October 2006
Association News

AISI Appeals to Policymakers
for Tougher Stance on China
The American Iron and Steel Institute, on behalf of its U.S. member companies, recently submitted a written statement expressing serious concerns to the interagency Trade Policy Staff Committee about China’s noncompliance with the commitments it has made to the World Trade Organization.

Comments by AISI highlight the U.S. administration’s need to address the “unprecedented surge in imports and unfair trade from China.”

According to data from AISI, the American Institute of International Steel and the U.S. Department of Commerce, 2006 steel imports are up 42 percent compared to 2005. Imports of steel declined by 7.6 percent in August, from the near-record 4.286 million tons in July.

Semifinished imports increased 103.6 percent, from 405,000 tons in August 2005 to 825,000 tons in August 2006, and were nearly 2 million tons ahead of the pace of 2005 year-to-date.

In its statement to the TPSC, AISI expressed concerns about the need to “insist that China fulfill strictly its commitment to reform its state-owned enterprises,” and that it “end its continued interventions in, and distortions of, upstream markets” for critical raw materials such as blast furnace coke and steel scrap. It also emphasized the U.S. need to improve “the still unacceptably low level of antidumping duty collection” in the case of dumped and injurious imports from China under order.

AIIS President David Phelps says the increased import numbers simply reflect high domestic prices and hungry demand. “During the timeframe that these imports were ordered—March through May— U.S. steel consumers were in need of substantially more steel than the U.S. industry could provide,” says Phelps. “Based on the AIIS monthly survey of importers, we believe that imports will trend downward in the coming months due to slightly increased inventories and some slowing of demand in some markets.”

In its statement, AISI asserts that Chinese subsidies, currency manipulation, overcapacity and non-market behavior are “undermining the U.S. manufacturing base.” Thus, there is an urgent need for the U.S. government to consider taking WTO action to deal with Chinese subsidies that are prohibited by the WTO, and to continue to treat China as a non-market economy under U.S. antidumping law.

The Chinese government’s currency manipulation, according to AISI, constitutes “an export subsidy of the type that is strictly prohibited under Article 3 of the WTO Agreement on Subsidies and Countervailing Measures.” In addition, this currency manipulation has “played an important role in the current U.S. record account deficit and the loss of three million U.S. manufacturing jobs since 2001.”

The AISI submission further makes the point that in order to achieve fundamental change and address the United State’s enormous trade deficit with China and the rest of the world, WTO tax rules on border-adjustability need to be revised. These tax rules continue to discriminate between direct and indirect tax systems. This discrimination continues to be “a major contributor to America’s runaway trade deficit, to the significant detriment of manufacturing in the United States,” AISI officials maintain.

In addition, the AISI statement highlights the need for the administration to enforce the China-specific safeguard provisions found in Section 421 of U.S. trade law, which has yet to result in a single case of trade remedies, notwithstanding repeated affirmative findings by the International Trade Commission of market disruption.

The AISI statement also urges the Bush administration to keep pressing the government of China to show more respect for intellectual property rights.

MSCI: U.S. Steel Inventories
Continue Yearlong Rise
Steel inventories at U.S. service centers rose for the ninth straight month, while aluminum stocks rose for the fifth consecutive month, according to the latest Metals Activity Report from the Metals Service Center Institute, Rolling Meadows, Ill.

In Canada, steel inventories also continued their yearlong climb, while aluminum inventories remained relatively flat.

U.S. service centers shipped 5.1 million tons of steel products during August, up 9.7 percent from August 2005. Year-to-date steel shipments totaled 39.2 million tons, an increase of 5.7 percent from shipments during the same eight-month period last year. Month-end steel inventories totaled more than 15.9 million tons, an increase of 19.0 percent from the year-earlier amount and 4.4 percent greater than at the end of July. At the current shipping rate, steel inventories represented a 3.1-month supply.

Aluminum shipments totaled 106,400 tons during August, a 16.8 percent increase from July but slightly below the same month in 2005. For the year to date, aluminum shipments of 830,400 tons were up 4.1 percent from the same period of 2005. Aluminum inventories totaled 385,800 tons at the end of August, 2.2 percent greater than the end of July and 5.0 percent more than August 2005. At the current shipping rate, this represents supplies sufficient for 3.6 months.

August shipments of steel products from Canadian service centers declined 10.1 percent from the same month in 2005, to 336,400 tons. For the first eight months of the year, steel shipments of 2.8 million tons were down 1.3 percent from the same period last year. Steel product inventories of nearly 1.5 million tons were 35.8 percent greater than at the end of August 2005 and represented a supply sufficient for 4.3 months at current shipping rates.

Aluminum shipments declined 8.5 percent from year-earlier totals, to 9,700 tons. Shipments for the first eight months of the year totaled 83,600 tons of aluminum products, or 3.2 percent more than last year. End-of-August inventories of aluminum totaled 31,300 tons, down 6.0 percent from a year ago and 0.3 percent from July. At the current shipping rate, aluminum inventories represent a 3.2-month supply.

IISI: World Steel Production
Up 11 Percent in August
World crude steel production for the 62 countries reporting to the International Iron and Steel Institute, Brussels, Belgium, was 101.6 million metric tons in August, an 11 percent increase from the same period in 2005.

The figures suggest that China currently accounts for 36 percent of world crude steel production, compared to 34 percent for the same period last year. Excluding China, world production rose 7.9 percent compared to August 2005.

China produced 36.7 million tons of crude steel in August, an increase of 17.0 percent compared to August 2005. Japan produced 9.6 million in August, up 4.1 percent year-over-year. South Korea produced 4.0 million tons of crude steel, an increase of 5.7 percent from 2005.

In North America, Canada produced 1.3 million tons in August. This is an increase of 12.6 percent year over year. The United States totaled 8.4 million tons during the quarter. While the figure for North America is based on an estimate, crude steel production in North America has achieved double-digit growth of over 11 percent from 2005.

Germany was again the largest producer of crude steel in the European Union with total production of 3.9 million tons in August. This is 16.7 percent higher than for the same month of 2005. August production in Italy was 1.8 million tons, an increase of 13.9 percent year-over-year.

As the largest crude steel producers in Eastern Europe, Russia and the Ukraine posted crude steel production figures of 6.0 million tons and 3.5 million tons, respectively, suggesting 9 percent and 14.1 percent increases over the same period last year.

ISSF: Stainless Production
Increases Worldwide
The International Stainless Steel Forum reports that world stainless crude steel production in the first six months of 2006 stood at 13.9 million metric tons, up 6.5 percent vs. the same period of 2005. All regions have contributed to this strong growth.

Stainless steel melting in Asia grew by 8.1 percent to 7.1 million tons. Driving forces were China (up 44 percent) and India (up 10 percent). China produced 2.3 million tons of stainless crude steel in the first half of the year and is now the leading stainless steel producing country in the world. The strong increase in production is partially caused by new capacities coming on-stream this year.

The second biggest producing region is Western Europe/Africa where stainless steel production increased by 3.5 percent. Total production for the region in the first half of 2006 was 5 million tons.

The Americas increased their stainless crude steel production by 7.4 percent to 1.6 million tons. Production in the Central and Eastern Europe region increased by 24 percent, mainly due to sharp increases in production in Russia.
Comparing the second quarter of 2006 to the same period of 2005 shows that production increased by 12.6 percent to 7.3 million tons in the quarter. This is an all-time high for a single quarter. ISSF believes the increase can be attributed to both an improvement in general economic development, and the need for stainless steel suppliers to re-fill empty stocks.

CBSA: Copper Shipments Remain
Ahead of 2005 Pace
Red metals shipments improved 13.6 percent in August compared to the previous month, reports the Copper and Brass Servicenter Association, Wayne, Pa., though the increase was primarily due to the increased number of shipping days.

August had three additional shipping days. The average daily shipping rate in August vs. July registered a drop of 1.2 percent. Copper shipments were up 1.1 percent compared to August 2005, though alloy shipments were down 4.0 percent from the same month in 2005.

Two-thirds of the way through the year, total red metal shipments remained 9.7 percent ahead of the same eight-month figure in 2005.

SSINA: Stainless Steel Imports
Up in First Half of 2006
Imports of total stainless steel in the first six months of 2006 were 381,362 tons, an 11 percent increase compared to the same 2005 period, according to data from the Specialty Steel Industry of North America, Washington, D.C.

U.S. consumption was 1,274,725 tons, an 8 percent increase, while import penetration was 30 percent.

SSINA reports the following data comparing year-to-date imports and consumption through June vs. the same six-month period in 2005:

  • Stainless steel sheet/strip: Imports were 241,971 tons, a 26 percent increase; U.S. consumption was 922,584 tons, an 8 percent increase.
  • Stainless steel plate: Imports were 45,804 tons, a 19 percent increase; U.S. consumption was 165,045 tons, a 30 percent increase.
  • Stainless steel bar: Imports were 55,006 tons, a 15 percent decrease; U.S. consumption was 111,276 tons, a 12 percent decrease.
  • Stainless steel rod: Imports were 14,669 tons, a 42 percent decrease; U.S. consumption was 32,699 tons, a 16 percent decrease.
  • Stainless steel wire: Imports were 23,911 tons, a 5 percent increase; U.S. consumption was 43,121 tons, a 7 percent increase.

Imports of total specialty steel (comprising stainless steel, alloy tool steel and electrical steel) in the first five months of 2006 were 473,013 tons; a 5 percent increase compared to the first half of 2005; U.S. consumption was 1,544,050 tons, a 7 percent increase.

  • Alloy tool steel: Imports were 52,406 tons, a 14 percent decrease; U.S. consumption was not calculable.
  • Electrical steel: Imports were 39,246 tons, a 17 percent decrease; U.S. consumption was 230,007 tons, a 10 percent increase.

Briefs
The Consuming Industries Trade Action Coalition is closely monitoring a complaint filed with the WTO by the United States, the European Union and Canada against China tariffs that hurt U.S. automakers and auto suppliers. According to the office of the U.S. Trade Representative, China imposes charges that unfairly discriminate against imported auto parts and discourage automobile manufacturers in China from using imported auto parts in the assembly of vehicles. The United States and other complaining countries believe that these restrictions are inconsistent with China’s WTO obligations.

Metalforming companies expect a slight decline in business conditions during the next three months, according to the September Precision Metalforming Association Business Conditions Report. Conducted monthly, the report is an economic indicator for manufacturing, sampling 153 metalforming companies in the United States and Canada. When asked to forecast the trend in general economic activity over the next three months, 27 percent of participants reported that economic activity will decrease (up from 20 percent in August), 49 percent believe conditions will remain the same (down from 58 percent the previous month) and 24 percent anticipate economic activity will improve (compared to 22 percent in August).

 

 
 

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