2007 Association News

ISM: U.S. Economic Growth
to Continue Through 2007
Economic growth in the United States is sustainable for the remainder of 2007, say the nation’s purchasing and supply executives in their spring 2007 Semiannual Economic Forecast. Expectations for the remainder of 2007 are encouraging in both the manufacturing and non-manufacturing sectors. These projections are part of the forecast issued in April by the Business Survey Committee of the Institute for Supply Management.

The survey panel of purchasing and supply management executives remains optimistic, with 62 percent of respondents predicting revenues to be greater in 2007 than in 2006. This is reflected in their expectations of a 5.6 percent net increase in revenues for the period.

To support the revenue growth expectations, manufacturers expect to increase capital expenditures 5.8 percent for the year in spite of a lower current operating rate of 82.8 percent.

Metal producers and users are among the industries most bullish about the remainder of the year. Listed in order, the following industries are expecting the greatest revenue increases in 2007: primary metals; miscellaneous manufacturing; electrical equipment, appliances and components; chemical products; fabricated metal products; plastics and rubber products; and food, beverage and tobacco products.

“Respondents are optimistic about their organizations’ prospects for 2007,” says Norbert J. Ore, chair of the ISM Manufacturing Business Survey Committee. “While 2007 appears to be lagging behind the last three years in terms of manufacturing growth, the forecast indicates manufacturers are investing and foresee revenue improvement in their future.”

MSCI
Service Centers Continue
Liquidating Inventories
With economic activity and shipments slowing, U.S. service centers continued in April with a steady liquidation of steel and aluminum inventories, according to the latest Metals Activity Report from the Metals Service Center Institute, Rolling Meadows, Ill. In Canada, the service center inventory correction for both steel and aluminum appears to have ended.

Steel product activity
April U.S. steel shipments of 4.5 million tons were 1.5 percent lower than year-earlier volume, marking the eighth consecutive month of year-over-year monthly shipment declines. Shipments for the first four months of 2007, at 18.2 million tons, were 5.4 percent lower than during the same period in 2006.

Steel inventories declined for the sixth consecutive month, to 14.6 million tons, the lowest level since May 2006, although still 4.5 percent greater than the April 2006 inventory total. At April shipping rates, steel product inventories represented a 3.2-month supply, up slightly from March.

April shipments from Canadian service centers totaled 308,100 tons of steel products, down 5.9 percent from the 2006 month and the ninth consecutive month of year-over-year shipment decreases. Year-to-date shipments of nearly 1.3 million tons were down 5.8 percent in Canada. But steel inventories rose slightly from March levels, to 1.29 million tons, up 17.7 percent from a year ago and, at April shipping rates, equal to a 4.2-month supply.

Aluminum product activity
U.S. aluminum product shipments totaled 94,000 tons in April, down 3.7 percent from the same month in 2006. Shipments of 405,000 tons for the first four months were down 2.9 percent from year-earlier shipments.

U.S. aluminum inventories declined slightly in April to 353,100 tons, down 12,700 tons from the end of March, but remained 2.0 percent higher than April 2006. At April shipping rates, inventories equaled a 3.8-month supply, up from 3.3 months at the end of March.

Canadian aluminum shipments in April totaled 9,700 tons, or 4.8 percent lower than April 2006. Shipments for the first four months of the year were down 4.4 percent, to 40,200 tons. But inventories at the end of April were up slightly, to 29,900 tons, or 500 tons more than at the end of March. Despite that tiny uptick, inventories remain 5.6 percent below year-ago levels. At April shipping rates, Canadian aluminum inventories represented a 3.1-month supply.

Imports Continue Downward; Inventory Reduction
Takes Longer than Expected
Steel imports declined again in April, down 9.3 percent vs. March, reports the American Institute for International Steel, Washington, D.C.

“The decline in April continues to show the impact of the inventory overhang that has reduced import order taking in 2007,” says David Phelps, president of AIIS. Import arrivals from non-NAFTA suppliers in April were ordered during the December 2006 to February 2007 period when the inventory overhang was still significant.

“With the slower than expected reduction in inventory, coupled with stronger prices in other international markets, the U.S. market is not as attractive as some other markets, especially during the timeframe when these imports were ordered,” says Phelps.

Recent reports suggest that while inventory levels have decreased substantially, weakened demand in some steel-intensive sectors has also affected demand and prices in the U.S. market, keeping them below many international markets.

GDP has slowed in 2007, with softness in the housing and auto markets, but steel industry demand remains healthy in non-residential construction and capital goods. Indications are increasing that the domestic steel industry’s order books and raw steel production are improving, suggesting that the steel market is beginning to strengthen at mid-year, AIIS reports.

Of note in the April data was the level of imports from China, which declined again. “The decline in imports from China in April shows that market conditions in China were improving during the period that U.S. April imports were ordered and that other international markets were more profitable than the U.S. for Chinese exports,” Phelps adds.

Total steel imports in April 2007 were 2.76 million tons compared to 3.04 million tons in March 2007, a 9.3 percent decrease, and a 26.2 percent decrease compared to April 2006.

According to year-to-date figures for the first four months, imports decreased 23.7 percent compared to 2006 or from 15.0 million tons in 2006 to 11.4 million tons in 2007. The data show that semifinished imported products decreased by 6.4 percent in April 2007 as compared to April 2006.

Semifinished imports for the year-to-date period decreased from 3.5 million tons in 2006 to 2.2 million tons in 2007, a 37.1 percent decline, based on preliminary reporting.

AISI
Report Says Steel’s Gaining
Ground on Other Materials
The North American steel industry and its strategic partners are advancing steel’s competitive edge in today’s marketplace with their commitment to investment in advanced technologies and the development of advanced design solutions, according to the American Iron and Steel Institute, Washington, D.C.

Through a collective annual investment of nearly $25 million, steel is redefining competitive materials decisions in the automotive, construction and container markets, industry officials say. Results include a 44.6 percent increase in the use of advanced high-strength steels for automotive design and a 47 percent increase in the use of cold-formed steel framing for commercial construction.

Steel’s impact on the marketplace is documented in the AISI Market Development Progress Report 2006-2007, recently released at the AISI’s General Meeting. With the theme “Advancing Steel’s Competitive Edge,” the report shows how the industry’s investment in strengthening traditional markets and developing new-growth markets is providing customers with steel-intensive, cost-effective solutions.

The Progress Report includes a “Report Card” summary for each of the markets that documents market changes, the influence of new design practices and increased steel demand. Some highlights include:

Steel comprises 62 percent of the mass of today’s average light vehicle.
High-strength steels now make up an average of 415 pounds per vehicle, representing a 44.6 percent increase in the past 10 years.
The use of cold-formed steel framing for commercial construction has increased 47 percent since 1998, from 1.7 million tons to 2.5 million tons in 2006.
Residential steel framing now claims 72 percent market share in Hawaii, 8 percent in California and 7 percent in Florida. The residential steel framing market has the potential for 3.25 million tons of new steel growth annually.
Metal roofing market share has grown dramatically, from 3 percent in 1995 to 8 percent in 2005, representing a change in steel demand from 375,000 tons to 790,000 tons.
Tinplate consumption rose approximately 8 percent in 2006.
The overall steel recycling rate in 2005 was 75.7 percent in the U.S., with total tons of steel recycled at slightly over 76 million—more than all other materials combined.

CBSA
Copper, Alloy Shipments
Down Through First Quarter
Service centers’ average daily shipping rate for copper and copper alloy products during March edged up just 0.3 percent from February, according to the Copper and Brass Servicenter Association, Wayne, Pa. The average shipping rate was off 0.8 percent compared to March 2006.

With one additional shipping day for most service centers in March, the month’s red metal shipments surpassed those of the prior month by nearly 14 percent. Comparing March shipments to those of the companion month a year ago, however, totals were down 11.5 percent, though there was one less shipping day this year.

For the first quarter, service centers’ copper metal shipments were down 3.1 percent compared to 2006, and alloy shipments were off 3.1 percent. Total warehouse shipments were down 9.4 percent in a year-over-year comparison.

At the CBSA annual convention in April, members elected three new directors. Joseph Walton, president of Williams Metals & Welding Alloys, Wayne, Pa.; David Dickens Jr., president of Three D Metals, Valley City, Ohio; and Dan Kendall, president of ABC Metals, Logansport, Ind., were elected to three-year terms.

Denis Brady of Nonferrous Products Inc., Franklin, Ind., was renamed president of the association; Daniel Erck of Cambridge Lee Industries, Boston, Mass., was renamed vice president; and Robert A. Lewis of AJ Oster West, Yorba Linda, Calif., was renamed treasurer. Scott Immell of Scioto Metals, Columbus, Ohio was elected to his first term as secretary.

Donald M. Commerford Jr., Revere Copper Products, Rome, N.Y., and Joyce Ronken, Copper Plating Inc., Newmarket, Ontario, were returned to their roles as supplier members to the board.

SSINA
Stainless Steel Imports
Rise Early in Year
Imports of stainless steel through February totaled 130,729 tons, an 11 percent increase compared to the first two months of 2006, according to the Specialty Steel Industry of North America, Washington, D.C.

Through two months, U.S. consumption was 403,526 tons, a 2 percent increase, while import penetration was 32 percent, a 2 percent increase.

February data for individual products categories is as follows:

Stainless steel sheet/strip: Imports were 73,368 tons, a 3 percent decrease; U.S. consumption was 267,019 tons, a 7 percent decrease.
Stainless steel plate: Imports were 23,076 tons, an 89 percent increase; U.S. consumption was 67,218 tons, a 32 percent increase.
Stainless steel bar: Imports were 21,248 tons, a 29 percent increase; U.S. consumption was 43,156 tons, a 25 percent increase.
Stainless steel rod: Imports were 5,682 tons, a 6 percent increase; U.S. consumption was 13,013 tons, a 15 percent increase.
Stainless steel wire: Imports were 7,356 tons, a 1 percent decrease; U.S. consumption was 13,121 tons, a 3 percent decrease.

Imports of total specialty steel, comprising stainless steel, alloy tool steel and electrical steel, totaled 164,243 tons through two months, a 15 percent increase compared to 2006. U.S. consumption was 487,650 tons, up 15 percent from the first two months of last year, while import penetration was up 11 percent to 25 percent.

IISI
Despite Drop in U.S., World
Crude Steel Production Up
World crude steel production in April from the 67 countries reporting to the Brussels-based International Iron and Steel Institute totaled 109.3 million tons, a 7.6 percent increase vs. April 2006. Asian production once again led the way.

China produced 40.3 million tons of crude steel in April, an increase of 16.5 percent compared to the same month of 2006. Japan produced 9.7 million tons, an increase of 4.1 percent. South Korean production was 4.3 million tons, an increase of 10.9 percent. April crude steel production in India was 3.7 million tons, an increase of 5.7 percent.

North America again bucked the worldwide trend of increased production, with total crude steel production of 10.4 million tons, down 6.2 percent from April 2006. The United States produced 8.0 million tons, down 6.6 percent from the previous year.