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Released March 09, 2016 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Stock prices for U.S. steel makers recently got a shot in the arm when the U.S. Department of Commerce announced the imposition of preliminary anti-dumping duties on imported cold-rolled steel from several overseas producers. However, domestic producers warn they've still got a long way to go before they can rebound from the global steel supply glut. Industrial Info is tracking $13.8 billion in U.S. steel-related projects.
Click on the image at right for a graph detailing steel projects in the U.S.
Following complaints by five U.S.-based steel producers, the Department of Commerce's International Trade Commission (ITC) announced preliminary determinations in the anti-dumping investment on imports of cold-rolled steel flat products from Brazil, China, India, Japan, Korea, Russia and the U.K. The ITC placed a 265.79% dumping margin on Chinese steel producers, and lesser duties on steel producers in other countries.
U.S.-based steel producers have long complained of unfairly priced imports, particularly from China. Company executives warn that the situation isn't likely to end anytime soon.
John Ferriola, chief executive officer of steel producer Nucor Corporation (NYSE:NUE) (Charlotte, North Carolina), recently shared his view of the situation with the U.S.-China Economic & Security Review Commission.
Finished steel imports accounted for a record 29% of U.S. market share, Ferriola said. "At the same time, domestic capacity utilization averaged only 70%, and fell as low as 60% in the final weeks of 2015," he told the commission.
The imports were driven by global production overcapacity, he said, which in turn has been driven by a dramatic increase in China's steelmaking. "In 2000, China had roughly the same annual steelmaking capacity as the United States-- just over 100 million tons," Ferriola said. "Today, China's steelmaking capacity is 1.2 billion tons."
Global steel production overcapacity was more than 700 million tons per year in 2014, of which 425 million tons was due to China's producers, Ferriola said, citing the American Iron and Steel Institute (AISI). Last year, he continued, China exported 123 million tons of steel, which is more than all three North American Free Trade Agreement (NAFTA) countries produced combined.
He maintained the open U.S. market makes it a magnet for unfairly traded imports. The global glut has contributed to 12,000 layoffs last year by the U.S. steel industry, he added.
China has vowed to cut steel production by 100 million tons to 150 million tons in the next five years, and could lay off about 500,000 steel industry workers there, according to news accounts.
Ferriola said he was skeptical of China's claims, adding, "Without meaningful trade relief as the hammer, China will always prioritize its internal need to maintain employment and Communist party control."
In the U.S., four major steel producers reported net losses for fourth-quarter 2016.
U.S. Steel
United States Steel (NYSE:X) (U.S. Steel) (Pittsburgh, Pennsylvania) incurred a net loss of $999 million for the just-ended quarter, compared with net income of $275 million in fourth-quarter 2014. The latest results included the impact of a $606 tax provision, as well as the results of lower prices and product shipments. Looking forward, Chief Executive Officer Mario Longhi noted "significant headwinds and uncertainty in many of the markets we serve," but added the company remains focused on cost savings. The company's capital spending plan for 2016 is set at $350 million, compared with the $500 million that it spent in 2015. Industrial Info is tracking 13 active U.S. Steel projects worth $91.46 million. This includes the closure of the flat rolled steel mill at its Fairfield, Alabama site. The closure project has a total investment value (TIV) of $10 million.
A.K. Steel
AK Steel (NYSE:AKS) (West Chester, Ohio) reported a net loss of $147.1 million for the just-ended quarter, compared with a $13.5 million net profit a year earlier. The latest results included $200.9 million in charges, including pension and unemployment-related expenses. Net sales for fourth-quarter 2015 were $1.54 billion, down from $2 billion a year earlier. The company is targeting capital expenditures in the range of $120 million to $140 million for this year, including $40 million for growth projects. Capital expenditures for 2015 totaled $97.3 million. Industrial Info is tracking 14 active AK Steel projects worth $108.00 million, including an electrostatic oiling process, valued at $29 million, at its Dearborn, Michigan operational site.
Nucor
Nucor reported a $62 million loss in fourth-quarter 2015, compared with a profit of $210.4 million for the same quarter of 2014. The results for the just-ended quarter included a $153 impairment charge related to its Duferdofin-Nucor joint venture in Europe, and an $84.1 million impairment charge related to a postponed blast furnace project at Nucor's St. James Parish facility in Louisiana. Net sales for fourth-quarter 2015 dropped 31% to $3.46 billion in comparison with fourth-quarter 2014. The company said it expects $500 million in capital spending for 2016, up from $365 million in 2015. Industrial Info is tracking 28 active Nucor projects worth $236.55 million. This includes a $21 million pollution control system addition at its Tuscaloosa Steel Mill in Alabama, with completion expected in second-quarter 2016.
Steel Dynamics
Steel Dynamics Incorporated (NASDAQ:STLD) (Fort Wayne, Indiana) reported a fourth-quarter 2015 net loss of $253 million, compared with a loss of $45 million in fourth-quarter 2014. Consolidated external net sales for the just-ended quarter were $1.6 billion, down from $2.5 billion a year earlier. Capital expenditures are expected to range from $250 million to $300 million this year. Industrial Info is tracking 11 Steel Dynamics projects worth $142 million. This includes $100 million for the coil paint line and galvanizing equipment addition at the company's steel mill in Columbus, Mississippi. The paint line is expected to begin operations the first quarter of 2017.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
Click on the image at right for a graph detailing steel projects in the U.S.Following complaints by five U.S.-based steel producers, the Department of Commerce's International Trade Commission (ITC) announced preliminary determinations in the anti-dumping investment on imports of cold-rolled steel flat products from Brazil, China, India, Japan, Korea, Russia and the U.K. The ITC placed a 265.79% dumping margin on Chinese steel producers, and lesser duties on steel producers in other countries.
U.S.-based steel producers have long complained of unfairly priced imports, particularly from China. Company executives warn that the situation isn't likely to end anytime soon.
John Ferriola, chief executive officer of steel producer Nucor Corporation (NYSE:NUE) (Charlotte, North Carolina), recently shared his view of the situation with the U.S.-China Economic & Security Review Commission.
Finished steel imports accounted for a record 29% of U.S. market share, Ferriola said. "At the same time, domestic capacity utilization averaged only 70%, and fell as low as 60% in the final weeks of 2015," he told the commission.
The imports were driven by global production overcapacity, he said, which in turn has been driven by a dramatic increase in China's steelmaking. "In 2000, China had roughly the same annual steelmaking capacity as the United States-- just over 100 million tons," Ferriola said. "Today, China's steelmaking capacity is 1.2 billion tons."
Global steel production overcapacity was more than 700 million tons per year in 2014, of which 425 million tons was due to China's producers, Ferriola said, citing the American Iron and Steel Institute (AISI). Last year, he continued, China exported 123 million tons of steel, which is more than all three North American Free Trade Agreement (NAFTA) countries produced combined.
He maintained the open U.S. market makes it a magnet for unfairly traded imports. The global glut has contributed to 12,000 layoffs last year by the U.S. steel industry, he added.
China has vowed to cut steel production by 100 million tons to 150 million tons in the next five years, and could lay off about 500,000 steel industry workers there, according to news accounts.
Ferriola said he was skeptical of China's claims, adding, "Without meaningful trade relief as the hammer, China will always prioritize its internal need to maintain employment and Communist party control."
In the U.S., four major steel producers reported net losses for fourth-quarter 2016.
U.S. Steel
United States Steel (NYSE:X) (U.S. Steel) (Pittsburgh, Pennsylvania) incurred a net loss of $999 million for the just-ended quarter, compared with net income of $275 million in fourth-quarter 2014. The latest results included the impact of a $606 tax provision, as well as the results of lower prices and product shipments. Looking forward, Chief Executive Officer Mario Longhi noted "significant headwinds and uncertainty in many of the markets we serve," but added the company remains focused on cost savings. The company's capital spending plan for 2016 is set at $350 million, compared with the $500 million that it spent in 2015. Industrial Info is tracking 13 active U.S. Steel projects worth $91.46 million. This includes the closure of the flat rolled steel mill at its Fairfield, Alabama site. The closure project has a total investment value (TIV) of $10 million.
A.K. Steel
AK Steel (NYSE:AKS) (West Chester, Ohio) reported a net loss of $147.1 million for the just-ended quarter, compared with a $13.5 million net profit a year earlier. The latest results included $200.9 million in charges, including pension and unemployment-related expenses. Net sales for fourth-quarter 2015 were $1.54 billion, down from $2 billion a year earlier. The company is targeting capital expenditures in the range of $120 million to $140 million for this year, including $40 million for growth projects. Capital expenditures for 2015 totaled $97.3 million. Industrial Info is tracking 14 active AK Steel projects worth $108.00 million, including an electrostatic oiling process, valued at $29 million, at its Dearborn, Michigan operational site.
Nucor
Nucor reported a $62 million loss in fourth-quarter 2015, compared with a profit of $210.4 million for the same quarter of 2014. The results for the just-ended quarter included a $153 impairment charge related to its Duferdofin-Nucor joint venture in Europe, and an $84.1 million impairment charge related to a postponed blast furnace project at Nucor's St. James Parish facility in Louisiana. Net sales for fourth-quarter 2015 dropped 31% to $3.46 billion in comparison with fourth-quarter 2014. The company said it expects $500 million in capital spending for 2016, up from $365 million in 2015. Industrial Info is tracking 28 active Nucor projects worth $236.55 million. This includes a $21 million pollution control system addition at its Tuscaloosa Steel Mill in Alabama, with completion expected in second-quarter 2016.
Steel Dynamics
Steel Dynamics Incorporated (NASDAQ:STLD) (Fort Wayne, Indiana) reported a fourth-quarter 2015 net loss of $253 million, compared with a loss of $45 million in fourth-quarter 2014. Consolidated external net sales for the just-ended quarter were $1.6 billion, down from $2.5 billion a year earlier. Capital expenditures are expected to range from $250 million to $300 million this year. Industrial Info is tracking 11 Steel Dynamics projects worth $142 million. This includes $100 million for the coil paint line and galvanizing equipment addition at the company's steel mill in Columbus, Mississippi. The paint line is expected to begin operations the first quarter of 2017.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
