Steel imports are at the
forefront of many market players minds right now, with an
influx of foreign products affecting service center inventories
and buying decisions, and even leading to calls for more port
Heavy imports earlier this year,
along with lingering uncertainty about demand, could cause
service centers to reduce their steel plate purchases through
the end of 2012, according to Jeffery J. Moskaluk, chief
commercial officer of Lisle, Ill.-based plate producer SSAB
We would certainly expect
service centers to remain cautious on purchasing for
inventory in the fourth quarter, he said.
Moskaluk, who addressed an
Association of Women in the Metals Industry meeting in
California in September and was interviewed briefly by
AMM afterward, noted that most distributors
plate inventories have been climbing in recent months.
According to the most recent
Metals Service Center Institute data, U.S. distributors
steel plate inventories in both August and September were equal
to 3.3 months supply at then-current shipping levels, up
from 3.2 months in July and well above 2.8 months supply
a year earlier.
As inventories climb, service
center requirements are being reined in, Moskaluk said, with
SSAB first starting to notice signs of reduced buying in
The U.S. steel plate market also
is living with the consequences of a really large
glut of imports in the second quarter, he said. While a
lack of trade barriers in the United States is partially to
blame, it also appears that much of the foreign tonnage arrived
at below fair market value. In addition, slightly
higher-than-average prices in the U.S. market compared
with other global markets also attracted the foreign tonnage,
But demand has since fallen in
the domestic market, and at some point importers paying to
finance this newly arrived inventory will be forced into a
cash decision to unload it. At some point,
theyve got to sell it, Moskaluk said, noting that
it will be difficult to predict how long it will take to work
off the overhang, given still-unanswered questions about supply
Those who are bringing steel
products into the United States also have concerns--albeit of a
different sort. Steel importers are urging Congress to make the
nations ports and dredging needs a top priority.
At issue is the Harbor
Maintenance Tax, a 0.125-percent federal levy imposed on cargo
values to generate funds for dredging maintenance at U.S.
ports. Port and shipping interests say that the funds
estimated $6-billion surplus hasnt been used as
This issue doesnt
only affect steel importers, but also the domestic steel
industry (guy) who (gets) pig iron up the Mississippi River to
his facility or coal to his coking facility, American
Institute for International Steel president David Phelps told
AMM. The dredging issue is a serious one, and
clearly, if you have silting in a harbor, youre forced to
put fewer products on the barge. This adds costs to the entire
This past summer, President
Obama signed legislation that maintains funding for the
nations roads, bridges and other transportation
infrastructure for 27 months. While the legislation requires
Congress to use revenue collected via the tax, some have
maintained that its wording isnt strong enough.
In September, AIIS members
Richard Brazzale, general manager of commercial operations at
Houston-based steel trader Coutinho & Ferrostaal Inc., and
Steven W. Baker, attorney at Novato, Calif.-based Steven W.
Baker & Associates, urged steel and logistics members to
take the ports issue to Capitol Hill.
Americas harbors and
navigable waterways are essential to the economic health of the
country, yet they are becoming increasingly narrowed and silted
in, reducing their carrying capacity and increasing the cost of
moving cargo, the two wrote in a letter to AIIS members.
Congress has ... not only failed to appropriate adequate
funds for these purposes, but has routinely used (Harbor
Maintenance Tax) funds for unrelated purposes.
They also endorsed the Realize
Americas Maritime Promise Act, a bill that would require
the full amount of fees collected by the trust fund to be used
for port maintenance. The bill, which was introduced in the
House in January 2011 by Rep. Charles W. Boustany Jr. (R.,
La.), was referred to the Transportation and Infrastructure
Committee and hasnt moved forward since.
This (issue) is not only
for importers, but domestic shippers as well, Phelps
said. Were already paying for this, so its
just a matter of making sure that Congress is doing the job it
Proponents of the bill say that
it would address any infrastructure needs that may arise from
the expansion of the Panama Canal, which is slated for
completion in 2014.
An upcoming report by the Army
Corps of Engineers will assess the impact of the expanded canal
and suggest how to modernize this countrys waterways,
according to a Politico story in May, which quoted
Sen. Lindsey Graham (R., S.C.), a member of the Senate
Appropriations Committee, as saying that deeper ports are
the economic gateway to the world.
In the Politico story, Susan Monteverde, vice
president of government relations at the American Association
of Port Authorities, said, No matter what, the Panama
Canal is an area to make us wake up and say, Do we have