NAM: Export, Employment Reports
are Wakeup Call for Congress
The U.S. Commerce Department has announced that strong growth in the U.S. economy is being fueled by robust exports. “This underscores the benefits of free trade agreements and the need to support a robust trade agenda beginning immediately this fall,” says John Engler, president of the National Association of Manufacturers, Washington, D.C.

The Commerce Department reports that the economy grew at an annual rate of 4.0 percent in the second quarter compared to 0.6 percent in the first quarter. Improvements in trade and business investment resulted in an upgrading from July’s advanced estimate of 3.4 percent growth in the second quarter.

“With exports growing by 7.6 percent and imports falling by 3.2 percent, trade contributed 1.4 percentage points to growth in the second quarter,” says NAM Chief Economist David Huether. “This marks the best performance in a dozen years. Buoyed by a more competitive dollar and solid growth abroad, the trade deficit is now at its lowest level in three years as a share of GDP.

“Together, business investment and trade accounted for two-thirds of economic growth in the second quarter,” Huether adds. “As a result, the economic expansion remains on track despite turmoil in the mortgage markets.”

“[The Aug. 30] report should be a wake up call for Congress,” Engler concluded. “Growing exports are important to the health of the U.S. economy, especially when other sources of growth falter. There is simply no question that where we have free trade agreements in place, our trade situation is great and getting better. Congress needs to approve the free trade agreements with Panama, Peru and Columbia and renew Trade Promotion Authority now so that our country can negotiate with other countries to open up more markets for U.S. exporters, most of whom are manufacturers.”

In other action, following August’s grim employment report from the Department of Labor, NAM officials criticized politicians in Washington for their bi-partisan inability to craft sensible, pro-growth policies for the nation and eliminate impediments that ultimately cost America jobs.

The Labor Department reported that the economy lost 4,000 jobs in August, as the 64,000 jobs lost in construction and manufacturing more than cancelled out the 60,000 jobs gained in the service sector. Over the previous three months, private sector employment growth averaged just 71,000, which is the slowest pace in four years. Manufacturing lost 46,000 jobs in August.

Overall manufacturing employment fell by 215,000 in the previous 12 months, the largest 12-month drop in three years, NAM reports.

NAM Senior Vice President for Policy Jay Timmons says the loss of manufacturing jobs is a direct result of Washington’s failure to address the external costs that make it unnecessarily expensive to create jobs. “There is no great mystery to this,” Timmons says. “We have carefully documented that the external costs imposed on U.S. manufacturing for energy, excess litigation, regulation, taxes and health care add 31.7 percent to the cost of production in this country compared to our major trading partners. That severe disadvantage has helped kill more than three million U.S. manufacturing jobs in this decade.”

Made in China...with the Government’s Help
China’s unprecedented economic growth machine relies overwhelmingly on an export-driven model that is fueled by numerous governmental policies that give certain industries—including the stainless steel industry—an unfair edge in the world marketplace, says David A. Hartquist, general counsel to the Specialty Steel Industry of North America, Washington, D.C.

SSINA claims China is a threat to the economic stability of the international stainless steel market and the financial viability of U.S. stainless steel producers. “While there is no crisis today in the U.S. specialty metals industry, there could be if the White House and Congress do not act soon and specifically focus on China’s trade practices,” Hartquist warns.

Policymakers in Beijing, as well as provincial and municipal government officials, actively promote the stainless steel and other “pillar industries” by providing numerous forms of direct and indirect financial assistance, he says. China’s banks are state-owned or state-affiliated and lend money at low rates to state-owned or state-influenced companies. Those companies sell their goods overseas at prices kept down by a Chinese currency that Beijing keeps deliberately and artificially undervalued.

Hartquist provides specific examples of how China’s stainless steel industry has benefited from such preferential industry programs and pointed to 2006 as a watershed year when China became the world’s largest producer of stainless steel, increasing output more than 60 percent or three million tons. “It’s only a matter of time before all this new Chinese capacity, purportedly built to service the growing Chinese market, ends up being dumped into world markets, with Chinese government support as the Chinese economy begins to slow,” Hartquist says.

Recent actions by the U.S. Department of Commerce in initiating countervailing and antidumping duty cases against China and proposed congressional legislation on currency manipulation have given the U.S. stainless steel industry some assurance that the U.S. is fully committed to enforcing trade laws and agreements with China, Hartquist adds.

MSCI
Steel, Aluminum Inventories
Continue to Dip in U.S., Canada
Service center inventories of steel and aluminum products continued their year-over-year decline in August, and shipments of both metals also fell during the month from 2006 levels, according to the latest Metals Activity Report from the Metals Service Center Institute, Rolling Meadows, Ill.

Because shipments of industrial metals closely parallel the economy as a whole, the yearlong decline in steel shipments—12 consecutive months of year-over-year declines in the United States and 13 months in Canada—the report underscores the weakness of North American economic activity.

Steel product activity
Shipments of steel products from U.S. service centers fell 8.4 percent, to 4.64 million tons, compared with August 2006 shipments. Shipments for the first eight months of the year, at 36.1 million tons, are 7.8 percent lower than during the same period last year. In Canada, steel shipments from service centers totaled 315,500 tons in August, down 6.3 percent from a year ago. Year-to-date shipments of 2.53 million tons are down 8.0 percent.

U.S. steel inventories at the end of August totaled 13.0 million tons, or 18.2 percent below year-earlier totals. U.S. steel inventories are at their lowest level since December 2005, when inventories totaled 12.9 million tons. At August shipping rates, U.S. steel inventories represent a 2.8-month supply. In Canada, inventories of about 1.2 million tons are down 18.6 percent from August 2006 and at their lowest level since March 2006. At August shipping rates, this represents a 3.8-month supply.

Aluminum product activity
U.S. service centers shipped 102,400 tons of aluminum products during August, down 4.0 percent from August 2006 shipments. For the year through August, shipments totaled 797,200 tons of aluminum products, or 4.0 percent below the same period last year. Canadian service center shipments totaled 10,200 tons during the month, down 0.8 percent from a year ago. Canadian year-to-date aluminum shipments of 81,500 tons are 3.9 percent lower than during the 2006 period.

U.S. aluminum inventories totaled 302,200 tons at the end of August, or 21.7 percent below stockpiles at the end of August 2006. U.S. inventories are at their lowest level since March 2004, when they totaled 300,000 tons. At August shipping rates, the inventory level represents a 3.0-month supply.

In Canada, aluminum inventories totaled 28,300 tons, or 14.9 percent below year-ago stocks. August marked the 13th consecutive month of year-over-year inventory declines in Canada. At August shipping rates, inventories represent a 2.8-month supply of the metal.

IISI
World Steel Production
Up 5.3 Percent in August
World crude steel production for the 67 countries reporting to the International Iron and Steel Institute, Brussels, Belgium, was 108.1 million metric tons in August, a 5.3 percent increase vs. August 2006.

Chinese production was 41.6 million tons in August, an increase of 13.6 percent compared to August 2006.

North American production also enjoyed a bump in August production, improving 3.5 percent to 11.4 million tons. All three countries were up, with the United States increasing a fraction to 8.5 million tons.

Germany was the largest crude steel producer in the EU-27, with production of 4.0 million tons in August, up 2.5 percent vs. the same month last year.

Production in France was 1.2 million tons, an increase of 3.9 percent. Italy produced 1.6 million tons, a decrease of 11.0 percent.

Production in the United Kingdom was 1.1 million tons, a decrease of 2.7 percent. Production in Europe is lower in August compared to July because of the summer holiday season.

CDA
Funding to Test Copper’s
Germ-Killing Effectiveness
The Copper Development Association, Washington, D.C., has been awarded congressionally approved funds for studies that will help substantiate the natural antimicrobial properties of copper, brass and bronze. Proving that copper kills germs holds the potential to widely expand applications for red metals in hospitals and other public places.

CDA will conduct two studies with the government money. The first will focus on the ability of copper metals to kill deadly pathogens on touch surfaces in hospitals in New York and Charleston, S.C. The other study will look at the effectiveness of copper components in heating, ventilation and air conditioning systems at Fort Jackson in Columbia, S.C.; Fort Gordon in Augusta, Ga.; and the U.S. Air Force Academy in Colorado Springs, Colo.

The studies will be carried out by the Department of Defense under the Telemedicine and Advanced Technologies Research Center, a section of Army Medical Research and Material Command, and implemented by the Advanced Technology Institute.

Research conduced by the University of Southampton, U.K., has demonstrated that copper, brass and bronze quickly and effectively eradicate several different pathogens that are the source of many hospital-acquired infections, including methicillin-resistant staphylococcus aureus and escherichia coli. The U.S. Centers for Disease Control and Prevention estimate infections acquired in U.S. hospitals affect two million individuals annually, resulting in nearly 100,000 deaths.

The touch surfaces study will employ a series of clinical trials to determine how well natural copper, brass and bronze surfaces mitigate infectious microbes, disease cross-contamination and the material effectiveness in reducing the incidence of hospital-acquired infections.

The air-conditioning study will compare copper components, such as cooling coils, heat exchange fins and drip pans, with aluminum components to determine the materials’ ability to control the growth of harmful bacteria and fungi.

AISI
July Shipments Dip
U.S. steel mills shipped 8,844,000 net tons in July, a 1.9 percent decrease from the 9,016,000 net tons shipped in July 2006 and a 0.9 percent decrease from the 8,920,000 net tons shipped in the previous month, according to the American Iron and Steel Institute, Washington, D.C.

A year-to-year comparison of year-to-date shipments shows the following changes within major market classifications: service centers and distributors, down 11.2 percent; automotive, down 1.6 percent; construction and contractors’ products, down 2.5 percent; and oil and gas, down 9.3 percent.

CBSA
Average Daily Copper Shipments
Down Slightly In August
An extra two days in August boosted service centers’ copper and alloy product shipments compared to July, though the month was actually down slightly in terms of the average daily shipping rate. Shipments were up 10.4 percent in a month-to-month comparison, but down 2.0 percent on the average daily rate, according to the Copper and Brass Servicenter Association, Wayne, Pa.

For the first eight months of the year, total copper shipments were even with a similar period of 2006.  This was largely attributable to the second largest product category—copper rod and bar—which was nearly 9.0 percent higher for this year’s first eight months. Total alloys shipments for the first eight months were down 10.5 percent, with total service center shipments down 6.5 percent through August. 

One mitigating factor, CBSA reports, was the loss of some production days in August due to flooding and other adverse weather in the Great Lakes and Southern states.

Briefs
The Precision Metalforming Association’s September Business Conditions Report indicates that metalforming companies expect business conditions to remain fairly steady during the next three months. Conducted monthly, the report is an economic indicator for manufacturing, sampling 159 metalforming companies in the United States and Canada. Asked to forecast the trend in general economic activity for the next three months, 28 percent of participants reported that conditions will improve, 53 percent predict activity will remain the same and 19 percent anticipate a decline in business conditions-about the same sentiment as in August. 

ISM
New Orders, Production, Employment
Growing, Inventories Contracting
Economic activity in the manufacturing sector expanded in August for the seventh consecutive month, while the overall economy grew for the 70th consecutive month, say the nation’s supply executives in the latest Manufacturing Report On Business from the Institute for Supply Management, Tempe, Ariz.

Viewed from the manufacturing sector, the overall economy continues to grow at a significant rate. In comparing August to July, the rate of growth in manufacturing was slightly less, but continues the expansion, though at the slowest pace in the past five months.

Manufacturing grew at a slower rate in August as the PMI registered 52.9 percent, a decrease of 0.9 percentage points when compared to July’s reading of 53.8 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding. A PMI in excess of 41.9 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates that both the overall economy and the manufacturing sector are growing. The past relationship between the PMI and the overall economy indicates that the PMI average for January through August (53.1 percent) corresponds to a 3.5 percent increase in real annual GDP. In addition, if the PMI for August (52.9 percent) is annualized, it corresponds to a 3.4 percent increase in real GDP.