March 2006
Association News

AISI: Gulf Coast Region Should
‘Rebuild Stronger with Steel’
Twelve North American steel companies have joined together to help rebuild the U.S. Gulf Coast region in the aftermath of hurricanes Katrina and Rita. Collectively, they have committed $1.1 million to support the Gulf Coast Steel Initiative through a business plan put together by the American Iron and Steel Institute. The initiative’s ultimate goal is to “rebuild stronger with steel” in a region subject to severe storms.

The newly launched Gulf Coast Steel Initiative will focus on implementing long-term strategies to impact future construction practices in the region. “The strength of this commitment is based on the industry’s significant investment in market development over the past five years that provides steel-based solutions to the rebuilding challenges we’re seeing in the Gulf Coast region,” says John Surma, chairman of AISI and chairman and CEO of United States Steel Corp. “The $1.1 million funding for the Gulf Coast Steel Initiative is in addition to more than $7 million already contributed to the disaster relief effort by North American steel companies on an individual basis.”

Companies supporting the Gulf Coast Steel Initiative include: AK Steel Corp., California Steel Industries Inc., Dofasco Inc., IMSA ACERO S.A. de C.V., IPSCO Inc., Mittal Steel USA, Nucor Corp., Shenango Inc., Steel Dynamics Inc., United States Steel Corp., USS-POSCO Industries, and Wheeling-Pittsburgh Steel Corp.

After discussions with local, state and federal officials involved in disaster relief efforts, initiative-supporting companies decided on a course of action focused on where the need is clearly the greatest—the residential market. Through AISI’s Market Devel-opment programs, resources will be used to support local communities and businesses in the rebuilding process, particularly in the areas of steel framing and roofing. In addition, steel is playing a major role in solid waste reduction through its recycling program.

“Like everyone else, we were amazed at the extent of damage sustained by the Gulf Coast region,” says Andrew G. Sharkey, III, president and CEO of AISI. “After a comprehensive review of the needs throughout the region—and a universal concern to rebuild it stronger than before—we recognized that our industry had a lot to offer. Through our long-term investment in market development, we have established a number of steel-based solutions that can help to rebuild homes and the infrastructure of the region while also helping to fortify it against future storms.”

Initiative-supporting companies would welcome the participation of other organizations with similar goals to provide steel-intensive solutions for rebuilding the region, he added.

Gulf Coast Steel Initiative objectives include to:

  • Work with affected communities to support the use of state-of-the-art design and construction practices for hurricane-prone areas by providing educational programs for building inspectors;
  • Encourage the introduction of insurance and lending programs that promote the use of durable construction materials;
  • Partner with local contractors and technical schools to train workers on how to build homes using steel framing and roofing; and
  • Assist with clean-up efforts by facilitating steel product recycling throughout the region, which will provide business owners and consumers with information on where they can take their steel products to have them recycled.

Currency Coalition Dismayed
By Report’s View of China
China’s policy of undervaluing its currency appeared only as a footnote in an extensive U.S. government review of trade relations with China, much to the disappointment of a coalition seeking an end to Chinese currency manipulation.

Touted as a “ top-to-bottom review of U.S.-China trade relations,” the 29-page report released by the Office of the U.S. Trade Representative recommends that U.S. trade resources and priorities be readjusted to meet new challenges, and identifies trade objectives accompanied by key action items.

“While we support the comprehensive approach outlined in the report, unless China stops its currency juggling act, many of the report’s goals will be rendered moot,” says David A. Hartquist, spokesman for the China Currency Coalition, an alliance of American industry and trade groups opposed to Chinese monetary policy. “That this critical issue appeared only as a footnote in [this] report is troublesome.”

Hartquist notes that the disregard for the currency issue in the USTR report appears at odds with the 2006 Economic Report of the President, also released in February. That report specifies China’s “tightly managed pegged exchange rate” and “foreign exchange market intervention to limit currency appreciation” as partly to blame for the United States’ record trade deficit.

In July 2005, the People’s Bank of China announced a change in its exchange rate regime, which the coalition describes as woefully inadequate. The change amounted to the yuan appreciating by only 2 percent, compared to estimates by economists that the degree of undervaluation is 40 percent or more.

MSCI: Steel, Aluminum Shipments
On the Rise in U.S., Canada
Shipments of steel and aluminum products from U.S. and Canadian service centers rose during January compared with year-ago shipments, while inventory positions of both metals declined in terms of months of supply on hand, according to the latest Metals Activity Report from the Metals Service Center Institute, Rolling Meadows, Ill.

U.S. service centers shipped nearly 4.8 million tons of steel products in January, a 4.9 percent increase from January 2005, marking the sixth consecutive month of year-over-year growth in monthly shipments.

Steel product inventories at the end of January totaled 13.1 million tons, a decrease of 17.7 percent from January 2005, but a 1.6 percent increase from December 2005. Expressed in terms of months of inventory on hand, U.S. service center steel product inventories fell to 2.7 months of supply, down 21.5 percent from a year ago and a decrease of 17.8 percent from the previous month.

January shipments of aluminum products totaled 102,500 tons, an increase of 7.7 percent from the same month a year ago and continuing a two-year trend of increases in aluminum product shipments. Aluminum product inventories at the end of January totaled 353,400 tons, essentially flat when compared with January 2005 inventory levels and those of December. However, at the current shipping rate, aluminum product inventories represent a supply of 3.4 months, a decrease of 7.1 percent from a year ago and 11.4 percent from the previous month.

Shipments of steel products from Canadian service centers totaled 353,100 tons in January, an increase of 4.6 percent from January 2005 shipments of 337,400 tons. Steel product inventories were nearly 1.0 million tons at the end of January, a decrease of 24.1 percent from a year earlier, but about 4.2 percent higher than December 2005. Expressed in terms of months of inventory on hand, steel stocks at the end of January represented a 2.9-month supply, down 27.5 percent from January 2005 and a decrease of 20.4 percent from the previous month.

Canadian service centers shipped 9,500 tons of aluminum products in January, an increase of 5.4 percent from January 2005. Month-end inventories totaled 30,200 tons, a decrease of 2.7 percent from year-ago inventories and down 2.4 percent from December. At the current shipping rate, January aluminum stocks represented a 3.2-month supply, a decrease of 7.7 percent from last year and down 17.4 percent from December.

CBSA: Sharp Increase for Copper
Shipments During January
Total copper shipments in the first month of 2006 surpassed those registered in the initial month of the previous year by 8.3 percent, according to the Copper and Brass Servicenter Association, Wayne, Pa. Copper shipments were up 12.7 percent and alloy shipments up an even 6 percent year-to-year.

Although the final quarter of 2005 was better than many had anticipated, the surge in January following December’s good performance was particularly significant. January copper product shipments were up 25.5 percent while alloy products registered a gain of 26.5 percent from December levels.

Particularly strong was 200 series brass sheet, the largest volume category, up nearly 50 percent from December. That product category also registered a gain of 22.2 percent vs. January 2005.

CBSA officials noted that in the 2006 Wholesale Distribution Economic Fact Book, published by Pembroke Consulting, metal service center revenues increased 12.7 percent last year compared to 2004. That marked one of the better performance increases among distributors of all commodity lines.

SSINA: Stainless Steel Imports
Slightly Down from 2004
Year-end figures from the Specialty Steel Industry of North America, Washington, D.C., show imports of stainless steel finished slightly behind the 2004 totals. Imports for 2005 were 671,322 tons, a 1 percent decrease from the previous year.

The final numbers reflect a downward trend in the second half of the year, as imports were up 15 percent through the first six months.

U.S. consumption for the year totaled 2,256,880 tons, down 8 percent from 2004. Import penetration was 30 percent, a 2 percent increase.
Additional year-end data from SSINA shows:

  • Stainless steel sheet/strip: Imports were 378,748 tons, reflecting a 13 percent decrease; U.S. consumption was 1,624,772 tons, a 10 percent decrease; import penetration was 23 percent.
  • Stainless steel plate: Imports were 83,374 tons, reflecting a 22 percent increase; U.S. consumption was 253,462
    tons, a 12 percent decrease; import penetration was 33 percent.
  • Stainless steel bar: Imports were 124,008 tons, reflecting a 48 percent increase; U.S. consumption was 236,185 tons, a 15 percent increase; import penetration was 53 percent.
  • Stainless steel rod: Imports were 41,538 tons, reflecting a 13 percent decrease; U.S. consumption was 66,095 tons, a 10 percent decrease; import penetration was 63 percent.
  • Stainless steel wire: Imports were 43,654 tons, reflecting a 4 percent increase; U.S. consumption was 76,366 tons, a 7 percent decrease; import penetration was 57 percent.

Imports of total specialty steel—including stainless steel, alloy tool steel and electrical steel—were 875,778 tons in 2005, a 2 percent increase. U.S. consumption was 2,764,314 tons, a 6 percent decrease.

In alloy tool steel: Imports were 121,860 tons, reflecting a 29 percent increase; U.S. consumption and import penetration are not calculable.

In electrical steel: Imports were 82,595 tons, reflecting a 5 percent decrease; U.S. consumption was 406,473 tons, a 2 percent increase; import penetration was 20 percent.

AIIS: Steel Imports Down
Significantly in 2005
Steel imports decreased 10.9 percent last year, or from 35.81 million tons in 2004 to 31.91 million tons in 2005, according to the American Institute of International Steel, Washington, D.C., which represents foreign mills.

Steel imports in December 2005 totaled 2.73 million tons compared to 2.41 million tons in November 2005, a 13.1 percent increase, and a 6.8 percent decrease compared to December 2004.

Semifinished imported steel increased by 27.6 percent in December 2005 vs. December 2004. For the year in total, semifinished imports decreased 7.5 percent—from 7.42 million tons in 2004 to 6.86 million tons in 2005, based on preliminary reporting.

IISI: World Steel Production
Begins Year With Increase
World crude steel production for the 61 countries reporting to the Brussels-based International Iron and Steel Institute was 94.7 million metric tons in January, 5.0 percent higher than the same month of 2005.

China is again the largest steel-producing country with production of 30.3 million tons in January. This is 20.7 percent higher than the same month in 2005. India produced 3.6 million tons of crude steel, up 17.8 percent year-on-year. Total production in the Asia region was 48.7 million tons, 11.9 percent higher than for January 2005.

Crude steel production in Russia was 5.4 million tons for the month, almost identical to January 2005. Ukraine produced 3.3 million tons of crude steel, 1.2 percent lower than for the same month last year. Total production in the CIS was 9.5 million tons in January.

The EU-25 countries produced 15.8 million tons of crude steel, 5.8 percent lower than for the same month last year. Germany (3.4 million tons), Italy (2.5 million tons), and France (1.8 million tons) were the largest EU producers in January. However, all three countries recorded lower production than in January 2005. The United Kingdom (1.2 million tons) increased production by 1.5 percent year-on-year.

Brazil produced 2.6 million tons of crude steel in January, the same as January 2005.

Briefs
The International Iron and Steel Institute will open a second office based in Beijing, China, in April 2006. The new office, to be led by Nae Hee Han, will improve the quality of information on developments in the Asia-Pacific region for the benefit of IISI’s worldwide membership. Han will also serve as IISI’s chief economist.

 
 

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