Recent Developments in the Steel Industry in the United States - - PowerPoint PPT Presentation

Recent Developments in the Steel Industry in the United States

OECD Steel Committee Meeting Paris, France March 25-26, 2019

Economic Conditions are Robust and the Industrial Economy is in the Midst of a Broad-Based Rebound

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1.9%

• 0.1%
• 2.5%

2.6% 1.6% 2.2% 1.8% 2.5% 2.9% 1.6% 2.2% 2.9% 2.4% 2.0%

• 3%
• 2%
• 1%

0% 1% 2% 3% 4% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Percent Change

Gross Domestic Product (GDP)

Sources: BEA, IHS Markit 2.5%

• 3.5%
• 11.5%

5.5% 3.1% 3.0% 2.0% 3.1%

• 1.0%
• 1.9%

1.6% 4.0% 2.7% 1.5%

• 12%
• 10%
• 8%
• 6%
• 4%
• 2%

0% 2% 4% 6% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Industrial Production (IP)

Sources: Federal Reserve, IHS Markit

U.S. Steel Market Highlights

• Despite recent trade actions, steel imports continue to

capture significant U.S. market share and distort markets

• U.S. direct steel trade deficit remains elevated

– Finished imports captured 22.9 percent of the U.S. market in 2018, the lowest level since 2011 – Imports of two key product areas saw double-digit increases in 2018: hot-rolled sheet (up 22 percent) and plates in coil (up 15 percent)

• Production and capacity utilization have increased, but

have not yet reached pre-recession levels

• Steel companies are reinvesting in U.S. steelmaking

facilities to meet robust market demand. Others have reduced capacity or exited the market

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Apparent Steel Demand is Rebounding, but Has Not Fully Recovered to Pre-Recession Levels

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110.6 100.7 60.8 81.8 90.9 98.0 97.6 108.8 98.0 93.9 99.7 101.8

20 40 60 80 100 120

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Million Metric Tons (MMT)

U.S. Apparent Steel Use (ASU)

Sources: U.S. Census Bureau, American Iron and Steel Institute

Steel Shipments Increasing But Remain Below Pre-Recession Levels

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96.6 89.4 56.4 75.7 83.3 87.0 86.6 89.1 78.5 78.5 82.5 86.4

20 40 60 80 100 120

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Million Metric Tons (MMT)

U.S. Steel Mill Shipments

Source: American Iron and Steel Institute

Capacity Utilization has Trended Higher Recently but Remains Low by Historical Standards

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40 50 60 70 80 90 100 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Capacity Utilization (%)

U.S. Raw Steelmaking Capacity Utilization

Source: American Iron and Steel Institute

The Lost Decade

Great Recession Begins

U.S. Steel Imports Have Remained at Elevated Levels for Past Five Years

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0% 5% 10% 15% 20% 25% 30% 35% 5 10 15 20 25 30 35 40 45

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Finished Import Market Share (%) Million Metric Tons (MMT)

U.S. Steel Imports

Sources: U.S. Census Bureau, American Iron and Steel Institute

Semi-Finished Imports (LHS) Finished Imports (LHS) % Market Share (RHS)

U.S. Finished Steel Exports at Lowest Level Since 2009

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9.7 11.7 7.8 10.4 11.3 11.7 11.1 10.6 8.9 8.3 9.4 7.9

2 4 6 8 10 12 14

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Million Metric Tons (MMT)

U.S. Finished Steel Exports

Source: U.S. Census Bureau

From 2014-18, U.S. Direct Steel Trade Deficit Exceeded 20 Million Metric Tons Annually

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• 35
• 30
• 25
• 20
• 15
• 10
• 5

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Million Metric Tons (MMT)

U.S. Direct Steel Trade Balance

Source: U.S. Census Bureau

Semi-Finished Steel Trade Balance Finished Steel Trade Balance

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International Efforts to Reduce Global Steel Overcapacity

• Global excess capacity remains a serious problem

and continues to plague steelmakers in the United States and other markets

– U.S. industry supports continued efforts of governments at the Global Forum on Steel Excess Capacity and Trilateral negotiations to address subsidies and market-distorting practices

• However, renewed efforts should achieve:

(1) Meaningful net reductions in uneconomic capacity (2) Elimination of government subsidies and other market- distorting policies and practices in the steel industry (3) Effective trade remedies and enforcement

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U.S. Steelmaking Capacity Has Remained Remarkably Stable Since 2000

500 1,000 1,500 2,000 2,500 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*

Million Metric Tons (MMT)

U.S. vs. World Steelmaking Capacity

World U.S.

2018* estimate Source: OECD

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State-Supported Steel Production Continues to Challenge Market-Based U.S. Steelmakers

• Global steel excess capacity continues to distort

steel markets worldwide

• Steel production and exports continue to be

supported by subsidies and other measures

• U.S. steelmakers favor effective solutions to get

governments out of the business of supporting uneconomic capacity expansions

• Urgent action by governments are needed to

address this critical situation