SSINA Study: Chinese Subsidize Stainless Industry
The government of China has a policy of conferring preferred status on the stainless steel industry, and providing it with a wide range of preferential programs and direct subsidies, according to a new study issued by the Specialty Steel Industry of North America. The study, Government Subsidies to the Stainless Steel Industry,” claims China’s Steel and Iron Industry Development Policy mandates direct government subsidization of the Chinese steel and stainless steel industries.
Quoting directly from the policy, the study details Chinese government support in the form of “tax refunds, discounted interest rates, funds for research and other policy support for major iron and steel projects utilizing newly developed domestic equipment.” The policy also calls for indirect support by, among other things, restricting foreign investment, discriminating against foreign equipment and technology, and by providing various export credits.
In short, according to the SSINA study, China’s Steel Policy “is a primary example of the government’s attempt to manipulate the steel market and dictate industry outcomes by involving itself in decisions that should be made by the market.”
The study was released in conjunction with the annual American Metal Market specialty steel conference in Pittsburgh where SSINA counsel David A. Hartquist gave a speech entitled “The U.S. Specialty Steel Industry: Today and Tomorrow.” In his remarks, Hartquist stated that, even though global stainless steel capacity exceeds demand, new facilities are being added around the world. This new capacity is being funded through massive government subsidization, particularly in China.
“SSINA members recognize the importance of being able to address Chinese subsidies in the future should the need arise,” Hartquist said. “We are pleased that the Department of Commerce has announced its willingness to pursue countervailing duty cases against non-market economies like China. This is consistent with U.S. law and WTO rules.”
MSCI
Steel Inventories, Shipments Continue to Decline
Inventories of steel products at U.S. service centers fell again in March, while shipments of steel dipped more than 10 percent from year-ago levels, according to the Metals Activity Report from the Metals Service Center Institute, Rolling Meadows, Ill. Aluminum shipments fell nearly six percent.
In Canada, the inventory correction appeared to be ending, as month-end stocks of both industrial metals rose slightly.
Steel product activity
U.S. inventories of steel products fell to about 14.8 million tons by the end of March, down from 15.8 million tons in February, but 9.9 percent above inventory levels at the end of March 2006. At those shipping rates, steel on hand represented a 3.1-month supply, down from 3.7 months in February. Steel product shipments, when compared to year-earlier volume, fell for the seventh consecutive month to nearly 4.8 million tons. For the year to date, shipments of 13.7 million tons were down 6.6 percent from the end of first-quarter 2006.
Inventories of steel products at Canadian service centers rose slightly to 1.24 million tons, or 18 percent more than at the end of March 2006. At March shipping rates, this represented a 3.6-month supply, the lowest level since June 2006. Shipments of 341,900 tons were 7.5 percent lower than shipments in March 2006, and year-to-date shipments of 985,600 tons were down 5.8 percent from the same period last year.
Aluminum product activity
Shipments of aluminum products from U.S. service centers, at 110,000 tons, were 5.8 percent below year-ago volume, while first-quarter shipments of 311,500 tons were down 2.6 percent. U.S. aluminum inventories at the end of March totaled 364,800 tons, slightly more than in February and 5.9 percent more than the end of March 2006. At March shipping levels, this represented a 3.3-month supply, a decline from the 3.8-month supply on hand at the end of February.
Canadian service centers shipped 10,700 tons of aluminum products in March, a decline of 8.3 percent from year-earlier totals. First-quarter Canadian aluminum volume of 30,600 tons was down 4.2 percent. Inventories stood at 29,400 tons at the end of March, a 6.7 percent decline from March 2006 but up slightly from February. At March shipping rates, this represented a 2.7-month supply of aluminum.
AIIS
Steel Imports Slowing Through First Quarter
Imports declined 23.3 percent in the first quarter of 2007 compared to 2006, based on preliminary data, as many sectors of the U.S. steel market continued to remove excess inventory from the marketplace.
“Since the March arrivals from non-NAFTA sources were ordered in the October to December period, the modest level of arrivals in March reflect the order-taking during the peak of the inventory levels,” says David Phelps, president of the American Institute for International Steel, Washington, D.C. “With arrivals in March from Canada jumping 30.2 percent compared to February, there is reason to believe that the inventory adjustment period is coming to an end.”
Imports from China declined for the second month in a row, totaling 378,000 tons in March, down from the peak of nearly 600,000 tons in October 2006. “It is clear that Chinese exports were likewise affected by reduced order-taking during the period of inventory adjustment in the U.S.,” says Phelps.
Total steel imports in March 2007 were 2.99 million tons compared to 2.67 million tons in February 2007, a 12.1 percent decrease, and a 26.4 percent decrease compared to March 2006. The data show that semifinished imported products decreased by 51.6 percent in March 2007 as compared to March 2006, from 1.1 million tons to 530,000 tons. For the year-to-date period, semifinished imports dropped from 2.84 million tons in 2006 to 1.6 million tons in 2007, a 43.8 percent decrease, based on preliminary reporting.
AISI
February Steel Shipments Trail 2006 Figures
U.S. steel mills shipped 8.35 million tons of steel in February, down 6.5 percent from the same period in 2006, according to the American Iron and Steel Institute, Washington, D.C. February’s figures were also down 3.2 percent from the 8.61 million tons shipped in January.
A year-to-year comparison of year-to-date shipments shows the following changes within major market classifications: service centers and distributors, down 9.7 percent; automotive, down 4.6 percent; construction and contractors’ products, up 2.2 percent; oil and gas, down 8.1 percent; machinery, industrial equipment and tools, down 10.1 percent; appliances, utensils and cutlery, down 6.6 percent; containers, packaging and shipping materials, down 7.4 percent; and electrical equipment, down 16.2 percent.
IISI
Crude Steel Production Up 10.2% in First Quarter
World crude steel production for the countries reporting to the International Iron and Steel Institute, Brussels, Belgium, totaled 110.9 million metric tons in March, an 8.6 percent increase vs. March 2006. Total world crude steel production was 318.3 million tons in the first three months of 2007, a 10.2 percent increase over the first quarter of 2006.
In the first three months of 2007, the Asia region produced 173.6 million tons of crude steel, an increase of 16.3 percent over the same period of 2006. The Asia region has produced 54.5 percent of the world’s crude steel this year.
China produced 40.2 million tons of crude steel in March, an increase of 20.4 percent compared to the same month of 2006. Japan produced 10.3 million tons, an increase of 6.0 percent. South Korean production was 4.3 million tons, an increase of 9.4 percent. March crude steel production in India was 4.2 million tons, an increase of 10.2 percent.
The general trend for increased production did not reach North America, where crude steel output was 10.4 million tons, down 11.3 percent from 2006. The United States produced 7.8 million tons, down 12.0 percent from a year earlier. Canada fell to 1.1 million tons, down 23.7 percent from a year earlier.
In Europe, Germany produced 4.2 million tons in March, an increase of 1.4 percent compared to March 2006. Italy was the second largest crude steel producer with 3.0 million tons, an increase of 3.7 percent. France produced 1.9 million tons, up 4.0 percent. Production in the United Kingdom was 1.2 million tons in March, 2.0 percent below the same month of 2006.
Russia produced 6.2 million tons of crude steel in March, an increase of 6.4 percent compared to the same month last year. In the Ukraine production was 3.7 million tons, up 11.5 percent.
Other major steel producing countries in March were Turkey (2.2 million tons, up 12.4 percent) and Brazil (2.8 million tons, up 12.4 percent).
SSINA
Stainless Imports Rise Through First Month
Imports of stainless steel totaled 72,065 tons in January, a 23 percent increase compared to the same month in 2006, according to data from the Specialty Steel Industry of North America, Wash ington, D.C. U.S. consumption was up 9 percent to 220,545 tons. Import penetration was 33 percent, up four percent from the same month in 2006.
January data for individual product and categories as follows:
- Stainless steel sheet/strip: Imports were 40,014 tons, a 10 percent increase; U.S. consumption was 145,707 tons, a 2 percent increase.
- Stainless steel plate: Imports were 12,809 tons, a 113 percent increase; U.S. consumption was 36,545 tons, a 35 percent increase.
- Stainless steel bar: Imports were 11,923 tons, a 45 percent increase; U.S. consumption was 24,290 tons, a 36 percent increase.
- Stainless steel rod: Imports were 2,976 tons, a 12 percent decrease; U.S. consumption was 6,818 tons, an 8 percent increase.
- Stainless steel wire: Imports were 4,343 tons, a 2 percent increase; U.S. consumption was 7,185 tons, a 6 percent decrease.
Imports of total specialty steel (comprising stainless steel, alloy tool steel and electrical steel) in January 2007 were 86,509 tons, a 24 percent increase compared to January 2006. U.S. consumption was 261,111 tons, a 10 percent increase, while import penetration was 33 percent, a 4 percent increase.
- Alloy tool steel: Imports were 6,566 tons, a 27 percent decrease; U.S. consumption was not calculable.
- Electrical steel: Imports were 7,878 tons, a 203 percent increase; U.S. consumption was 35,450 tons, a 28 percent increase.
PMA
Metalforming Companies Envision Slowing Conditions
Metalforming companies expect business conditions to continue weakening over the next three months, according to the April Business Conditions Report from the Precision Metalforming Association, Cleveland. The report is an economic indicator for manufacturing, sampling 158 metalforming companies in the U.S. and Canada.
Asked what they expect the trend in general economic activity to be over the next three months, only 25 percent of participants reported that conditions will improve, a decrease from the 28 percent in March. Fifty-six percent predict activity will remain the same, similar to last month, while 19 percent anticipate a decline in business conditions, up from 15 percent.
“Metalforming companies are experiencing a very challenging environment, as customers constantly adjust their requirements for metal parts and assemblies to avoid excess inventories should the economy stumble more severely than anticipated. There is continued uncertainty in the automotive, housing and appliance markets that will make profitability in 2007 a challenge for many companies,” says William E. Gaskin, PMA president.
CBSA
Copper Shipments Well Behind 2006 Figures
A sluggish start in January was compounded in February as copper and brass shipments declined for the second straight month, according to the Copper and Brass Servicenter Association, Wayne, Pa.
Total copper shipments were 5.5 percent below the same period in 2006, while alloy shipments were down 17.1 percent from February 2006. The two largest volume categories, 200 series brass sheet and 300 series rod were down 20.4 percent and 21.6 percent below last year’s figures, respectively.
The average daily shipping rate was 12.5 percent behind the February 2006 pace. It also trailed January’s rate by 2.9 percent.
Briefs
Douglas Kittenbrink, an executive vice president with Allegheny Tech nologies, has been named chairman of the Specialty Steel Industry of North America, replacing the retired Dr. Jack W. Shilling. Dr. Sunil Widge of Carpenter Technology Corp. was appointed vice chairman of SSINA.
Warren Bartel, senior vice-president and senior advisor to Luvata, has been named the new chairman of the Copper and Brass Fabricators Council, Washington, D.C. Bartel will lead discussions on international competition practices, market protection, industry policy and self-legislation.
