NAM Criticizes Treasury’s Decision Not to Cite China
National Association of Manufacturers President John Engler criticized the U.S. Treasury Department’s decision not to cite China for currency manipulation in its semi-annual report to the U.S. Congress.

“While we support Secretary of Treasury Henry Paulson’s approach to the U.S.-China Strategic Economic Dialogue and the other steps he is making to press China to revalue the yuan more quickly, these processes would be made easier by Treasury formally acknowledging that China is manipulating its currency,” says Engler, president of Washington, D.C.-based NAM.

NAM members consider China’s monetary policy, which keeps its yuan artificially weak relative to the U.S. dollar, a serious problem and have urged Chinese officials to let the yuan appreciate significantly in the near future.

China’s currency has appreciated 12 percent since NAM and other groups first called for a more market-based currency. While this amount is helpful, there is virtually universal agreement that it needs to move faster, both for China’s domestic economy and to reduce global trade imbalances, Engler says.

“Currency manipulation is not a pejorative term but one that is defined by the articles of the International Monetary Fund, to which China has acceded. NAM wants the multilateral rules and procedures to work, but if the Treasury will not step forward and plainly state that China is manipulating its currency, we cannot expect the International Monetary Fund to do so,” Engler says.  

MSCI
Service Center Inventories at Lowest Point Since 1997
The uncertain economic outlook compounded by seasonally low demand led to reduced shipments of steel and aluminum products from service centers in the United States and Canada in November. Inventories also continued to decline from year-earlier levels as service centers, reluctant to restock, delayed most new orders until called for by seasonal upswings, according to the November Metals Activity Report of the Metals Service Center Institute, Rolling Meadows, Ill.

U.S. service centers further drew down steel inventories and added modestly to aluminum stocks compared with October inventory totals. Although U.S. inventories, as measured by months of supply on hand, appeared to rise from October levels, the change was due to the seasonal demand decline.

Canadian service centers added slightly to steel inventories while slightly reducing aluminum inventories from October, MSCI reports.

Steel product activity
November steel product shipments from U.S. service centers totaled just under 4.0 million tons, down 7.8 percent from shipments during the same month in 2006. Shipments for the first 11 months of the year totaled 48.8 million tons, down 7 percent from a year earlier.

U.S. inventories at the end of the month totaled 12.1 million tons, 27 percent lower than November 2006 and the lowest total since November 1997. That represented a 3.0-month supply, compared with a 3.8-month supply on hand in November 2006 and 2.6-month supply at the end of October.

Canadian steel product shipments fell from year-earlier totals for the 16th consecutive month, to 321,400 tons, down 0.3 percent from 2006. Year-to-date shipments totaled 3.48 million tons, down 6.8 percent from the previous year.

Steel inventories in Canada declined 12.4 percent from a year earlier to 1.13 million tons, or a 3.5-month supply, compared with a 4.0-month supply the previous year and a 3.3-month supply at the end of October.

Aluminum product activity
U.S. service center shipments of aluminum products totaled 89,000 tons in November, or 5.5 percent lower than November 2006. Year-to-date aluminum shipments were 1.08 million tons, down 5.2 percent from the previous year.

U.S. aluminum product inventories were 272,200 tons, down 29.9 percent from a year earlier and equal to a 3.1-month supply, compared with a 4.1-month supply at the same time in 2006 and a 2.7-month supply at the end of October.

Canadian service center aluminum shipments of 9,900 tons declined 2.4 percent from November 2006, and year-to-date shipments of 112,500 tons were 3.1 percent lower than the previous year.

Canadian aluminum inventories of 27,600 tons declined 10.3 percent from 2006 and, at November shipping rates, represented a 2.8-month supply, compared with a 3.0-month supply at the end of November 2006.

AISI
Steel Mill Shipments Increase in October
U.S. steel mills shipped 9,238,000 net tons in October, a 5.9 percent increase from the 8,725,000 net tons shipped in October 2006, according to the American Iron and Steel Institute, Washington, D.C. The October figures show an 8.8 percent increase from the 8,492,000 net tons shipped in the previous month.

A year-to-year comparison of year-to-date shipments shows the following changes within major market classifications: service centers and distributors, down 10.5 percent; automotive, flat; construction and contractors’ products, down 3.1 percent; and oil and gas, down 7.9 percent.

On the import front, AISI reported that the U.S. imported a total of 2.3 million net tons of steel in November 2007, down 18 percent from the previous month. The U.S. also imported 1.9 million net tons of finished steel, down 1 percent from October.

Among the finished steel products showing large increases in November 2007 vs. the prior month were: oil country goods (up 46 percent), bars—light shapes finished (up 40 percent) and hot- rolled sheets (up 38 percent).

China continues to dominate imports of pipe and tube products through the first 11 months of 2007, now accounting for 33 percent of total imports of such products. In November, the three largest suppliers of finished steel from offshore were all from Asia—China at 309,000 tons, South Korea at 176,000 tons and Japan at 106,000 net tons.

“China, a non-market economy, continues to be the number one offshore supplier of finished steel to the United States,” says Andrew G. Sharkey, III, AISI president and CEO, commenting on the November numbers. “Trade and market-distorting practices remain pervasive in the steel sector worldwide.”

IISI
Crude Steel Production Jumps in North America
World crude steel production for the 67 countries reporting to the International Iron and Steel Institute in Brussels, Belgium, was 109.0 million tons in November, a 4.0 percent increase from November 2006. Total world production was 1.211 billion tons for the first 11 months of 2007, an increase of 7.7 percent over the same period of 2006.

In North America, November steel production in excess of 10.9 million tons showed an 8.2 percent increase compared with November 2006, but a decline of 4.7 percent compared with the previous month.

Production in the United States increased 8.5 percent, from 7.4 million tons in November 2006 to 8.0 million tons in November 2007.

In Canada, production increased 11.4 percent to 1.4 million tons, while Mexican steel production was up 2.1 percent to 1.5 million tons, year over year.

Total production in China was 39.7 million tons for the month, an increase of just 4.3 percent vs. November 2006. Japanese production was 10.1 million tons, an increase of 1.1 percent. India produced 4.6 million tons, an increase of 7.8 percent.

Crude steel production in the 27 EU countries totaled 193.3 million tons for the first 11 months of 2007, 1.6 percent higher than for the same period of 2006. Germany produced 4.0 million tons of crude steel in November, an increase of 2.4 percent compared to the same month in 2006. The United Kingdom produced 1.2 million tons of crude steel, an increase of 20.1 percent.

Turkey experienced the biggest increase to 2.1 million tons, 10.3 percent ahead of November 2006. Russia produced 5.9 million tons, a decrease of 2.8 percent compared to the same month in 2006. 

Brazil produced 2.9 million tons of crude steel, an increase of 6.2 percent vs. November 2006.

ISSF
Stainless Production Lags
During Third Quarter
Stainless steel production in the first three quarters of 2007 was nearly flat compared to 2006, according to the International Stainless Steel Forum, Brussels, Belgium. Total stainless steel crude production hit 20.9 million tons, only 90,000 tons, or 0.4 percent, more than during the first three quarters the previous year.

Comparing the third quarter of 2007 with the same period of 2006 shows a 16.6 percent decrease in stainless production, to 5.9 million tons. The decrease in production occurred across all regions.

Production by quarter in 2007 shows a clear downward trend driven by high nickel prices and the need to reduce the global stock of stainless steel. However, ISSF officials believe underlying demand for stainless steel remains generally healthy

The Western Europe/Africa region saw the most significant decline in stainless production for the first nine months of 2007, declining almost 13 percent to 6.5 million tons. In the same period, the Americas region decreased stainless crude production by 12 percent to 2.0 million tons.

Asia showed accumulated stainless crude steel production of 12.2 million tons for the first nine months of the year, 12.2 percent higher than in the same period of 2006. The main contributor once again was China with a total increase of more than 45 percent.

CBSA
Alloy Shipments Remain Behind 2006 Figures
Service center copper shipments through the first 11 months of 2007 were virtually even with year-ago figures, though a 9.3 percent decline in alloy shipments resulted in a 5.5 percent dip in red metal shipments overall, according to the latest figures from the Copper and Brass Servicenter Association, Wayne, Pa.

While the average daily shipping rate in November was virtually the same as the previous month, the poundage shipped showed a 10.3 percent decline because October had several more shipping days.

January is typically the best month of the year for the copper metal service center industry, so many CBSA members are “guardedly optimistic” 2008 will get off to a good start.

Briefs
Economic activity in the manufacturing sector declined in December, though the overall economy grew for the 74th consecutive month, according to the latest Manufacturing Report On Business from the Institute for Supply Management, Phoenix, Ariz.

“The manufacturing sector failed to grow in December ending 10 consecutive months of growth,” said Norbert J. Ore, chairman of ISM’s Manufacturing Business Survey Committee. “December was apparently a very tough month as New Orders, Production and Employment were all below the break-even mark of 50 percent. Industries close to the housing market appear to be struggling more than others, and those involved in exports seem to be doing better. Slower demand appears to be more of a problem than excessive inventories based on the respondents’ comments.”

Economic growth in the United States will continue in 2008, according to ISM’s December 2007 Semiannual Economic Forecast. Expectations for 2008 are at a higher level for the manufacturing sector than the non-manufacturing sector. Increased revenues in 2008 compared to 2007 were forecast by 62 percent of survey respondents. The panel of purchasing and supply executives expects a 6.8 percent net increase in overall revenues for 2008, compared to an increase of 2.4 percent reported for 2007. 

Metalforming companies are slightly more optimistic about business conditions as 2008 begins, according to the December 2007 Business Conditions Report from the Precision Metalforming Association, Cleveland. The report is a sampling of 148 metalforming companies in the United States and Canada. When asked to forecast the trend in general economic activity over the next three months, 20 percent of participants predicted conditions will improve, up from 15 percent in November. Declines were forecast by 30 percent of respondents, down from 38 percent the previous month, while 50 percent anticipate activity will remain the same, up from 47 percent.