MSCI Endorses Fair Currency Act
Steel Shipments Decline
for Sixth Straight Month; Correction Continues
AISI: House Reauthorizes Metals Initiative
AIIS: Steel Imports Decline 10 Percent in February
SSINA: Stainless Steel Imports Up 23 Percent in 2006
PMA: Business Conditions Decline in March
IISI: World Steel Demand to Grow 5.9 Percent
ISSF: World Stainless Production up 16.7 Percent in 2006

MSCI Endorses Fair Currency Act
The Metals Service Center Institute, Rolling Meadow, Ill., has endorsed the Senate’s introduction of the Fair Currency Act of 2007 and urged fast action on the proposed legislation.

“This bill, like the House bill before it, fills a void in U.S. trade policy by permitting injured industries to secure countervailing duties to offset the impact of consistently misaligned exchange rates caused by the policies of foreign governments,” says M. Robert Weidner, III, MSCI’s president and chief executive officer. “Until this legislation is enacted, U.S. manufacturers—our customers in every state of the union—will continue to suffer the devastating effects of manipulated, misaligned currencies with no means of self-defense. This is not about protectionism. It is about permitting the foreign exchange markets to determine the appropriate value of all currencies to secure a level playing field in international trade.”

The bipartisan legislation was introduced by Senators Jim Bunning (R-Ky.), Evan Bayh (D-Ind.), Robert P. Casey, Jr. (D-Pa.), Carl Levin (D-Mich.), Olympia Snowe (R-Maine) and Debbie Stabenow (D-Mich.)

“The fact that Republicans and Democrats have united behind this legislation is an important indication of how much American manufacturing needs the ability to fight the impact of mercantilism of this kind,” Weidner says. “All of us understand that U.S. industry can compete with anyone if trade is free and fair, and if all partners to global trading agreements comply with their agreements. But it is very difficult to overcome the trade subsidy of deliberately undervalued currencies.”

Weidner notes that recent presidents have relied on persuasion in attempts to motivate trading partners to eliminate misaligned currencies. But after many years of talk, there has been almost no change, particularly with regard to China’s currency.

“We need new policy tools to help persuade these trading partners to abandon their currency misalignment, to deter others from adopting similar policies, and to provide effective remedies for injured American industries,” he says. “The Fair Currency Act is the best such tool we have yet seen.”

Steel Shipments Decline for Sixth Straight Month; Correction Continues
North American steel shipments from metals service centers continued a six-month, year-over-year decline in February, while inventories, which peaked last fall in the United States and Canada, also moved lower, according to the latest Metals Activity Report from the Metals Service Center Institute, Rolling Meadows, Ill.

At this stage, steel inventory liquidation, which began four or five months ago, will continue into the second quarter, MSCI reports.

Aluminum shipments also fell in February compared with year-ago volume, with lower inventories of aluminum products reported in both countries.

Steel product activity
Shipments of steel products from U.S. service centers fell 6.7 percent in February, to 4.26 million tons compared with February 2006 shipments of nearly 4.57 million tons. Canadian steel shipments of 306,700 tons were down 5.1 percent from year-earlier levels, marking the seventh consecutive month of year-over-year steel shipment declines. For the year to date, U.S shipments were down 4.5 percent, while Canadian shipments were 4.8 percent lower.

U.S. steel inventories, which peaked in October at nearly 16.8 million tons, totaled just 15.8 million tons at the end of February. That amount was still 18.2 percent more than at the same time last year. At February shipping rates, this was equal to a 3.7-month supply, well above the 2.9-month supply of February 2006, and slightly higher than in January 2007.

Canadian steel product inventories were about 1.24 million tons at the end of February, down slightly from January but still 20.1 percent higher than a year ago. At February shipping rates, this represented a 4.0-month supply, compared with a 3.2-month supply on hand at the end of February 2006, and slightly more than at the end of January.

Aluminum product activity
U.S. shipments of aluminum products totaled 96,500 tons, or 4.0 percent less than in February 2006. On a year-to-date basis, U.S. aluminum shipments were down 0.8 percent at 201,500 tons. Canadian shipments of 9,700 tons of aluminum products were down 4.1 percent from a year ago and were off 1.9 percent for the year to date at 19,900 tons.

U.S. aluminum inventories of 362,800 tons at the end of February were 3.9 percent higher than a year earlier and represented a 3.8-month supply, up slightly from January 2007 and from February 2006. Canadian inventories of 29,300 tons of aluminum products were down 5.2 percent from a year ago and, in terms of months of supply, flat with January’s supply of 3.0 months at current shipping rates.

AISI
House Reauthorizes Metals Initiative
The U.S. House of Representatives has reauthorized the Metals Initiative, a public-private cost-sharing research partnership to develop technologies in the metals industry. Originally authorized by the 100th Congress, H.R. 1126 aims to strengthen the competitiveness of the U.S. industry while improving environmental and energy efficiencies.

Rep. Daniel Lipinski (D-Ill.) introduced the bill, also known as the Steel and Aluminum Energy Efficiency and Technology Competitiveness Act. It was co-sponsored by nine other Steel Caucus members in the House.

“This bill is a direct contributor to maintaining a strong U.S. manufacturing sector by delivering numerous new technologies to the factory floor,” says American Iron and Steel Institute Presi­ dent and CEO Andrew G. Sharkey, III.

The Washington, D.C.-based AISI, with its member companies, has maintained a partnership with the U.S. Department of Energy under the Metals Initiative, and its predecessor, the Steel Initiative, since 1987.

“The constant influx of new technology is vital to competitiveness in any sector,” says Sharkey. “Our partnership with DOE allows us to conduct much more high-risk research than we could on our own, and we obtain results faster.”

H.R. 1126 not only supports steel-related research, including CO2 reduction technologies, but also maintains and advances U.S. manufacturing competitiveness.

“The steel industry, and other metals industries, are important parts of our national economy and they must remain innovative in order to stay competitive in the increasingly global economy,” Lipinski says.

This bill re-authorizes $12 million per year for five years to fund advanced metals research. Provisions in the bill create a “payback” feature to repay the taxpayers investment in any technology developed that is put into use in industry or the marketplace. In addition, the bill prioritizes the development of technologies that reduce greenhouse gas emissions.

AIIS
Steel Imports Decline 10 Percent in February
Steel imports declined 10 percent in February to 2.65 million tons from 2.95 million tons in January 2007, according to the American Institute of Inter­ national Steel, Washington, D.C. The total was also a 27.3 percent decrease from February 2006.

“Excess inventory in late 2006 when these products were ordered from non-NAFTA sources depressed order-taking and import arrivals,” says Dave Phelps, AIIS president. Imports in February declined 38.1 percent from the peak of 4.29 million tons in July 2006, when arrivals were responding to strong demand and high prices earlier in 2006. 

“While some indications are that the market is improving late in the first quarter and import orders for some products are improving, the import pipeline of 3 to 5 months means that import arrivals will not return to more healthy levels until later in 2007,” says Phelps. 

According to year-to-date figures, imports decreased 21.8 percent compared to 2006 or from 7.2 million tons in 2006 to 5.6 million tons in 2007. The data show that semifinished imported products decreased by 41.0 percent in February 2007 as compared to February 2006. For the year-to-date period, semifinished imports decreased from 1.8 million tons in 2006 to 1.0 million tons in 2007, a 42.6 percent decrease, based on preliminary reporting.

SSINA
Stainless Steel Imports Up 23 Percent in 2006
Total stainless steel imports increased by 23 percent in 2006, according to year-end figures from the Specialty Steel Industry of North America, Washington, D.C. U.S. consumption totaled 2,591,577 tons, a 15 percent increase from 2005.

Import penetration was 32 percent, up 2 percent from 2005.

Year-end data for individual product categories is as follows:

• Stainless steel sheet/strip: Imports were 515,017 tons, a 36 percent increase. U.S. consumption was 1,842,713 tons, a 13 percent increase.
• Stainless steel plate: Imports were 112,479 tons, a 35 percent increase; U.S. consumption was 358,406 tons, a 41 percent increase.
• Stainless steel bar: Imports were 120,456 tons, a 3 percent decrease. U.S. consumption was 233,278 tons, a 1 percent decrease.
• Stainless steel rod: Imports in 2006 were 31,479 tons, a 24 percent decrease. U.S. consumption was 71,361 tons, an 8 percent increase.
• Stainless steel wire: Imports in 2006 were 48,667 tons, an 11 percent increase; U.S. consumption was 85,819 tons, a 12 percent increase.

Imports of total specialty steel (comprising stainless steel, alloy tool steel and electrical steel) in 2006 totaled 1,010,892 tons, a 15 percent increase from 2005. U.S. consumption was 3,108,118 tons, a 12 percent increase, while import penetration was 33 percent, a 1 percent increase.

PMA
Business Conditions Decline in March
Metalforming companies expect a slight downturn in business conditions during the next three months, according to the March Business Conditions Report from the Precision Metalforming Association, Cleveland. Conducted monthly, the report is an economic indicator for manufacturing, sampling 162 metalforming companies in the United States and Canada .

When asked about the trend in general economic activity over the coming three months, 28 percent of participants reported that conditions would improve, down from 32 percent in February. Fifty-seven percent predict activity will remain the same, while 15 percent anticipate a decline in business conditions.

IISI
World Steel Demand to Grow 5.9 Percent
The International Iron and Steel Institute predicts 5.9 percent growth in worldwide steel demand in 2007. Such growth would represent an additional 65 million tons, taking worldwide demand to nearly 1.18 billion tons.

Growth will accelerate in 2008, with an increase of 6.1 percent forecast by the Brussels-based association, increasing demand to 1.25 billion tons.

Neither of these figures matches the growth of 8.5 percent totaled in 2006.

The growth trends are strongest in Africa, Asia and South America. Growth is expected to resume in North America in 2008 after an inventory correction runs its course this year.

China remains the largest single market and the strongest growth area. Steel use will increase by 13 percent in 2007 followed by another 10 percent in 2008, taking the total to 443 million tons—35 percent of the world total.

For February, IISI reported world crude steel production of 99.0 million tons, 8.6 percent higher than for the same month in 2006. China produced 36.1 million tons of crude steel in February, a 20.1 percent increase from the same period in 2005.

The United States produced 7.1 million tons, down 8.0 percent from February 2006.

ISSF
World Stainless Production up 16.7 Percent in 2006
World stainless steel production increased by 16.7 percent to 28.4 million tons in 2006, according to the International Stainless Steel Forum, Brussels, Belgium. All major regions of the world contributed to the growth.

Crude stainless steel production in Asia grew by 20.6 percent to 15.1 million tons. Asia now produces more than half of all the stainless steel in the world. The driving force was China with production of 5.3 million tons of stainless steel, a growth of 68 percent compared to 2005. The strong increase in production is partially based on new capacity coming on-stream during 2006.

Japan has been the largest stainless steel producer in Asia. In 2006, total production in Japan was 4.1 million tons, an increase of 2.3 percent. All other stainless steel producing countries in Asia showed growth rates of 9 to 13 percent, though production in South Korea remained flat.

The second biggest producing area in 2006 was Western Europe/Africa. Stainless steel production increased by 13.4 percent to 10 million tons in this region

The Americas increased their stainless steel production by 9.8 percent to nearly 3 million tons.