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United States Metals Report Q1 2010
Business Monitor International, Jan 2010, Pages: 54
Business Monitor International's United States Metals Report provides industry professionals and strategists, corporate analysts, metals associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on the United States' metals industry.
The US metals sector was dealt a significant boost in Q409 with the announcement that the International Trade Commission (ITC) sided with the country’s local steel companies over their complaint that the increasing levels of steel product imports from China have indeed harmed local manufacturers. With the Wall Street Journal describing the ruling as ‘the biggest case the ITC has ever taken on’, the decision will result in duties of 12-16% being imposed on Chinese steel imports to the US. The ruling has been described as ‘essential’ as the US steel manufacturing sector attempts to rebound from record historic lows. It has also been noted that it may take several months for Chinese firms decide whether to appeal to the World Trade Organisation (WTO) over the ruling.
Further respite was seen in Q409 with results from the Metals Service Centre Institute indicating that shipments of steel and aluminium products from the US had increased in October month-on-month (m-o-m), while inventories for both metals rose slightly. The report indicated that October steel shipments from the US totalled nearly 2.62mn tonnes, a 2.3% rise in comparison with those recorded in September, however still 28% lower than the volumes witnessed over the same month in 2008. Also, shipments for the year-to-date, nearly 25mn tonnes, have indicated a drop of 40.1% compared with the same period last year. From an aluminium standpoint, October shipments weighed in at 92,500 tonnes, a 7% rise on September levels but down a monumental 36.1% in comparison with the same period in 2008. One of the major news stories in the US metals markets in Q409 was the announcement that Saudi Arabia’s Maaden and US aluminium giant Alcoa have agreed to construct a US$10.8bn aluminium complex, with production scheduled to commence as early as 2013. This partnership will undoubtedly cause waves within the competitive landscape of the metals market, especially on the back of recent cutbacks such as that of Rio Tinto Alcan, which in December 2008 abandoned its 49% stake in a 740,000 tonnes per annum (tpa) smelter project due to its inability to obtain financing on the back of the global financial crisis.
From a steel industry standpoint, 2009 will go down in economic history as one of the most volatile on record. However, according to Aditya Mittal, CFO of ArcelorMittal, the world’s largest steelmaker, 2010 might hold better prospects as the industry seeks to reassert itself within global markets. Mittal has underlined that with inventories at historically low levels, stimulus plans having their desired effect and stock markets beginning to show signs of buoyancy, many countries are finally beginning to emerge from the recession. BMI agrees that while it might take longer than experienced in the past, the steel industry can expect to see steady improvement as the global economy begins its recovery. This view, however, is very much focused on the long term, as short-term forecasts remain rather negative and are expected to remain fragile through 2010, with marked differences between the developing and developed markets. In the US, BMI believes crude steel output will increase 6% but the market will still not have recovered to pre-crisis levels by the end of the forecast period in 2014.
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