steel industry update #268

8/3/2019 Steel Industry Update #268

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Steel Industry Update/268 November 2011Locker Associates, 225 Broadway, Suite 2625 New York NY 10007 Tel: 212-962-2980

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

Table 1: Selected U.S. Steel Industry Data, September & Year-to-Date, 2011

Month of September Year-to-Date

(000 net tons) 2011 2010 % Chg 2011 2010 % Chg

Raw Steel Production.........................7,973 7,280 9.5% 71,348 67,115 6.3%

Capacity Utilization........................... 76.1 70.2 -- 74.8 71.2 --

Mill Shipments....................................7,947 7,140 11.3% 68,441 63,154 8.4%

Exports...............................................1,213 988 22.8% 9,872 9,064 8.9%

Total Imports.......................................2,263 2,076 9.0% 21,991 18,383 19.6%

Finished Steel Imports......................1,687 1,585 6.5% 16,709 14,266 17.1%

Apparent Steel Supply*......................8,422 7,737 8.9% 75,278 68,356 10.1%

Imports as % of Supply*................... 20.0 20.5 -- 22.2 20.9 --

Average Spot Price** ($/ton)................$838 $689 21.7% $891 $709 25.7%

Scrap Price# ($/gross ton)....................$444 $353 25.8% $440 $342 28.6%

Sources: AISI, SteelBenchmarker *Excl semi-finished imports **Avg price of 4 carbon products #shredded scrap

Table 2: U.S. Spot Prices for Selected Steel Products, November & Year-to-Date, 2011

Month of November Year-to-Date

($ per net ton) 2011 2010 % Chg 2011 2010 % ChgHot Rolled Band....

643 560 14.8% 761 614 24.0%

Cold Rolled Coil.......

757 664 14.0% 858 720 19.2%

Coiled Plate..................

934 756 23.5% 1,002 766 30.7%

Average Spot

Price....

$778 $660 17.9% $874 $700 24.8%

#1 HeavyMelt...

368 327 12.5% 399 312 28.1%

ShreddedScrap...

405 354 14.4% 437 343 27.4%

#1Busheling.

436 388 12.4% 473 407 16.1%

Sources: World Steel Dynamics, SteelBenchmarker, 11/11


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Steel Industry Update/268

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Table 3: World Crude Steel Production, September & Year-to-Date, 2011

(000 metric tons)Month of SeptemberYear-to-DateRegion20112010% Chg20112010% ChgEuropeanUnion.14,97114,3384.4%135,687130,0644.3%Other

Europe.3,2182,85712.6%27,42423,15418.4%C.I.S.9,2909,1771.2%84,67580,1875.6%North America9,9459,1878.3%89,26684,1376.1%South

America...3,9453,6966.7%36,77932,70312.5%Africa...1,1031,280-13.9%10,47112,325-15.0%Middle

East.1,6611,6113.1%15,28014,0518.7%Asia..78,80969,82212.9%728,307665,2259.5

%Oceania......626670-6.6%5,9176,124-3.4%Total123,567112,6409.7%1,133,8061,047,9708.2%CountryChina.......56,70048,67816.5%525,73547

4,90410.7%Japan...8,8829,236-3.8%81,01581,934-1.1%UnitedStates..7,1906,6058.9%64,68260,8866.2%India(e)

.5,9505,6545.2%53,90651,1795.3%Russia(e).

5,7605,7160.8%51,87049,7284.3%South Korea....5,4784,65217.7%50,62842,65318.7%Germany..3,6543,31210.3%34,13932,9693.6%Brazil..2,9972,56416.9%25,05821,07818.9%Turkey..2,8072,7033.8%26,71524,8857.4%Ukr

aine(e)....2,7802,799-0.7%26,37224,6167.1%AllOthers....24,14923,5202.7%193,686183,1385.8%Source: World Steel Association, 11/11; e=estimate


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Steel Industry Update (ISSN 1063-4339) published 12 times/year by Locker Associates, Inc. Copyright 2011 by Locker Associates, Inc. Allrights reserved. Reproduction in any form forbidden w/o permission. Locker Associates, Inc., 225 Broadway Suite 2625 New York NY 10007.

Source: World Steel Association, 7/11

Graph 2: World Steel Capacity Utilization Ratio

Source: World Steel Association, 11/11; in million metric tons

Graph 1: World Crude Steel Production


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Table 4: US Exports of Steel Mill Products, September 2011

Product Sept 11 Aug 11 % Chg Sept 11 % Chg

All carbon steels 1,058 1,015 4.2% 866 22.1%

Cut-to-length plate 94 104 -9.6% 89 6.3%

Heavy structural shapes 93 91 2.6% 56 66.1%Hot-dip galvanized sheets/strip 93 97 -4.1% 70 33.6%

Plate in coils 86 85 0.6% 75 13.4%

Hot-rolled coil 82 63 30.0% 61 34.9%

Cold-rolled coil 75 54 39.2% 57 32.9%

Total 1,100 1,079 2.0% 906 21.5%

Source: American Metal Market, 11/16/11; in 000 tonnes

Source: World Steel Association, 11/11; in million metric tons


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Table 5: Chinese Steel Imports and Exports, 2011

(million tonnes) Oct11 Jan-Oct11 Jan-Oct10 % Chg

Imported semi-steels 0.1 0.5 0.5 -2.0%

Finished steel 1.2 13.2 13.6 -3.4%

Exported semi-steel 0.0 0.0 0.1 --Finished steel 3.82 41.0 36.8 11.3%

Net export -0.1 -0.5 -0.4 37.1%

Finished steel 2.6 27.8 23.2 20.0%

Source: www.steelhome.cn/en, 11/12/11

Table 6: Eurofer Steel Market Outlook by End-user, 2011-2012F

ShareFY'10

Q1'11

Q2'11

Q3'11

Q4'11

FY'11

Q1'12

Q2'12

Q3'12

Q4'12

FY'12

Construction 27% -2.6 7.6 1.8 0.1 1.5 2.4 -1.6 2.7 3.9 5.3 2.8Structuralsteelwork

11% 1.6 9.1 1.8 2.6 2.3 3.8 1.1 1.5 2.6 3.2 2.1

Mechengineering

14% 9.915.

911.

96.1 3.8 9.2 4.3 3.7 3.5 2.5 3.4

Automotive 16%20.

719.

410.

97.5 3.9

10.3

1.7 1.0 2.8 2.2 1.9

Dom appliances 4% 2.7 0.9 -3.4 -0.9 1.6 -0.3 0.4 4.1 3.2 4.2 2.9

Shipyards 1%-

18.9

0.7 -8.2 2.0 4.0 -0.6 0.8 -1.0 1.6 2.5 0.9

Tubes 12%13.

122.

38.2 2.3 2.0 8.7 1.8 2.2 3.0 2.5 2.3

Metal goods 12% 8.312.

17.8 4.6 4.6 7.3 2.2 2.3 3.8 3.9 3.0

Miscellaneous 3% 6.0 4.6 4.5 2.6 1.4 3.2 1.9 1.6 3.4 3.7 2.8

Total 100% 5.912.

75.8 3.1 2.8 5.9 1.2 2.4 3.4 3.5 2.6

Source: Eurofer Steel Market Outlook Report, 10/21/11

Table 7: Indian Domestic Car Sales, October 2011

Company Oct '10 Oct '11 % Chg

Maruti Suzuki 107,555 51,458 -52.2%

Hyundai Motor 34,720 33,001 -5.0%

TATA Motors 24,478 25,124 2.6%

M&M 16,987 18,756 10.4%

Fiat 2,025 622 -69.3%

Toyota 6,602 10,762 63.0%

Ford 9,026 8,091 -10.4%

General Motors 10,051 10,062 0.1%

Volkswagen 4,343 7,266 67.3%

Honda Siel 5,275 5,526 4.8%Total 221,062 170,668 -22.8%

Source: SteelGuru, 11/7/11; in number of units


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Table 8: Global DRI Production by Country, Jan-Sept & YTD 2011

Country Jan Feb Mar Apr May Jun Jul Aug SepYTD

'11

India 2,246 2,14 2,16 2,22 2,40 2,28 2,36 2,36 2,30 20,494

Iran 883 923 786 879 849 820 850 820 820 7,630Mexico 536 483 522 547 473 469 439 507 532 4,509

Venezuela 435 279 345 376 394 454 350 368 386 3,387

Saudi Arabia 356 442 480 465 433 412 469 473 405 3,936

Egypt 244 216 263 261 248 247 272 254 223 2,228

Qatar 215 100 149 90 95 95 100 100 95 1,039

Argentina 143 134 150 147 138 102 94 95 151 1,154

Libya 125 40 0 0 0 0 0 0 0 165

South Africa 110 110 120 115 120 115 120 120 115 1,045

Trinidad Tobago 85 149 183 182 152 167 191 152 152 1,413

Canada 54 44 49 49 51 66 84 88 59 544

Peru 8 7 7 7 8 8 9 7 7 68

Brazil 0 0 0 0 0 0 0 0 0 0

Total 5,440 5,07 5,22 5,34 5,37 5,24 5,33 5,34 5,24 47,612

Source: World Steel Association, 10/31/11; in 000 tonnes


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Table 9: US Iron and Steel Scrap Usage, August, 2011 & YTD

(000 metric tons) Aug11 July11 MOM % YOY %YTD2011

YTDYOY %

ScrapBlast furnace 269 232 15.9% na 1,320 na

Basic oxygen process 462 632 -26.9% -43.0% 5,960 -7.0%

Electric furnace 3,900 3,710 5.1% 20.0% 29,400 10.5%

Production: Recirculating scrap 657 608 8.1% 9.9% 5,360 11.0%

Production: Obsolete scrap 11 7 57.1% 10.0% 61 -39.6%

Total Consumption 4,660 4,600 1.3% 11.8% 36,900 8.5%

Scrap Receipts

From dealers 3,890 3,840 1.3% 18.2% 30,800 10.4%

From other own company plants 240 214 12.1% -17.2% 2,050 -10.1%

Scrap shipments 108 99 9.1% -18.2% 1,180 22.3%

Pig IronBasic oxygen process 2,210 2,600 -15.0% -16.9% 21,200 4.4%

Receipts 620 619 0.2% 17.0% 4,930 -32.8%Production 2,370 2,290 3.5% 4.4% 19,000 24.2%

Total Consumption 2,970 2,920 1.7% 4.2% 23,800 5.8%

Direct Reduced Iron

Receipts 110 140 -21.4% 6.8% 990 8.7%

Total Consumption 145 121 19.8% 13.3% 994 9.4%

Source: U.S. Geological Survey, 11/10/11

Table 10: Severstal Steel Production and Sales Results From Operations, Jan-Sept 2011

Production Q3'11 Q2'11 % Chg J-S'11 J-S'10 % ChgHot metal 2.6 2.7 -1% 7.9 7.7 2%

Russian Steel 2.2 2.2 -1% 6.6 6.4 3%

North America 0.5 0.5 0% 1.3 1.3 1%

Crude steel 4.0 3.9 4% 11.5 10.9 6%

Russian Steel 2.9 3.0 -2% 8.6 8.2 5%

North America 1.1 0.9 23% 3.0 2.7 9%

SalesRolled products 1.1 0.8 31% 2.8 2.9 -5%

Hot-rolled strip and plate 0.7 0.4 76% 1.5 1.4 5%

Cold-rolled sheet 0.1 0.1 1% 0.4 0.6 -33%

Galvanized and coated sheet 0.3 0.3 -11% 0.9 1.0 -2%

Source: SteelGuru, 10/27/11; in million tonnes


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Exhibit 1: Summary of the Economic Impact of the Steel Industry in Pennsylvania, 2011

Source: Economic Impact of the Steel Industry in Pennsylvania, October 2011

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Table 11: U.S. Steel Financial Results From Operations, Q311

(in US$ millions) Q3'11 Q2'11 Q3'10

Net Sales 5,081 5,120 4,497

Total reportable segment 295 396 -65

Postretirement benefit expense -96 -96 -58

Other items not allocated to segments - - -15Income from operations 199 300 -138

Net interest and other financial costs 144 13 -78

Income tax provision 33 65 -9

Net income attributable to US Steel 22 222 -51

Per basic share 0.2 1.5 -0.4

Per diluted share 0.2 1.3 -0.4

Source: SteelGuru, 10/27/11


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Exhibit 2 - Pennsylvania Primary Metal Exports, 2001-2010


Exhibit 3 - Pennsylvania Primary Metal Manufacturing Export Value by Destination, 2005-2010


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Table 12: Recent Investments by the Steel Industry in Pennsylvania, 2005-2011

Company City Nature of InvestmentTotal

Investment

2011

Carpenter Tech ReadingTwo additional Electroslag Remelting Furnaces (ESR);increased capacity for Forge Finishing & Annealing ops

NA

2010

ArcelorMittal Steelton Renovation of the plants reheat furnace $54.0

2009

Lehigh Heavy Forge Bethlehem Production enhancements $3.2

Universal Stainless BridgevilleEquipment automation and plant layout upgrades in themelt shop

$13.0

Wheatland Tube Wheatland Upgrade equipment and consolidations of ops $2.0

2008

AK Steel Butler Expansion of production capacity of steel used tomanufacture power generation equipment

$21.0

Allegheny Tech Brackenridge New hot-rolling and processing facility and melt shop $1,160.0

Hussey Copper Leetsdale Relocation of production line from Kentucky $1.2

Latrobe Specialty Latrobe Plant expansion $62.0

U.S. Steel Clairton Clairton Coke Works overhaul $600.0

2007

AK Steel Butler Replaced two or three EAF with a single furnace;carbon steel slab production expansion

$180.0

Allegheny Tech Canton Twp Titanium mill Upgrade $60.0

ArcelorMitttal Steelton Upgrades to bloom caster and in-line head hardeningunit

NA

Carpenter Tech ReadingPremium melt expansion with four vacuum arcremelting (VAR) furnaces and two ESR

$115.0

Carpenter Tech Reading Hot-rolling facility expansion $115.0

Col-Fin Specialty Fallston Plant expansion $1.1

Damascus Steel Beaver FallsNew induction melt furnace system, cranes and tram-rail transfer system; electrical upgrades

NA

Ellwood Quality Ellwood City$60 million for a 5,000-ton open die forging pres; $75million for a new forge facility

$135.0

Penn Cold Drawn West Mayfield New tubular production facility $9.0

2005

Lehigh Specialty Latrobe Reopening of shuttered Standard Steel plant $16.7

Perryman Co California New titanium plant $55.0

TMK IPSCO KoppelPipeline expansion in Koppel, plant improvements inAmbridge

$60.0

Total $2,591.0



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Locker Associates, Inc.

LOCKER ASSOCIATES is a business-consulting firm that specializes in enhancing thecompetitiveness of businesses and industries on behalf of unions, corporate and governmentclients. 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 afirms market, financial and operating performance on behalf of a cooperative labor-management effort. Locker Associates also produces a widely read monthly newsletter, SteelIndustry Update that circulates throughout the U.S. and Canadian steel industry.

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Steel Mill Products: US Imports, September & Year-to-Date

Imports: Country of Origin Month of September Year-to-Date

(000 net tons) 2011 2010 % Chg 2011 2010 % ChgCanada.. 537 570 -5.8% 4,619 5,300 -12.8%Mexico 206 182 13.2% 2,312 2,180 6.1%

Other W. Hemisphere.. 282 104 171.2% 2,544 828 207.2%

European Union 272 398 -31.7% 3,213 3,235 -0.7%

Other Europe*.. 209 237 -11.8% 2,114 1,792 18.0%

Asia. 652 516 26.4% 6,285 4,456 41.0%

Oceania. 103 59 74.6% 775 509 52.3%Africa.. 3 11 -72.7% 128 83 54.2%

Total 2,263 2,076 9.0% 21,991 18,323 19.6%

Imports: Customs District

Atlantic Coast 187 167 12.0% 2,489 2,299 8.3%

Gulf Coast/Mexican Border 1,081 790 36.8% 9,798 6,197 58.1%

Pacific Coast. 334 408 -18.1% 4,024 3,556 13.2%

Gr Lakes/Canadian Border. 654 699 -6.4% 5,524 6,175 -10.5%

Off Shore 8 12 -33.3% 155 157 -1.3%

Source: AISI; *includes Russia

Update #268


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RECENT PROJECTS

Business Plan for High-Tech Startup (2009-present): drafted detailed business plan toraise capital and promote a new hydrogen battery technology

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

improvement Institute of Scrap Recycling Industries (2010): presented a status report on the U.S.steel market before the Institute of Scrap Recycling Industries Commodities roundtable

Save the World Air-Marketing (2009-present): developed a marketing plan to helpdrive sales of a green technology product, ELEKTRA, an electronic fuel device for trucks thatincreases fuel economy (mpg's), reduces exhaust emissions and improves engine performance

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MAJOR CLIENTS

United Steelworkers Air Line Pilots Association/Delta Air Lines MECBank of Boston Sharpsville Quality ProductsCongress Financial IPSCOSantander Investment Securities International Association of MachinistsAEIF-IAM/AK Steel Middletown CSEA/AFSCMEPrudential Securities United Auto Workers

US Steel Joint Labor-Mgmt Comm Service Employees International UnionLTV Steel Joint Labor-Mgmt Committee American Fed of Television & Radio ArtistsIntl Union of Electrical Workers SupervaluBethlehem Joint Labor-Mgmt Comm United Mine WorkersInland Steel Joint Labor-Mgmt Comm Algoma SteelNorthwestern Steel and Wire North American Refractories

Boilermakers UNITE/HEREAmerican Federation of Musicians AFL-CIO George Meany Center USS/KOBE Watermill Ventures

Sysco Food Services of San Francisco Wheeling-Pittsburgh SteelInternational Brotherhood of Teamsters Canadian Steel Trade & Employment CongressDevelopment Bank of South Africa Minn Gov's Task Force on MiningJ&L Structural Steel Special Metals

steel industry update #268

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