alloy tool steel and electrical steel—hit 376,707 tons in the first five months of the year, a 23 percent increase vs. the same period in 2004, according to the latest data from the Specialty Steel Industry of North America. U.S. consumption in the five-month period was 1,188,284 tons, a 2 percent increase.

SSINA offers the following breakdown by market segment for January through May 2005 vs. the first five months of 2004:

  • Stainless steel sheet/strip: Imports were 162,813 tons, a 12 percent increase; U.S. consumption was 711,851 tons, a 3 percent decrease.
  • Stainless steel plate: Imports were 30,131 tons, a 1 percent decrease; U.S. consumption was 106,626 tons, a 14 percent decrease.
  • Stainless steel bar: Imports were 53,049 tons, a 70 percent increase; U.S. consumption was 104,258 tons, a 29 percent increase.
  • Stainless steel rod: Imports were 21,401 tons, a 26 percent increase; U.S. consumption was 33,018 tons, a 7 percent decrease.
  • Stainless steel wire: Imports were 19,009 tons, a 10 percent increase; U.S. consumption and import penetration are calculated quarterly.
  • Alloy tool steel: Imports were 50,945 tons, a 52 percent increase; U.S. consumption and import penetration are not calculable.
  • Electrical steel: Imports were 39,359 tons, a 28 percent increase; U.S. consumption was 173,224 tons, a 12 percent increase.

PMA: Metalformers Predict Slight Improvement
Metalforming companies are expecting a slight improvement in near-term business conditions, according to the July Business Conditions Report from the Precision Metalforming Association.

When asked what they expect the trend in general economic activity to be over the next three months, 32 percent of PMA members surveyed said they think business conditions will improve (up from 27 percent in June), 57 percent anticipate activity will remain the same (compared to 54 percent the previous month) and just 11 percent predict it will decrease (from 19 percent in June).

Metalforming companies also expect an increase in incoming orders over the next three months. Forty-one percent believe orders will increase (compared to 35 percent in June), 45 percent anticipate no change (compared to 41 percent the previous month) and only 14 percent forecast a decrease in orders (down from 24 percent in June).

Metalforming companies with a portion of their workforce on short time or layoff stayed virtually the same.

 

 
 

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