Coalition Criticizes $232 Billion Trade Deficit with China
The U.S. trade deficit with China grew to a new high of $232.5 billion in 2006, up from $201.5 billion the previous year, according to the Department of Commerce. The U.S.-China bilateral trade deficit exceeded that with any other U.S. trading partner, notes the China Currency Coalition, an affiliation of U.S. manufacturers opposed to China’s economic and monetary policies.
The coalition plans to focus on the new Congress to promote legislation that will provide defense for U.S. manufacturers, workers and farmers who must compete against Chinese industries that benefit from their government’s currency manipulation. Some economists claim China’s currency is undervalued by about 40 percent. This undervaluation is significant because it effectively levies a tax and therefore increases the cost of U.S. exports to China, while giving Chinese producers an automatic price break on their exports to the United States, the coalition says.
“Americans are hurt coming and going, and many U.S. companies have concluded that the only way they can compete is by moving their operations to China. What is needed is legislation that will enable U.S. companies—consistent with international law—to defend themselves against the negative impact of undervaluation,” coalition spokesman David A. Hartquist says.
In July 2005, China appreciated its currency by about 2 percent and since then has allowed the yuan to increase by an additional 3.7 percent. Any nominal strengthening of the yuan against the dollar, however, has been largely cancelled by the relative levels of inflation in China and the United States, according to the coalition.
China has now amassed foreign exchange reserves of over $1 trillion, far surpassing any other country’s reserves. China’s subsidized currency also attracts foreign direct investment into China. Since January 2001, for example, three million U.S. manufacturing jobs have been lost.
“The insistence of China upon keeping an artificially weak yuan is preventing market forces from acting and is creating dangerous imbalances,” Hartquist says.
AIIS
Zeroing Practice Over on New Trade Cases
The U.S. Department of Commerce will no longer employ zeroing in new antidumping investigations, instead recalculating margins to include non-dumped steel. Zeroing is an antidumping methodology that does not offset dumped sales with non-dumped sales in trade cases.
The decision stemmed from 11 steel cases filed by European Union countries with the WTO, which has repeatedly ruled against zeroing. The Commerce Depart ment enacted the move after unsuccessful attempts to appeal the rulings.
“This announcement shows the importance of this issue and why AIIS has long had zeroing as one of its top priority trade law changes. AIIS applauds the DOC move to eliminate it for new cases,” says David Phelps, president of the American Institute for International Steel, which represents foreign steel producers.
The Commerce Department announcement, a preliminary determination, will have to be made final prior to the deadline of April 9. If the final margins are the same as the preliminary, two cases will be terminated—hot-rolled sheet from the Netherlands and stainless steel bar from France.
MSCI
Steel Shipments Start Year Behind 2006 Pace
January shipments of steel products from service centers in the United States and Canada declined from year-ago levels again in January, according to the Metals Activity Report from the Metals Service Center Institute, Rolling Meadows, Ill. Inventories also declined in both countries.
Shipments of aluminum products rose in the United States, but were up only slightly in Canada on a year-over-year basis.
U.S. steel and aluminum
U.S. service centers shipped nearly 4.7 million tons of steel products in January, a decrease of 2.5 percent from January 2006. At the end of January, steel inventories were 16.3 million tons, up 24.1 percent from a year ago, but down 1.5 percent from December. At the January shipping rate, this represented a 3.5-month supply, up 27.3 percent from the previous year, but down 26.4 percent from the previous month. The December inventory figures equaled a 4.7-month supply, tying the months-on-hand record. That figure was exacerbated by the seasonally low volume typical of mid-winter shipments, MSCI reported.
U.S. service center shipments of aluminum products in January totaled 105,000 tons, or 2.4 percent more than January 2006 shipments. Inventories were 367,100 tons, or 3.9 percent higher than a year ago, although 2.6 percent lower than at the end of December. At the January shipping rate, this represented a 3.5-month supply, 1.4 percent higher than January 2006, though a decrease of 19.5 percent from December.
Canadian steel and aluminum
Steel shipments from Canadian service centers totaled 337,000 tons in January, a decrease of 4.6 percent from a year earlier. Steel product inventories at the end of January were 1.25 million tons, 21.8 percent higher than last year, but a decrease of 0.7 percent from December. At the January shipping rate, this represented a 3.7-month supply, an increase of 27.6 percent from a year ago, but a decrease of 30.5 percent from December.
Canadian aluminum shipments totaled 10,200 tons, or 1.0 percent more than January 2006. Month-end inventories totaled 30,600 tons, down 4.0 percent from a year ago, but 4.3 percent higher than at the end of December. At the January shipping rate, this represented a 3.0-month supply, down 4.3 percent from a year ago and a decrease of 12.9 percent from December.
AISI
Steel Imports, Shipments Drop Through Winter
The U.S. imported 2,685,000 net tons of steel in January, down 11 percent from December 2006, according to the American Iron and Steel Institute, Washington, D.C. Imports of finished steel totaled 2,153,000 tons, 13 percent behind the previous month’s figure.
Among product categories, bars reinforcing was up 70 percent; structural pipe and tubing was up 22 percent; plates in coil was up 18 percent; and hot-rolled bars was up 11 percent.
China was the leading exporter of steel to the United States at 510,000 net tons, a 9 percent increase over December 2006. China has been the leading foreign supplier of steel to the United States for seven straight months. Other notable importers included Brazil at 127,000 tons, Korea at 114,000 tons and Japan at 110,000 tons.
“We continue to have concerns about the impact that government subsidies are having on the domestic market, a direct violation of trade rules established by the World Trade Organization,” says Louis L. Schorsch, CEO of Arcelor Mittal Flat Products Americas and chairman of AISI.
In December, U.S. steel mills shipped 7,609,000 net tons of steel, 11.8 percent off the 8,513,000 tons shipped in December 2005. The figure was also 5.0 percent behind the previous month.
A year-to-year comparison of total shipments showed the following changes in major market classifications: service centers and distributors, up 2.1 percent; automotive, up 7.5 percent; construction and contractors’ products, up 10.6 percent; oil and gas, up 19.6 percent; machinery, industrial equipment and tools, up 4.6 percent; appliances, utensils and cutlery, down 6.0 percent; containers, packaging and shipping materials, up 1.2 percent; and electrical equipment, up 12.8 percent.
CBSA
Copper Shipments Increase in 2006
Shipments of copper and copper alloy products tailed off at the end of the year, but total shipments finished 3.5 percent ahead of 2005, according to the Copper and Brass Servicenter Asso ciation, Wayne, Pa.
Total shipments of all copper products for 2006 were up 7.1 percent over 2005, while alloy products saw a 1.5 percent increase.
Distributors had a difficult Decem ber, as shipments were down 18.5 percent from November. The average daily shipping rate was off 14.3 percent from November’s totals, CBSA reports. Compared to 2005, December’s shipments were down 13.5 percent. The average daily rate was 9.9 percent off the previous year’s mark.
NAM
Manufacturers Trade Group Releases Energy Strategy
The National Association of Manufacturers, Washington, D.C., unveiled a new energy strategy, “Energy Security for American Competitiveness,” designed to diversify the nation’s energy mix and lay a foundation for meeting the nation’s energy needs in the future.
“Our economy and way of life are dependent on reliable and affordable energy,” says NAM President John Engler. “We cannot rely on the future to take care of itself. We must be proactive and we must be vigilant in creating an energy policy to keep America strong and working.”
The proposal provides a blueprint of action items for the Congress that:
- Sets goals for U.S. energy efficiency;
- Raises energy intelligence of the American public;
- Strengthens research and development projects;
- Streamlines existing statutes and regulations;
- Increases the nation’s electricity generation;
- Diversifies and increases domestic energy supply.
According to the Energy Information Administration, U.S. energy production will increase by 27 percent over the next 25 years. However, energy consumption is forecast to grow by 34 percent during that time, “leaving the United States more dependent on energy imports and vulnerable to higher energy prices,” Engler says.
PMA
Business Conditions On the Recovery
Metalforming companies expect a substantial spike in new orders and shipments during the next three months, according to the February Precision Metalforming Association Business Conditions Report. Conducted monthly, the report is an economic indicator for manufacturing, sampling 138 metalforming companies in the United States and Canada.
When asked to assess the trend in general economic activity over the next three months, 32 percent of participants forecast that conditions would improve, up from 27 percent in January. Only 10 percent expected a decline in business conditions, down from 18 percent forecasting a decline in January.
Metalforming companies also expect an improvement in incoming orders during the next three months. Forty-five percent of respondents predicted an increase in orders, up from 42 percent in January, while only 16 percent anticipated a decrease.
Average daily shipping levels spiked in February. Thirty-seven percent of companies reported that shipping levels were above levels of the prior three months, up substantially from 23 percent in January.
“The near-term outlook for new orders and shipments in the metalforming industry has shifted positively in the past month, following a severe downturn in the fourth quarter,” says William E. Gaskin, PMA president. “PMA’s monthly orders and shipments survey indicated that there was a 20 percent decrease in shipments in December, compared to November, so anticipated first-quarter improvement is welcome news.”
SSINA
Stainless Steel Imports, Consumption Up in 2006
Imports of total stainless steel through 11 months of 2006 hit 730,377 tons, a 23 percent increase compared to the same period in 2005, according to the Specialty Steel Industry of North America, Washington, D.C.
U.S. consumption was 2,390,592 tons, up 15 percent. Import penetration was 32 percent, up 2 percent from 2005.
- Stainless steel sheet/strip: Imports were 479,059 tons, a 38 percent increase; U.S. consumption was 1,710,302 tons, a 15 percent increase.
- Stainless steel plate: Imports were 99,717 tons, a 30 percent increase; U.S. consumption was 324,321 tons, a 40 percent increase.
- Stainless steel bar: Imports were 109,159 tons, a 5 percent decrease; U.S. consumption was 213,510 tons, a 3 percent decrease.
- Stainless steel rod: Imports were 28,062 tons, a 28 percent increase; U.S. consumption was 64,124 tons, a 1 percent increase.
- Stainless steel wire: Imports were 44,380 tons, a 10 percent increase; U.S. consumption was 78,335 tons, an 11 percent increase.
Imports of total specialty steel (comprising stainless steel, alloy tool steel and electrical steel) through 11 months totaled 924,270 tons, a 14 percent increase compared to 2005. U.S. consumption was 2,863,018 tons, a 13 percent increase. Import penetration was flat at 32 percent.
- Alloy tool steel: Imports were 93,243 tons, a 17 percent decrease; U.S. consumption was not calculable.
- Electrical steel: Imports were 70,650 tons, an 8 percent decrease; U.S. consumption was 401,361 tons, a 7 percent increase.
