January steel imports increased by 35%

Analysts see no trend; February imports may slide

By Tom Stundza -- Purchasing, 2/27/2008 11:55:00 AM

Steel imports increased a greater than anticipated 34.5% in January to 2.66 million tons from 1.98 million tons in December, although they are still down nearly 10% from year-ago levels.  Precision Metalforming Association (PMA) President William E. Gaskin says U.S. manufacturers still are “very concerned about rising steel prices and low inventory levels at the service centers,” and notes in a press release that imports of hot- and cold-rolled sheets were down 18% compared to January 2007.

The overall import increase was due to a number of factors including improved demand from service centers using imports to fill domestic holes in supply, a rush by China to export energy-related mill products ahead of anticipated tax changes (that did not materialize) and the need for slab because of domestic production bottlenecks. 

Analyst Michelle Applebaum at Michelle Applebaum Research Inc. (MARI) in Chicago says in a note to clients that Chinese imports jumped some 51% in January after plummeting in December to the lowest monthly level since May 2006. “We believe Chinese exports of energy pipe to the U.S. will continue at high levels in 2008 as the Chinese government failed to reduce the 13% export tax rebate in late December,” she writes. “However, we expect total Chinese exports to the U.S. of other products to fall significantly this year due to strong demand and steel prices at home as well as the implementation of further export tax increases on certain products.”      

Analysts such as Applebaum expect imports to decline again in February based on current import-license applications, which will maintain upward pressure on domestic pricing. “We continue to expect imports to remain at low levels as steel price hikes in the U.S. are being outpaced by steelmakers in other regions of the world, freight rates remain high and the dollar remains weak,” Applebaum writes.