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Non-Tech : RECY Looking Good... A -- Ignore unavailable to you. Want to Upgrade?

To: James Strauss who wrote (4154)	2/19/1998 5:52:00 PM
From: Brewmeister	Read Replies (4) \| Respond to of 7006

A few thoughts on the Asian /Korean affect on the US steel market and scrap. (data is below) Korean imports of steel to the US increased in 1997 to 1.7M tons with a significant increase coming in the last six months of the year vs. The first six month. However, imports from Korea were down in 1996. The average import from Korea from 1991 to 1996 was 1.4M tons. Is the 1997 increase due to the Asian crisis, or typical steel maker marketing? Was demand for US steel up and not be satisfied by US makers? The US makes about 100 tons of steel per year. If Korea doubles its exports to the US (1.7M tons to 3.4M), the quantity of Korean steel is still small compared to US steel production. If the 5 year average was 1.4M tons per year and imports increase to 1.7M tons or even 3.4M, compared to US production, this does not seem like much to absorb if demand is up. How much impact will limited imports actually have on a broad basis? In what products? The affect, in my opinion is likely to be limited. Also, if other Korea industries (autos, ships for example) lower prices to increase their exports, the demand for Korean steel rises or stays the same at home, limiting somewhat the need to "dump" on the US. Without much data to prove it, it seems there is an ebb and flow of imports at any given time. Korean imports might increase, but might only decrease the imports from other countries. Based on another source, 1997 steel imports were 24M tons through September 1997. This would extrapolate to about 32M tons for the year 1997. Korea is only a small piece of this and, if they drop price, it might actually affect other imports first, before US supply. At the end of the day, scrap is little affected. From AMM and the Commerce Department, the US exported about 3.2M short tons of scrap to Korea in 1997 and 2.7M in 1996. If Korea tries to produce more steel to sell in the US, the scrap not bought by US mills might be bought by the Koreans. US scrap may stay more level after all, even if US steel is affected. I believe the more efficient minimills will be the last to be affected. At the end of the day, I don't believe scrap will be greatly affected by any actions of Korea (alone) and RECY may be least affected here due to its geographic locations, particularly the southeast. DATA: Much of the data for the following was pulled from AMM on line (www.amm.com) Major steel producing countries: % change Rank 1997 1996 1995 1994 97 vs. 96 1 China 107.3 100.0 95.4 92.6 7.3 2 Japan 104.5 98.8 101.6 98.3 5.8 3 United States 99.2 94.7 95.2 91.2 4.8 4 Russia 46.9 b 49.3 51.6 48.8 -4.7 5 Germany 45.0 39.8 42.1 40.8 13.1 6 South Korea 42.5 38.9 36.8 33.7 9.3 b - based on 10 months Source - International Iron and Steel Institute, Brussels. From amm source: From a memo, authored by David J. Cantor, a CRS specialist in industry economics, Between July and October 1997 total steel exports to the United States from South Korea increased more than 630,000 tons, or 82 percent, compared with the first six months of 1997. Annualized total steel imports from Korea for 1997 were 1.7 million tons compared with an average of 1.4 million tons annually between 1991 and 1996. The article states this might imply a relationship between US imports of steel from Korea and the Asian financial crisis. The U.S. steel industry is currently operating at slightly less than 90 percent, supplying a strong market, with raw steel output peaking at 104 million tons in 1995 and 1996. (this is a discrepancy with the above table, do not know why) From March 5, 1997 OECD steel committee In the United States, steel-product imports rose by about 14 per cent in 1996. There was an increase in imports from the European Union and Canada, whereas those from Japan and Korea were down. At the same time, steel exports from the United States fell by 28 per cent from their record level of 1995. The decrease was particularly significant in the case of exports to Chinese Taipei, Korea and Canada, whereas those to Mexico rose.