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2014 Outlook: Imports–Exports

Dec 31, 2013 | 08:00 PM | AMM staff

Tags  Steel imports, steel exports, IHS Global Insight, U.S. Census Bureau, oil country tubular goods, hot-dipped galvanized, sheet and strip, U.S. Commerce Department economy

Steel imports fell slightly in 2013 and the outlook for 2014 is for more of the same, with relatively stagnant economies at home and abroad leading metal players to conclude that this year likely will be uneventful.

As for imports of alternative irons for mill production or a variety of nonferrous metals—and for exports of U.S. products all along the supply chain—a similar pattern appears to be emerging, although there is a chance for slightly more volatility in these areas, market participants said.

“While the trade shortfall looks bad on the surface, beneath the floorboards it matters little to the U.S. economy. Many trade categories are very volatile (and) beneath this volatility is a foreign trade sector beset by mediocrity on both sides of the ledger,” said Michael Montgomery, U.S. economist at Lexington, Mass.-based IHS Global Insight Inc. “Exports are flat because most of the rest of the world is barely growing. Imports are flat because both domestic consumption and investment are in low gear.”

But there is fear about just how many imports will arrive this year, with some wondering if competitive foreign material will hurt domestic pricing.

“There’s probably a little bit of inventory hedging on the foreign side,” one mill source said, referring to the potential impact of 2014 steel sheet imports on pricing. “We’re at the ($100-per-ton) range right now between foreign and domestic, and there’s fear that if the gap gets any wider the floodgates might open up.”

“Business has definitely been getting better and everyone is feeling pretty good about it,” a steel trader said. “People in the construction markets were talking about how (2013) was looking to end up pretty good and (this) year should be better. Of course we’re going to see imports, but I don’t think it’ll be a flood.”

Two more importers said that business continued to look busy, particularly on coated products. “We’re getting renewed interest and business is looking to be pretty good,” a second trader said.

“We’ve been very busy lately, but demand hasn’t changed at all; it’s the pricing,” another trader said. “Quantities have changed dramatically, and the same people who have put most of their buys traditionally into domestics are now moving a larger percentage into foreign.”

Several other traders agreed, noting that business has seen a meaningful pickup for customers in a variety of end markets. However, they said the fear of large quantities arriving stateside in 2014 might be overstated.

Recent figures from the U.S. Census Bureau show that total steel imports were expected to end 2013 down 4.9 percent compared with 2012. 

U.S. steel imports fell in November compared with the previous month, with hot-dipped galvanized sheet and strip, line pipe and oil country tubular goods (OCTG) leading the charge down, according to preliminary U.S. Census Bureau data.

Steel imports totaled 2.34 million tonnes for the month, down 16.7 percent from 2.81 million tonnes in October and 4.9 percent lower than the 2.46 million tonnes imported in November 2012. Imports of hot-dipped galvanized sheet and strip fell 38.6 percent to 133,283 tonnes in November from 216,936 tonnes the previous month; line pipe dropped 27.5 percent to 116,951 tonnes, the lowest monthly level last year, from 161,381 tonnes in the same comparison; and OCTG imports fell 26.5 percent to 264,400 tonnes from 359,754 tonnes. Stainless imports decreased 16 percent to 67,430 tonnes in November from 80,262 tonnes a month earlier, the preliminary data show. 

At the same time, U.S. steel exports fell to a more than one-year low in November as most products logged declines. Steel exports totaled 852,015 tonnes, down 17.1 percent from October and 6 percent below November 2012, according to the latest data from the U.S. Commerce Department’s Enforcement and Compliance division.

November shipments to North American Free Trade Agreement (Nafta) partners fell from the previous month, with exports to Canada down 13.3 percent to 469,928 tonnes and those to Mexico tumbling 26.1 percent to 274,704 tonnes. Exports to Brazil also fell sharply in November, plunging 80.9 percent to 1,977 tonnes from 10,372 tonnes in October.

In the carbon and alloy sector, major decreases were seen in exports of hot-rolled sheet (down 44.4 percent), cut-to-length plate (off 6.8 percent), hot-dipped galvanized sheet (down 6 percent) and heavy structural shapes (off 11.4 percent). Only a handful of products saw month-on-month increases, including cold-finished bar (up 26.7 percent to 13,217 tonnes) and ingots for steel and castings (up 17.9 percent to 12,951 tonnes).

Meanwhile, the U.S. iron and steel mill products trade deficit narrowed in November from the previous month, according to the latest U.S. Bureau of Economic Analysis data. Iron and steel mill product exports decreased 1.8 percent in November while imports fell 9.7 percent compared with October, resulting in a 20.1-percent drop in the trade deficit to $579 million from $725 million. The iron and steel mill products trade deficit in the first 11 months of the year totaled $6.28 billion, down 20.7 percent from $7.92 billion in the same period in 2012.

But not everyone sees imported material as a threat to domestic business. When it comes to alternative irons, some said imports are a necessary part of doing business.

“Imports of low-residual iron are approximately as much as domestic arisings of prime steel scrap,” said Robert Hunter, director of marketing and applications for Charlotte, N.C.-based Midrex Technologies Inc. “These imports are needed because the 7-, or 8-, or 9-million tons per year of prime scrap that are generated in the Nafta nations are simply not enough to satisfy the demand for high-quality, prime metallic iron.”

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