Oct. 6, 2006 — The Ohio Steel Council reports that Ohio steelmakers posted sizable increases in steel production and shipments for the first half of 2006, but have expressed concerns about demand through the second half of the year.
Although worldwide demand has been strong and the pricing environment stable, the Council reports that the cost of energy (especially electricity), an increase in imports, and announcements by domestic automakers are leading to a cautious outlook for the second half.
"We've enjoyed a solid steel market for many months running, a reflection of our strong economy and the replenishing of inventories at the distribution levels," said Patrick G. Tatom, President and CEO of WCI Steel, Inc. "As inventories rebuild, we expect some slowing in the economy overall and in automotive in particular in the second half of the year, even though the steel market will remain healthy."
Steelmakers are keeping a close eye on U.S. imports, which totaled 4.20 million net tons in July 2006—the second-highest monthly total in U.S. history, according to the American Iron and Steel Institute. Year-to-date imports are up 38% in the first eight months of the year, as compared to the same period in 2005.
The Council notes that imports have not had a severe impact on the domestic steel industry because they have not been unfairly priced.
Ohio steel producers shipped 4 million tons in the second quarter of 2006, up 9.85% over the same period in 2005. Production for the quarter was 3.9 million tons, up 12.82% over the same period in 2005. In the first half, shipments were 8.2 million tons, up 7.49% from the same period in 2005. Production was 7.7 million tons, up 6.81% from the same period in 2005.
Although capital spending was strong in the first quarter (3.3% higher than the same period in 2005), capital spending in the first half of 2006, $142 million, reflects a decrease of 10.95% compared to the year-ago period. The Ohio Steel Council is not attributing any significance to the second quarter dip and expects capital spending for 2006 to be on track with other years, barring any significant fluctuations in the market.
Employment for the first half of 2006 averaged 14,208 — 7% lower than the same period in 2005.
The Ohio Steel Data Report, compiled by Youngstown State University's Center for Urban Studies, covers statistics from Ohio facilities of the Council's steel-producing members. The data is forwarded to the Ohio Steel Council in aggregate, so the contribution of any single company cannot be determined.
The Ohio Steel Council is a public-private partnership designed to strengthen ties among the steel industry, the state of Ohio and its citizens. The Council's member organizations are:
- AK Steel
- Lorain Tubular Operations (of United States Steel)
- Mittal Steel USA
- Ohio Department of Development
- Ohio House of Representatives
- Ohio Senate
- PRO-TEC Coating
- Republic Engineered Products
- Timken
- Thomas Steel Strip
- United Steelworkers of America
- V&M STAR
- WCI Steel
- Wheeling-Pittsburgh Steel
- Cleveland State University
- The Ohio State University.