steel industry update/286 june 2013

Email: [email protected] | Website: www.lockerassociates.com

Steel Industry Update/286 June 2013

Locker Associates, 225 Broadway, Suite 2625 New York NY 10007 Tel: 212-962-2980

Click on the links below to go directly to a table

Table 1: Selected U.S. Steel Industry Data, April & YTD, 2013

Table 2: U.S. Spot Prices for Selected Products, June & Year-to-Date, 2013

Table 3: World Crude Steel Production, May & Year-to-Date, 2013

Graph 1: World Crude Steel Production, May 2013

Graph 2: World Steel Capacity Utilization, May 2013

Table 4: Stainless Crude Steel Production, 1st Quarter, 2013

Graph 3: Global Stainless Steel Demand Index, All Products, 2002-2014f

Graph 4: Global Flat-roll Apparent Stainless Steel Use vs Real Use, 2008-2014f

Graph 5: World Urbanization Rates, 2000-2050f

Graph 6: Production Percentage of Commodities by Region, 2008

Graph 7: US Steel Stocks vs S&P 500, May 2013

Graph 8: US Steel Industry, Quarterly Net Income Through 1st 2013

Table 5: U.S. Total Construction Spending, Jan-Mar 2013

China’s Steel Edge

USW Press Release

Table 2: U.S. Spot Prices for Selected Products, June & Year-to-Date, 2013

Month of June Year-to-Date

($ per net ton) 2013 2012 % Chg 2013 2012 % Chg

Hot Rolled Band..………….. 592 628 -5.7% 611 690 -11.5%

Cold Rolled Coil…......…….. 694 726 -4.4% 710 790 -10.1%

Coiled Plate................…….. 718 879 -18.3% 731 921 -20.6%

Average Spot Price…….... $668 $744 -10.3% $684 $800 -14.6%

Shredded Scrap…………... 352 373 -5.6% 370 429 -13.7%

Iron Ore ($/dmtu)*...………... 124 136 -8.8% 141 142 -0.4%

Pig Iron ($/tonne)**….……... 412 469 -12.2% 397 459 -13.4%

Sources: World Steel Dynamics, Spears Research; SteelontheNet.com; IndexMundi.com; * iron ore data is 5/13; **pig iron data is 4/13, $/dmtu: US$/dry metric tonne unit

Table 1: Selected U.S. Steel Industry Data, April & YTD, 2013

Month of April Year-To-Date

(000 tonnes) 2013 2012 % Chg 2013 2012 % Chg

Raw Steel Production…….………. 7,250 7,290 -0.5% 28,708 30,501 -5.9%

Capacity Utilization .......................... 76.7 80.9 -- 77.3 79.7 --

Mill Shipments…….……….……… 7,238 7,186 0.7% 28,696 30,397 -3.2%

Total Imports………………………. 2,484 2,853 -12.9% 9,464 10,826 -12.6%

Sources: AISI, US ITA

Steel Industry Update/286

- 2 -

Table 3: World Crude Steel Production, May & Year-to-Date, 2013

(000 metric tons) Month of May Year-to-Date

Region 2013 2012 % Chg 2013 2012 % Chg

European Union……. 14,711 15,441 -4.7% 69,932 74,123 -5.7%

Other Europe………. 3,227 3,282 -1.7% 15,120 15,931 -5.1%

C.I.S…………………. 9,448 9,615 -1.7% 45,728 47,470 -3.7%

North America……… 10,229 10,772 -5.0% 49,659 52,947 -6.2%

South America……... 4,025 3,941 2.1% 18,841 19,805 -4.9%

Africa/Middle East..... 3,202 3,183 0.6% 15,389 15,814 -2.7%

Asia………………….. 90,976 86,102 5.7% 440,967 416,316 5.9%

Oceania………...…... 485 477 1.6% 2366 2369 -0.1%

Total………………… 136,302 132,812 2.6% 658,002 644,777 2.1%

Country

China……………....... 67,034 62,489 7.3% 325,245 301,188 8.0%

Japan….…………..… 9,622 9,224 4.3% 45,428 44,867 1.3%

United States……….. 7,522 7,913 -4.9% 36,169 38,953 -7.1%

India(e)………………. 6,730 6,633 1.5% 33,258 32,295 3.0%

Russia….….………… 6,086 6,072 0.2% 29,046 30,002 -3.2%

South Korea...…...…. 5,530 5,951 -7.1% 27,602 29,130 -5.2%

Germany.…….………. 3,653 3,708 -1.5% 18,035 18,152 -0.6%

Turkey….…………… 3,020 3,081 -2.0% 14,379 14,989 -4.1%

Brazil.….……………. 3,013 2,856 5.5% 14,143 14,594 -3.1%

Ukraine.…………….. 2,772 2,965 -6.5% 13,968 14,306 -2.4%

All Others………….... 21,320 21,920 -2.7% 100,729 106,301 -5.2%

Source: World Steel Association, 6/13; e=estimate

Source: World Steel Association, 6/13; in million metric tons

Graph 1: World Crude Steel Production, May 2013


- 3 -

Table 4: Stainless Crude Steel Production, 1st Quarter, 2013

Quarter

% Chg

1st Quarter

% Chg Region Q4’12 Q1’13 2012 2013

W. Europe/Africa 1,798 2,148 19.5% 2,211 2,148 -2.8%

Central & E. Europe 85 84 -0.6% 87 84 -3.0%

The Americas 545 601 10.3% 607 601 -1.1%

Asia (excluding China) 2,140 2,146 0.2% 2,226 2,146 -3.6%

China 4,480 4,404 -1.7% 3,722 4,404 18.3%

World Total 9,047 9,384 3.7% 8,853 9,384 6.0%

Sources: International Stainless Steel Forum (ISSF) 6/21/13; in ‘000 metric tons

Steel Industry Update (ISSN 1063-4339) published 12 times/year by Locker Associates, Inc. Copyright © 2013 by Locker Associates, Inc. All rights reserved. Reproduction in any form forbidden w/o permission. Locker Associates, Inc., 225 Broadway Suite 2625 New York NY 10007.

Graph 2: World Steel Capacity Utilization, May 2013

Source: World Steel Association, 6/13


- 4 -

Graph 3: Global Stainless Steel Demand Index, All Products, 2002-2014F

Source: International Stainless Steel Forum (ISSF) 6/21/13

Graph 4: Global Consolidation Flat-rolled Apparent Stainless Steel Use vs Real Use, 2008-2014F

Source: International Stainless Steel Forum (ISSF) 6/21/13


- 5 -

Graph 5: World Urbanization Rates, 2000-2050f

Source: McKinsey & Co, 2013

Graph 6: Production Percentage of Commodities by Region, 2008

Source: McKinsey & Co, 2013


- 6 -

Graph 7: US Steel Stocks vs S&P 500, May 2013

Source: U.S. Department of Commerce, May 2013

Graph 8: US Steel Industry, Quarterly Net Income Through 1st Quarter 2013

Source: U.S. Department of Commerce, May 2013


- 7 -

Source: Wall Street Journal, June 2013

Table 5: U.S. Total Construction Spending, Jan-Mar, 2013

(in billions of current dollars)

Actual Forecast

Jan-Mar’12 Jan-Mar’13 2013 2014

New Single Family $24.5 $33.2 $168.3 $195.8

9.0% 35.4% 30.2% 16.3%

New Multifamily $5.6 $7.8 $35.3 $40.2

9.3% 39.5% 29.3% 14.1%

New Residential $30.1 $41.0 $203.6 $236.0

9.1% 36.1% 30.1% 15.9%

Residential Improvements $22.3 $20.0 $110.2 $121.4

3.5% -10.3% -12.2% 10.1%

Total Residential $52.4 $60.9 $313.8 $357.4

6.7% 16.4% 11.0% 13.9%

Nonresidential Building $66.7 $66.1 $300.0 $324.7

11.7% -0.8% 0.2% 8.3%

Heavy Engineering* $54.6 $54.6 $276.2 $294.1

12.5% 0.0% 1.0% 6.5%

Total $173.6 $181.7 $889.9 $976.3

10.4% 4.7% 4.0% 9.7%

Source: Metal Center News, June 2013; *non-building


- 8 -

USW Urges New York MTA to Reconsider Rebuilding Verrazano-Narrows Bridge with Domestic, not Chinese Steel

A USW PRESS RELEASE on May 23, 2013 Mr. Fernando Ferrer, Acting Chairman Metropolitan Transportation Authority 2 Broadway New York, NY 10004

Mr. Thomas F. Prendergast, Int Exec Director Metropolitan Transportation Authority 2 Broadway New York, NY 10004

Dear Mr. Ferrer and Mr. Prendergast:

I noted with interest recent media reports regarding the Metropolitan Transportation Authority’s plan to rebuild the Verrazano-Narrows Bridge using nearly 15,000 tons of steel, all sourced from China. On behalf of the 850,000 members of the United Steelworkers, the millions of American industrial workers – many of whom are working reduced hours, are laid off or unemployed — and the millions of New Yorkers who demand and deserve the best and safest transportation network in the world, I urge you to reconsider immediately.

American workers produce the highest-quality, safest products in the world. This is particularly true in the case of steel. American steelmakers and steelworkers have the drive, the know-how, and more than enough capacity to supply the Verrazano-Narrows Bridge project with the best steel in the world made at the safest and most environmentally-responsible plants in the world. In addition, much less pollution will result from shipping steel for the project from American plants, some of which are located within 100 miles of the bridge, than would be from hauling it halfway around the world from China.

In a time when it seems that Americans cannot agree on anything, one thing they do agree on is that they want their infrastructure built with American materials. Just last year, the Alliance for American Manufacturing conducted a poll in which they asked whether large infrastructure projects should be built in America, by American workers, using American steel and other products. Some 81 percent of respondents were in favor even when the best arguments for simple lowest-bidder contracting were offered as rebuttal. The people are making their voice heard loud and clear, and it is high time you listened to them.

Given all this, it was particularly troubling that your spokesperson drew the distinction that projects built with toll dollars like the Verrazano-Narrows Bridge are exempt from Buying American because that only applies to projects built with tax dollars. It does a disservice to your constituents to have their transportation authority looking for loopholes and technicalities to avoid doing what the people want.

New York is one of America’s – and the world’s – greatest cities, and many of the landmarks that make the city great, from the Empire State Building to Rockefeller Center to Madison Square Garden, were built with the best quality American steel.

According to published reports this bridge project represents the first time that the Chinese State Owned Entity (SOE) that you have chosen has produced this particular product. Those iconic, strong and lasting monuments tell the story of America to the world, and the idea that you would turn your back on that legacy in order to save a few dollars while buying potentially inferior product from a neophyte producer is scandalous.

We urge you to reconsider and ensure that the Verrazano-Narrows Bridge, and any other infrastructure projects you undertake in the future, be made of the best products in the world, made by the best workers in the world, right here in the United States.

Sincerely,

Leo W. Gerard, International President

c: Governor Andrew M. Cuomo | NYS Members of Congress | NYS Senate | NYS Assembly


- 9 -


- 10 -

Locker Associates, Inc.

LOCKER ASSOCIATES is a business-consulting firm that specializes in enhancing the competitiveness of businesses and industries on behalf of unions, corporate and government clients. By combining expert business and financial analysis with a sensitivity to labor issues, the firm is uniquely qualified to help clients manage change by:

leading joint labor/management business improvement initiatives;

facilitating ownership transitions to secure the long-term viability of a business;

conducting strategic industry studies to identify future challenges and opportunities;

representing unions in strategic planning, workplace reorganization and bankruptcy

formulating business plans for turnaround situations; and

performing due diligence for equity and debt investors.

Over the last 28 years, the firm has directed over 225 projects spanning manufacturing, transportation, distribution and mining industries. Typical projects involve in-depth analysis of a firm’s market, financial and operating performance on behalf of a cooperative labor-management effort. Locker Associates also produces a widely read monthly newsletter, Steel Industry Update that circulates throughout the U.S. and Canadian steel industry.

RECENT PROJECTS

Metallic Lathers and Reinforcing Ironworkers (2010-Present): strategic industry research and ongoing advisement on major industry trends and companies to help enhance the competitive position of the unionized NYC construction industry

Building & Construction Trades Council of Greater NY (BCTC) (2011-present): analysis and advisement regarding major trends in the New York City construction industry, including capital market developments which affect BCTC members

Communication Workers of America (CWA) (2011-present): research and analysis to prepare CWA for nationwide contract negotiations with AT&T

IBT-Supervalu (2010): assist union and management to identify major operational problems impacting warehouse performance and provide recommendations for joint improvement

Metallurgical Coal Producer (2011): prepared a detailed study on the major trends in the world metallurgical coal market for a large metallurgical coal producer

MAJOR CLIENTS

United Steelworkers Air Line Pilots Association/Delta Air Lines MEC

Bank of Boston Sharpsville Quality Products

Congress Financial IPSCO

Santander Investment Securities International Association of Machinists

AEIF-IAM/AK Steel Middletown CSEA/AFSCME

Prudential Securities United Auto Workers

US Steel Joint Labor-Mgmt Comm Service Employees International Union

LTV Steel Joint Labor-Mgmt Committee American Fed of Television & Radio Artists

Int’l Union of Electrical Workers Supervalu

Bethlehem Joint Labor-Mgmt Comm United Mine Workers

Inland Steel Joint Labor-Mgmt Comm Algoma Steel

Northwestern Steel and Wire North American Refractories

Boilermakers UNITE/HERE

American Federation of Musicians AFL-CIO George Meany Center

USS/KOBE Watermill Ventures

Sysco Food Services of San Francisco Wheeling-Pittsburgh Steel

International Brotherhood of Teamsters Canadian Steel Trade & Employment Congress

Development Bank of South Africa Minn Gov's Task Force on Mining

J&L Structural Steel Special Metals

steel industry update/286 june 2013

Documents