Rising Exports Offset
Housing Decline in GDP Numbers
The 1.9 percent rise in GDP in the second quarter—an improvement from the pace of growth in the prior two quarters—was largely driven by rising exports of manufactured goods, according to David Huether, chief economist of the National Association of Manufacturers in Washington, D.C.

“Consumer spending accelerated modestly in the second quarter growing by 1.5 percent, thanks in large measure to well-timed fiscal stimulus, which should help prop up consumer spending in the third quarter as well,” Huether says. “Without the stimulus, consumer spending would likely have been flat due to the negative effects of rising energy prices.”

The Commerce Department reported that residential investment continued to decline at a double-digit rate in the second quarter, falling by 15.6 percent. “This was a milder decline than during the prior three quarters, suggesting that the worst of the housing recession may be behind us,” Huether says. 

“The real story is that the 9.2 percent rise in exports more than offset the downturn in housing,” Huether says. “In fact, exports alone accounted for 61 percent of economic growth in the second quarter. Over the past year, fully two-thirds of GDP growth has come from U.S. exports, 63 percent of which are manufactured products.

“While the trade balance, as a share of GDP edged up to 5.2 percent of GDP, this was entirely due to the rising price of imported oil,” Huether notes. “Petroleum imports now account for 66 percent of the entire U.S. trade deficit.  Excluding petroleum imports, the U.S. trade deficit narrowed to just 1.7 percent of GDP in the second quarter, the lowest level in nearly a decade.”

These figures highlight the need for the U.S. to reduce its dependence on foreign sources of energy and to promote free trade agreements that will increase U.S. exports, he concludes.

MSCI
Listless Trend Continues for Steel,
Aluminum in U.S., Canada
Continued deterioration of economic conditions added to seasonal and cyclical weakness for metals shipments in June.

Steel and aluminum shipments from service centers fell from year-ago levels in the United States and Canada in June, according to the latest monthly Metals Activity Report from the Metals Service Center Institute, Rolling Meadows, Ill. End-of-June inventories of those metals also fell from 2007 levels, though slower activity contributed to slightly higher steel inventory levels in the U.S. compared to last month.

Steel product activity
Steel shipments from U.S. service centers totaled 4.2 million tons in June, down 4.3 percent from shipments during June 2007. First-half 2008 steel-product shipments totaled nearly 26.3 million tons, off 3.8 percent from a year ago. Inventories, at nearly 12.9 million tons of steel products, were down 7.3 percent from last year and, at June shipping rates, represented a 3.1-month supply.

In Canada, steel product shipments from service centers totaled 293,000 tons in June, down 6.0 percent from June 2007, and first-half shipments of almost 1.9 million tons were down 2.7 percent from a year ago. Canadian service center steel inventories of about 1.06 million tons at the end of June were down 12.1 percent from a year ago and, at June shipping rates, represented a 3.6-month supply.

Aluminum product activity
Shipments of aluminum products from U.S. service centers totaled 88,600 tons in June, or 8.3 percent lower than during the same month in 2007. First-half aluminum shipments of 562,800 tons were down 6.2 percent from the same period last year. Inventories of aluminum products at the end of June totaled 281,400 tons, down 15.2 percent from a year ago and, at June shipping rates, equaled a 3.2-month supply.

Canadian service centers shipped 10,700 tons of aluminum products in June, down 6.1 percent from the 2007 month, bringing first-half 2008 shipments to 62,200 tons, or 0.3 percent lower than shipments for the period in 2007. Aluminum inventories of 26,900 tons were essentially flat from a year ago and, at June shipping rates, represented a 2.5-month supply.

AIIS
Imports Trend Up in June by 6.9%
“Imports arrived in the U.S. markets at a modest pace in June, as the factors limiting imports—strong markets overseas, high freight rates and the weak dollar—continued to impede the import side of supply,” says David Phelps, president of the American Institute for International Steel, Washington, D.C.

June arrivals kept pace with the overall average for the first half of the year, around 31 to 32 million tons annualized.

Criticizing recent trade case rulings in favor of domestic suppliers, in light of high steel prices and strong profitability, Phelps adds, “This is an industry that does not need protection. Trade cases against steel serve only to further endanger steel consumers’ viability.”

Steel imports in June totaled 2.67 million tons, compared to 2.50 million tons in May 2008, a 6.9 percent increase, but a 12.3 percent decrease compared to June 2007.

According to year-to-date figures, imports decreased 10.9 percent compared to 2007 or from 17.82 million tons in 2007 to 15.87 million tons in 2008.

The data show that imported semifinished products decreased by 4.7 percent this June as compared to June 2007. For the year-to-date period, semifinished imports decreased from 3.30 million tons in 2007 to 3.29 million tons in 2008, a 0.5 percent decrease, based on preliminary reporting.

“High and rising prices in the U.S. market for some products suggest that conditions for imports could improve later in the year,” predicts Phelps. 

CBSA
Copper Shipments Trail Last Year
Service center shipments of copper and copper alloy products in June failed to match those of the companion month in 2007. Totals were down 9.3 percent from a year ago, reports the Copper and Brass Servicenter Association, Wayne, Pa.

Compared to the previous month, June shipments were off only 1.4 percent. Total alloy shipments actually were marginally above those recorded in May, though copper shipments, in spite of a sharp increase in copper plate, were down 3.5 percent. 

For the first half of the year, total shipments were down more than 4.9 percent. Copper shipments, paced by copper plate and copper rod, were off less then 1 percent, but alloy shipments were off nearly 7.3 percent. The two largest volume alloy categories—200 series brass sheet and 300 series rod and bar—both trailed the first six months of 2007 by nearly 11 percent.

IISI
World Steel Production
Up 5 Percent in First Half
World crude steel production for the 66 countries reporting to the International Iron and Steel Institute, Brussels, was 118.8 million metric tons in June—5.9 percent higher than the same month last year. Total world crude steel production was 696 million tons in the first half of 2008, a 5.7 percent increase over the same period in 2007.

Once again, China led the growth in steel production. In the first six months of 2008, China produced 263.2 million tons of crude steel, an increase of 9.6 percent compared to the same period in 2007. In June 2008, China’s moving annual total growth rate slowed further to 10.2 percent, compared to its growth rate peak of 26.3 percent in January 2006. China’s crude steel production for June 2008 was 46.9 million tons, an increase of 10.2 percent on June 2007.

Overall, Asia produced 68.3 million tons of crude steel in June 2008 compared to 62.8 million tons in June 2007, an 8.7 percent increase.

Crude steel production in North America totaled nearly 11.2 million tons in June, slightly more than the same month last year but down about 5 percent from 11.8 million tons the previous month.

Total crude steel production in the EU was 18.1 million tons, 1.8 percent higher than for June 2007. The largest producer in the EU was Germany, with 4.1 million tons of crude steel, an increase of 2.1 percent compared to the same month last year.

ISSF
Global Stainless Production
Recovers in First Quarter
Global stainless steel production hit 7.4 million metric tons in the first quarter of 2008, according to preliminary figures from the International Stainless Steel Forum, Brussels. Stainless steel production increased by 6.5 percent compared to the last quarter of 2007.

All areas of the world increased production compared to the last quarter of 2007. The Asia region showed the lowest growth rate (3.6 percent), while the Americas region led the way with growth of 13.4 percent. Western Europe/Africa (9.8 percent) and Eastern Europe (9.7 percent) both contributed to the stainless recovery.

Asia is still the largest stainless steel producing region with production of 4.2 million tons in the first quarter of 2008, ISSF reports.

Briefs
Precision Metalforming Association President William E. Gaskin points to June’s decline in imports of both hot- and cold-rolled steel as an anticipated continuation of the soft import trend challenging U.S. steel consuming industries that face a tight domestic market for steel. Total steel imports to date in 2008 are 11 percent lower than they were at this time in 2007. Preliminary data issued by the U.S. Department of Commerce showed an increase in overall steel imports of 7 percent last month from the prior month’s levels. However, imports of hot-rolled steel declined by 7 percent from May levels to 225,691 metric tons. Cold-rolled imports also decreased in June, down 13 percent to 108,477 metric tons. Combined imports of hot- and cold-rolled steel are down 9 percent compared to the first half last year. “The tight U.S. market for steel continues to present a serious challenge for industrial consumers even as the weak dollar and high overseas demand for steel further squeezes imports,” says Gaskin. “U.S. service center inventories are now at their lowest levels in 10 years. PMA members could easily experience serious problems if and when business conditions among our customers in industries such as automotive and construction pick up, potentially triggering both supply shortages and higher prices.”

According to PMA’s July 2008 Business Conditions Report, metalforming companies expect a slight improvement in business conditions in the next three months. Conducted monthly, the report is an economic indicator for manufacturing, sampling 150 metalforming companies in the United States and Canada. Metalforming companies also expect a slight improvement in incoming orders during the next three months. Current average daily shipping levels remained unchanged in July.  The number of metalforming companies with a portion of their workforce on short time or layoff decreased in July. 

The American Iron and Steel Institute, Washington, D.C., has selected Thomas J. Gibson as the association’s president and CEO. Currently senior vice president of advocacy for the American Chemistry Council, Gibson will assume his new responsibilities on Sept. 1. Gibson will succeed AISI President and CEO Andrew G. Sharkey III, who announced his retirement after leading the institute over the past 15 years and following a distinguished 30-year career.

AISI, the primary source of statistical information on the North American steel industry, has released its 2007 Annual Statistical Report. The 126-page book, the most comprehensive reference of its kind for the American steel industry, provides statistical data for the United States steel industry, plus a variety of selected statistical data on the Canadian, Mexican and world steel industries. The report is the longest running statistical publication series in all of manufacturing, dating back to 1868. AISI’s 2007 Annual Statistical Report, in its ninth year on CD as a PDF file, is also available by e-mail or hard copy. To purchase it online ($400 for a hard copy or $350 for an electronic version) visit www.steelfacts.com. To order it over the phone, call 412-860-5342.

The Copper and Brass Servicenter Association has awarded 12 scholarships to deserving students attending various colleges and universities in the U.S. for the 2008-2009 academic year. The total amount of the awards is $16,000, the highest in the seven years the group has been giving such awards. The total of 12 is also a record. The top award of $3,000 goes to Nicholas Hopwood, a pharmacy major at SUNY Buffalo.

Jack Miller, president of Sapa North America Extrusions Inc., has been elected to the board of directors of The Aluminum Association. “I’m pleased to be joining the board,” says Miller. “With rising energy costs and the industry’s focus on sustainability, this is a critical time for the aluminum industry, and it’s important for Sapa to be engaged and part of those efforts.”