NAFTA Steel Industry Pulse
North American Steel Trade Committee
Mexico City
June 27-28, 2011
0
NAFTA Apparent Demand
45,000
Metric Tons ('000)
40,000
35,000
30,000
NAFTA Capacity
25,000
Canada Demand
20,000
Mexico Demand
15,000
US Demand
10,000
5,000
2008
2ND
3RD
4TH
2009
2008
2ND
3RD
4TH
2010
2009
2ND
3RD
4TH
2010
1ST
2011
NAFTA Crude Steel Production & Capacity
45,000
40,000
Metric Tons ('000)
35,000
30,000
NAFTA Capacity
Canada Production
Mexico Production
US Production
25,000
20,000
15,000
10,000
5,000
1st
2ND
3RD
2008
4TH
1st
2ND
3RD
2009
4TH
1st
2ND
3RD
2010
4TH
1st
2011
1
Source: AISI, Statistics Canada, Canacero
NAFTA Steel Imports
8
NAFTA Finished Imports
Metric Tons (millions)
7
35.0%
Import Market Share
30.0%
6
25.0%
5
20.0%
4
15.0%
3
10.0%
2
5.0%
1
-
0.0%
1ST
2ND
3RD
4TH
1ST
2ND
2008
3RD
4TH
1ST
2ND
2009
3RD
1ST
2010
2011
NAFTA Steel Exports
3.0
NAFTA Exports
Exports
% of Shipments
2.5
Metric Tons (million)
4TH
% of
Shipments
35.0%
30.0%
25.0%
2.0
20.0%
1.5
15.0%
1.0
7%
0.5
6%
5%
7%
6%
8%
7%
6%
5%
6%
5%
6%
10.0%
5%
5.0%
0.0
0.0%
1ST
2ND
3RD
2008
Source: AISI, Statistics Canada, Canacero
4TH
1ST
2ND
3RD
2009
4TH
1ST
2ND
3RD
2010
4TH
1ST
2011
2
Tracking North America’s Steel Recovery
Steel Production and Shipment Tonnage for 2009-2011
5
62% 68%
56%
44%
73% 70%
26.9
28.6
80%
73%
68%
60%
40%
45%
20%
2nd
3rd
4th
1st
2nd
2009
3rd
4the
2010
4
3.3
2.7
3
2
-11%
1.0
1.2
1.6
1.4
1.3
24%
35
50%
30
30%
20%
-12% -9%
1
0
-15%
-9%
10%
0%
12%
0
-10%
-
-20%
1st
2nd
3rd
4th
1st
2009
30%
20%
38%
-13%
10%
-14%
0%
-10%
3rd
4th
1st
2nd
2009
60%
40%
24%
1
1
10%
-20%
2nd
2011
2nd
3rd
2010
4th
1ST
Million Metric Tons
1
1.3
42%
-6%
1st
Q-Y-Q % increase
Million Metric Tons
1
40%
-
1ST
50%
3rd
4the
2010
1st
2011
Apparent Supply
1.4
1.4
1.3
3.5
2.4
Exports
2
2
60%
4.7
4.1
1
0%
1st
4.8
5
25
20.7
20
18.3
21.5
15
17%
10
23.2
8%
26.7
28.7
28.3 27.4
31.0
50%
40%
30%
15%
13%
8%
10%
-2% -3%
5
20%
0%
-
-10%
1st
2nd
3rd
2009
4th
1st
2nd
3rd
2010
4the
1ST
2011
2011
3
Source: AISI, Statistics Canada, Canacero
Q-Y-Q % increase
17.6
27.7
70%
5.5
5.0
Q-Y-Q % increase
17.4
15
10
24.4
22.0
25
28.7
27.0
Million Metric Tons
Million Metric Tons
30
6
100%
Utilization Rate
35
20
Finished Imports
NAFTA Raw Steel Production & Utilization
Led by China, 2011 YTD World Steel Production at Record Level
NAFTA steel capacity utilization still 10% less than world-average
4
Key Concerns about Competitiveness
• Level of investment innovation by NAFTA countries continues to decline vs.
competitor nations – without reversal, risk of becoming “old economy.”
• NAFTA industries face uncertainties due to governments not taking a longterm focus in policy development and expenditure decisions.
• Growth in steel-containing imports adding to capacity underutilization
problem within NAFTA steel industry.
• Complex regulatory regimes are impeding ability of businesses to remain
competitive and “profitable.”
• The government of China continues to expand its reach into both upstream
and downstream industries, including through SOEs – new 5-Year Plans
could increase China’s share of world manufacturing production and exports.
5
Key Discussion Questions on Competitiveness
•
What can be done to address capacity underutilization in the NAFTA steel industry?
– growth in direct and indirect steel imports
– continuing weak internal demand
•
With governments facing mounting debt and deficits, where best can they direct limited
available resources to strengthen manufacturing competitiveness--- gain the best “ROI?”
– stimulating industrial innovation and R&D
– ensuring access to secure and affordable energy
– supporting skills development and training
– rebuilding infrastructure, etc.
•
How best can we inject a “pro-manufacturing bias” into government policy development?:
– within each NAFTA country
– across NAFTA
– in collaboration with other manufacturing entities
– building more awareness on key factors of industrial competiveness, such as NAFTA
Leaders letter and “Infrastructure Conference”
•
Is the industry deriving maximum benefits from the current policy and program “tool kits” of
governments, e.g., tax measures for purchasing machinery and equipment, funding for R&D
6
and increasing energy efficiency? If not, what needs to be done?
Key Concerns about Internal Trade
• Fraud, circumvention and evasion (FCE) can disrupt normal
internal trading patterns.
• FCE practices can result in misleading and erroneous internal
trade statistics, muddling trade analysis and complicating efforts
to stop unfair trade.
• Infrastructure issues at the NAFTA borders can restrict legitimate
cross-border trade flows.
• NAFTA steel trade data are not timely, hindering monitoring.
• New York state ballast water regulations would disrupt trade on
the St. Lawrence Seaway.
• Proposed North American Emissions Control Area (NAECA)
could raise shipping costs, restrict vessel movements, slow trade.
• Potential regulations to halt spread of Asian carp in Great Lakes
could stifle inland economy through restricted ship movements.
7
Key Discussion Questions on Internal Trade
• Regarding FCE, the industry has proposed (1) identifying enforcement
violations (2) analyzing evasion schemes, (3) improving communication and
(4) actions to resolve problems. Will NAFTA governments consider these
recommendations that aim to reduce, and eventually eliminate, unfair and
illegal FCE practices?
• What is being done now, and is expected in the future, to reduce and ultimately
eliminate infrastructure bottlenecks and protocols that slow legitimate crossborder NAFTA trade?
• How can the timeliness of NAFTA steel import data be improved?
• What are NAFTA governments doing to help solve the excessive, burdensome
restrictions that would be imposed by NY state ballast water regulations?
• What are NAFTA governments doing to help to resolve the shipping and trade
problems that would be created by the implementation of the NAECA?
• What is the position of NAFTA governments on potential regulations to stop
the spread of Asian carp and the impact of such regulations on shipping, and
what can NAFTA governments do to help mitigate the negative impact?
8
Key Concerns about External Trade
• Continuing effects of economic crisis
• Efforts to undermine trade laws through international
negotiations or WTO litigation
• Market-distorting practices in China and other countries,
including restrictions on trade in raw materials
• Policies that give state-owned enterprises (“SOEs”) an unfair
advantage over private companies
• Need for more effective policies recognizing the importance of
manufacturing to the NAFTA region
9
Key Discussion Questions on External Trade
• What are the prospects for the world and NAFTA economies going
forward?
• What steps can and should NAFTA governments take to prevent trade
barriers and market-distorting practices from hurting NAFTA steel
producers?
• What additional steps could NAFTA governments take to preserve
and strengthen the antidumping and countervailing duty laws?
• What should be the top priorities for NAFTA governments seeking to
address China’s mercantilist policies?
• What policies would help preserve true market competition between
private companies and SOEs?
• What policies would most effectively promote manufacturing in the
NAFTA region?
10
Industry Critical Alerts to NAFTA Governments
Given the severe problems facing NAFTA economies, it is
essential that NAFTA governments do the following:
•
•
•
•
•
Ensure strong and effective enforcement of trade laws throughout the NAFTA
region, including effective steps to prevent fraud and evasion of AD/CVD
orders;
Resist any effort to undermine trade laws through international negotiations or
WTO litigation;
Pursue a more aggressive response to market-distorting practices in China,
including currency manipulation and raw material export restrictions;
Ensure that SOEs are not given an unfair advantage over private companies,
at least in the NAFTA region;
Implement policies that recognize the importance of manufacturing to the
long-term prosperity of the NAFTA region.
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