Weakening dollar leads to big increase in steel exports

Mon 27 Oct 2008

The nation's financial woes continue to dominate headlines, but local steel executives have found a silver lining to the gloomy economic cloud.

Rising foreign steel prices, coupled with the weakening U.S. dollar, have made the option of importing steel from the U.S. look even more attractive.

"The industry is exporting more steel, probably at record levels this year," said John Campo, vice president of sales and marketing for Birmingham-based O'Neal Steel Inc.

Although O'Neal Steel does not directly export, Campo said some of the companies it deals with have increased their export activity because of a falling currency.

"I also think Birmingham, and Alabama as a whole, have become real growth areas in terms of steel manufacturing," Campo said.

Campo said a number of companies have either entered or expanded their presence in Alabama over the past decade, including Nucor and ThyssenKrupp, which last year announced plans to construct a new $4.2 billion steel mill in Mobile.

That's not to mention the $450 million multiphase project in Sumter County that U.S. Steel announced on April 18. Part of the reason behind that project is making the companies' U.S. Steel Fairfield Works facility in Birmingham more cost-effective.

"It's an investment in cutting-edge technology that's designed to make Fairfield Works more competitive long-term than what it is today," said John Goodish, executive vice president and chief operating officer of U.S. Steel.

Goodish credits the state's economic development efforts for helping create an environment that is conducive to industrial success.

Carolyn Trent, a socioeconomic analyst with the University of Alabama's Center for Business and Economic Research, said the state's recent success in attracting automotive manufacturers has helped buoy the state's steel industry.

The state's automotive production has grown from 68,724 vehicles in 1998 to more than 739,000 in 2007, Trent said.

"The local market for steel has grown substantially, making the state an attractive location for new manufacturing plants like ThyssenKrupp and expansions at existing manufacturers," Trent said.

And even though the state has lost some of its major manufacturers, such as Gulf States Steel, Trent said the industry's many longtime stalwarts have stabilized, new plants have been constructed and mergers have made the market stronger.

Trent said U.S. steel exports grew by 66.1 percent between 2000 and 2006, while imports only increased by 35.5 percent, helping reduce the country's net imports of steel.

"The U.S. was a net importer of steel mill products in 2006, importing 46.6 million metric tons of metal and exporting just 9.8 million tons," Trent said. "I think that trend is continuing, but faster growth in exports is helping."

Nancy Gravatt, spokeswoman for the American Iron and Steel Institute in Washington, D.C., said over the last several years there has been a gradual increase in steel exports leaving the country.

That's due primarily to increasing demand for steel in Asia, where there has been tremendous industrial growth and commercial construction, particularly in China and India.

"One of the sectors where we've seen a good rise in exports is the area of machinery and equipment," Gravatt said.

While that leads to increased challenges in transportation, both in terms of costs and scheduling, overall, steelmakers say that the export trend is a welcome sign in an industry that has experienced its share of ups and downs since the industrial revolution.

Campo said the trend is encouraging because it allows the domestic manufacturers, such as O'Neal Steel, to develop a far-reaching client base in an increasingly global world.

"The rise in exporting steel is positive, not only for our industry, but it gives our entire manufacturing base the chance to become more global in its marketing," Campo said.

Source Birmingham Business Journal

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