Facts At Odds With Mutual Angst On New U.S. Steel Tariffs

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Some perspective on the future of the U.S. steel industry may have been lost in the angst felt by steel producers and caused by the number and profile of companies going into Chapter 11 limbo. An air of domestic steel industry vulnerability resulted and was quickly followed by international indignation caused by the presidential announcement of protective tariffs. The exaggerated picture of an obsolete rust belt industry is not borne out by the amount of state-of-the-art technological innovation being installed in U.S. plants. Meanwhile, steel products, continue to be imported into the U.S. market at greater than normal rates.

The American Iron and Steel Institute's (AISI) latest reports, based on preliminary figures from Census Bureau data, show that a total of 1,881,000 net tons (NT) of steel was imported in April including 1,148,000 NT of finished steel. These totals were 13.7% and 8.6% down from last year respectively. Total year-to-date steel imports of 10,104,000 NT remain 6.9% higher than last year, with year-to-date finished steel imports at 7,331,000 NT, which is actually 2% lower.

Many steel import product categories showed significant increases year-to-date. For example semi-finished steel imports are up 41%, cut steel plates up 33%, hot dip galvanized sheet and strip up 34%, wire rod up 28%, steel bars light shapes up 18%, tin plate up 16%, steel line pipe up 15%, and hot rolled steel bars 13%.

Also in April, average import customs values in many steel products remained well below their historic, pre-crisis averages. This set of circumstances has led the AISI to plea for the full implementation of the 201 tariff protection announcement against product exclusions, border evasions, and legal claims by foreign governments to the WTO.

Many U.S. steel producers have been showing that they "can-do and will-do" whatever possible to modernize and bring in new technology. An electric arc furnace, ladle metallurgical furnace, and combination bloom/beam blank caster has been commissioned for Steel Dynamics Incorporated's (NASDAQ:STLD) (Fort Wayne, Indiana) new structural mill facility in Columbia City, Indiana, by SMS Demag, Incorporated (Pittsburgh, Pennsylvania). The project included engineering and equipment supply of two 150 ton electric arc furnaces (120 ton tap) featuring the Demag proprietary three-point quick change roof suspension system, two 120 ton ladle furnaces, and one three strand bloom/beam blank caster. Level 1 control systems were also included in the scope of the supply. The melting and casting facility is sized for an annual production of 1,200,000 tons.

Construction began on the Steel Dynamics mill in May 2001 and achieved first melt and cast in eleven months. The SMS Demag engineered and supplied heavy section rolling mill is expected to be commissioned by mid-year, which will complete the full process chain of melting to finished rolling.

The International Steel Group Incorporated (ISG) is the newest competitor in the global steel industry after it acquired LTV Steel's assets. The company, formed by WL Ross & Company, operates flat rolled steel plants in Cleveland and East Chicago, Indiana, and a finishing plant in Hennepin, Illinois. It also has a coke plant in Warren, Ohio and other facilities relates to the operation of its steel plants. At the Cleveland works, iron and steelmaking operations are underway. One of two blast furnaces has been started up along with the basic oxygen furnace steelmaking facility and continuous slab caster. The second blast furnace is expected to start up within three months. Employment is expected to increase from the current 750 to 1,200 by August.

Rocky Mountain Steel Mills (RMSM) (Pueblo, Colorado), part of Oregon Steel Mills (NYSE:OS) (Pueblo, Colorado), which is the third largest producer of seamless tubulars in the U.S., will be one of the first commercial sites to deploy and use an ultrasonic inspection system that addresses the problem of slow and cumbersome oil country tubular good inspection processes. The company has signed a five year contract with Tubular Ultrasound LP (Houston) to use state-of-the-art technology to inspect all of its critical-application tubulars before sales to end users. The technology will perform inspections up to twice as fast as older systems, with higher accuracy, and do them on location at the RMSM site.