Steel Industry Update/268

November 2011

Locker Associates, 225 Broadway, Suite 2625 New York NY 10007

Tel: 212-962-2980

Table 1: Selected U.S. Steel Industry Data, September & Year-to-Date, 2011
Month of September
2011
2010
% Chg
Raw Steel Production.........................7,973
7,280
9.5%
Capacity Utilization........................... 76.1
70.2
--

2011
71,348
74.8

Mill Shipments....................................7,947

7,140

11.3%

68,441

63,154

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%

(000 net tons)

Year-to-Date
2010
67,115
71.2

% Chg
6.3%
-8.4%

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 & Yearto-Date, 2011
($ per net ton)

Hot Rolled Band..
…………..
Cold Rolled Coil…......
…….
Coiled Plate................
……..
Average Spot
Price……....
#1 Heavy
Melt……………...
Shredded
Scrap…………...
#1
Busheling……………
….

Month of November
2011
2010 % Chg

Year-to-Date
2011
2010 % Chg

643

560

14.8%

761

614

24.0%

757

664

14.0%

858

720

19.2%

934

756

23.5%

1,002

766

30.7%

$778

$660

17.9%

$874

$700

24.8%

368

327

12.5%

399

312

28.1%

405

354

14.4%

437

343

27.4%

436

388

12.4%

473

407

16.1%

Sources: World Steel Dynamics, SteelBenchmarker, 11/11

Email: lockerassociates@yahoo.com | Website: www.lockerassociates.com

Steel Industry Update/268

Table 3: World Crude Steel Production, September & Year-to-Date, 2011
(000 metric tons)Month

of SeptemberYear-to-DateRegion20112010% Chg20112010% ChgEuropean

Union…….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%N
orth America………9,9459,1878.3%89,26684,1376.1%South
America……...3,9453,6966.7%36,77932,70312.5%Africa………………...1,1031,280-13.9%10,47112,32515.0%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%Total…………………
123,567112,6409.7%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%United
States………..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%All
Others…………....24,14923,5202.7%193,686183,1385.8%Source: World Steel Association, 11/11; e=estimate

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Steel Industry Update/268

Graph 1: World Crude Steel Production

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

Graph 2: World Steel Capacity Utilization Ratio

Source: World Steel Association, 7/11

Steel Industry Update (ISSN 1063-4339) published 12 times/year by Locker Associates, Inc. Copyright © 2011 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.

-3-

Steel Industry Update/268

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

Table 4: US Exports of Steel Mill Products, September 2011
Product
All carbon steels
Cut-to-length plate
Heavy structural shapes
Hot-dip galvanized sheets/strip
Plate in coils
Hot-rolled coil
Cold-rolled coil
Total

Sept ’11
1,058
94
93
93
86
82
75
1,100

Aug ‘11
1,015
104
91
97
85
63
54
1,079

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

-4-

% Chg
4.2%
-9.6%
2.6%
-4.1%
0.6%
30.0%
39.2%
2.0%

Sept ‘11
866
89
56
70
75
61
57
906

% Chg
22.1%
6.3%
66.1%
33.6%
13.4%
34.9%
32.9%
21.5%

Steel Industry Update/268

Table 5: Chinese Steel Imports and Exports, 2011
(million tonnes)
Imported semi-steels
Finished steel
Exported semi-steel
Finished steel
Net export
Finished steel

Oct’11
0.1
1.2
0.0
3.82
-0.1
2.6

Jan-Oct’11
0.5
13.2
0.0
41.0
-0.5
27.8

Jan-Oct’10
0.5
13.6
0.1
36.8
-0.4
23.2

% Chg
-2.0%
-3.4%
-11.3%
37.1%
20.0%

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

Table 6: Eurofer Steel Market Outlook by End-user, 2011-2012F
FY'
10

Q1'
11

Q2'
11

Q3'
11

Q4'
11

FY'
11

Q1'
12

Q2'
12

Q3'
12

Q4'
12

FY'
12

Construction
Structural
steelwork
Mech
engineering

27% -2.6

7.6

1.8

0.1

1.5

2.4

-1.6

2.7

3.9

5.3

2.8

11%

1.6

9.1

1.8

2.6

2.3

3.8

1.1

1.5

2.6

3.2

2.1

14%

9.9

3.8

9.2

4.3

3.7

3.5

2.5

3.4

16%

11.
9
10.
9
-3.4

6.1

Automotive

15.
9
19.
4
0.9

7.5

3.9

1.7

1.0

2.8

2.2

1.9

-0.9

1.6

10.
3
-0.3

0.4

4.1

3.2

4.2

2.9

0.7

-8.2

2.0

4.0

-0.6

0.8

-1.0

1.6

2.5

0.9

8.2

2.3

2.0

8.7

1.8

2.2

3.0

2.5

2.3

7.8

4.6

4.6

7.3

2.2

2.3

3.8

3.9

3.0

4.5

2.6

1.4

3.2

1.9

1.6

3.4

3.7

2.8

2.8

5.9

1.2

2.4

3.4

3.5

2.6

Share

Dom appliances

4%

Shipyards

1%

20.
7
2.7
18.
9
13.
1

Tubes

12%

Metal goods

12%

8.3

3%

6.0

Miscellaneous

22.
3
12.
1
4.6

12.
Total
100% 5.9
5.8
3.1
7
Source: Eurofer Steel Market Outlook Report, 10/21/11

Table 7: Indian Domestic Car Sales, October 2011
Company
Maruti Suzuki
Hyundai Motor
TATA Motors
M&M
Fiat
Toyota
Ford
General Motors
Volkswagen
Honda Siel
Total

Oct '10
107,555
34,720
24,478
16,987
2,025
6,602
9,026
10,051
4,343
-55,275
221,062

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

Oct '11
51,458
33,001
25,124
18,756
622
10,762
8,091
10,062
7,266
5,526
170,668

% Chg
-52.2%
-5.0%
2.6%
10.4%
-69.3%
63.0%
-10.4%
0.1%
67.3%
4.8%
-22.8%

Steel Industry Update/268

Table 8: Global DRI Production by Country, Jan-Sept & YTD 2011
Jan
2,246
883

Feb
2,14
6
923

Mar
2,16
5
786

Apr
2,22
4
879

May
2,40
9
849

Jun
2,28
4
820

Jul
2,36
0
850

Aug
2,36
0
820

Sep
2,30
0
820

YTD
'11
20,494
7,630

Mexico

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

Country
India
Iran

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
5,22
5,34
Total
5,440 5,07
3
0
2
Source: World Steel Association, 10/31/11; in ‘000 tonnes

0
5,37
0

0
5,24
0

0
5,33
8

0
5,34
3

0
5,24
4

0

-6-

47,612

Steel Industry Update/268

Table 10: Severstal Steel Production and Sales Results From Operations, Jan-Sept 2011
Production
Hot metal
Russian Steel
North America
Crude steel
Russian Steel
North America
Sales
Rolled products
Hot-rolled strip and plate
Cold-rolled sheet
Galvanized and coated sheet

Q3'11
2.6
2.2
0.5
4.0
2.9
1.1

Q2'11
2.7
2.2
0.5
3.9
3.0
0.9

% Chg
-1%
-1%
0%
4%
-2%
23%

J-S'11
7.9
6.6
1.3
11.5
8.6
3.0

J-S'10
7.7
6.4
1.3
10.9
8.2
2.7

% Chg
2%
3%
1%
6%
5%
9%

1.1
0.7
0.1
0.3

0.8
0.4
0.1
0.3

31%
76%
1%
-11%

2.8
1.5
0.4
0.9

2.9
1.4
0.6
1.0

-5%
5%
-33%
-2%

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

Table 9: US Iron and Steel Scrap Usage, August, 2011 & YTD
Aug’11

July’11

MOM %

YOY %

YTD
2011

YTD
YOY %

269
462
3,900
657
11
4,660

232
632
3,710
608
7
4,600

15.9%
-26.9%
5.1%
8.1%
57.1%
1.3%

na
-43.0%
20.0%
9.9%
10.0%
11.8%

1,320
5,960
29,400
5,360
61
36,900

na
-7.0%
10.5%
11.0%
-39.6%
8.5%

3,890
240
108

3,840
214
99

1.3%
12.1%
9.1%

18.2%
-17.2%
-18.2%

30,800
2,050
1,180

10.4%
-10.1%
22.3%

Pig Iron
Basic oxygen process
Receipts
Production
Total Consumption

2,210
620
2,370
2,970

2,600
619
2,290
2,920

-15.0%
0.2%
3.5%
1.7%

-16.9%
17.0%
4.4%
4.2%

21,200
4,930
19,000
23,800

4.4%
-32.8%
24.2%
5.8%

Direct Reduced Iron
Receipts
Total Consumption

110
145

140
121

-21.4%
19.8%

6.8%
13.3%

990
994

8.7%
9.4%

(000 metric tons)

Scrap
Blast furnace
Basic oxygen process
Electric furnace
Production: Recirculating scrap
Production: Obsolete scrap
Total Consumption
Scrap Receipts
From dealers
From other own company plants
Scrap shipments

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

-7-

Steel Industry Update/268

Table 11: U.S. Steel Financial Results From Operations, Q3’11
Q3'11
5,081
295

Q2'11
5,120
396

Q3'10
4,497
-65

-96

-96

-58

-

-

-15

Income from operations

199

300

-138

Net interest and other financial costs

144

13

-78

(in US$ millions)

Net Sales
Total reportable segment
Postretirement benefit expense
Other items not allocated to segments

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

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

-8-

Steel Industry Update/268

Exhibit 2 - Pennsylvania Primary Metal Exports, 2001-2010

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

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

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

-9-

Steel Industry Update/268

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

City

Carpenter Tech

Reading

ArcelorMittal

Steelton

Nature of Investment
2011
Two additional Electroslag Remelting Furnaces (ESR);
increased capacity for Forge Finishing & Annealing ops
2010
Renovation of the plant’s reheat furnace

Total
Investment
NA

$54.0

2009
Lehigh Heavy Forge

Bethlehem

Production enhancements

Universal Stainless

Bridgeville

Equipment automation and plant layout upgrades in the
melt shop

Wheatland Tube

Wheatland

Upgrade equipment and consolidations of ops

AK Steel

Butler

Allegheny Tech

Brackenridge

Hussey Copper

Leetsdale

2008
Expansion of production capacity of steel used to
manufacture power generation equipment
New hot-rolling and processing facility and melt shop
Relocation of production line from Kentucky

Latrobe Specialty

Latrobe

Plant expansion

U.S. Steel

Clairton

Clairton Coke Works overhaul

AK Steel
Allegheny Tech

Butler
Canton Twp

2007
Replaced two or three EAF with a single furnace;
carbon steel slab production expansion
Titanium mill Upgrade
Upgrades to bloom caster and in-line head hardening
unit
Premium melt expansion with four vacuum arc
remelting (VAR) furnaces and two ESR

ArcelorMitttal

Steelton

Carpenter Tech

Reading

Carpenter Tech

Reading

Hot-rolling facility expansion

Col-Fin Specialty

Fallston

Plant expansion

Damascus Steel

Beaver Falls

Ellwood Quality

Ellwood City

Penn Cold Drawn

West Mayfield

New induction melt furnace system, cranes and tramrail transfer system; electrical upgrades
$60 million for a 5,000-ton open die forging pres; $75
million for a new forge facility
New tubular production facility

$3.2
$13.0
$2.0

$21.0
$1,160.0
$1.2
$62.0
$600.0

$180.0
$60.0
NA
$115.0
$115.0
$1.1
NA
$135.0
$9.0

2005
Lehigh Specialty

Latrobe

Perryman Co

California

TMK IPSCO

Koppel

Reopening of shuttered Standard Steel plant

$16.7

New titanium plant

$55.0

Pipeline expansion in Koppel, plant improvements in
Ambridge

$60.0

Total
$2,591.0

$2,591.0

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

- 10 -

Steel Industry Update/268

- 11 -

Steel Industry Update/268

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 labormanagement effort. Locker Associates also produces a widely read monthly newsletter, Steel
Industry Update that circulates throughout the U.S. and Canadian steel industry.

Steel Mill Products: US Imports, September & Year-to-Date
Imports: Country of Origin
(000 net tons)

Canada………………………..
Mexico…………………………
Other W. Hemisphere………..
European Union………………
Other Europe*………………..
Asia…………………………….
Oceania……………………….
Africa…………………………..
Total
Imports: Customs District
Atlantic Coast…………………
Gulf Coast/Mexican Border…
Pacific Coast………………….
Gr Lakes/Canadian Border….
Off Shore………………………

Month of September
2011
2010
% Chg
537
570
-5.8%
206
182
13.2%
282
104
171.2%
272
398
-31.7%
209
237
-11.8%
652
516
26.4%
103
59
74.6%
3
11
-72.7%
2,263
2,076
9.0%
187
1,081
334
654
8

167
790
408
699
12

Source: AISI; *includes Russia

Update #268
- 12 -

12.0%
36.8%
-18.1%
-6.4%
-33.3%

2011
4,619
2,312
2,544
3,213
2,114
6,285
775
128
21,991
2,489
9,798
4,024
5,524
155

Year-to-Date
2010
% Chg
5,300
-12.8%
2,180
6.1%
828
207.2%
3,235
-0.7%
1,792
18.0%
4,456
41.0%
509
52.3%
83
54.2%
18,323
19.6%
2,299
6,197
3,556
6,175
157

8.3%
58.1%
13.2%
-10.5%
-1.3%

Steel Industry Update/268

RECENT PROJECTS

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

IBT-Supervalu (2010): assist union and management to identify major operational
problems 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

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