WCA March 2007

From the Americas

Barriers to high-grade steel imports are dropped by the US In a victory for US and Japanese auto makers, federal trade regulators revoked most of the tariffs and duties on imports into the US of the carbon steel used in cars. The 14 th December vote of the International Trade Commission (ITC) put an end to tariffs and duties on corrosion-resistant steel sheet imported from Canada, France, Australia, and Japan. Only steel from Germany and Korea will continue to face the duties, imposed since 1993. DaimlerChrysler, Ford Motor, and General Motors had joined the Japanese auto makers Honda Motor, Nissan Motor, and Toyota Motor in seeking an end to the tariffs. They claimed to have been hit with $3 billion in additional costs since 2004 because of steel prices rendered artificially high by the barriers to imported steel. The ITC action offers the promise of help for the struggling US auto industry and manufacturers in many other industries that use steel. But it was not welcome news to US steel makers, who say the tariffs helped stem the dumping of low-priced and subsidised imports that almost destroyed the domestic steel industry in the 1990s. Nucor Corp (Charlotte, North Carolina) said on 2 nd January that it had agreed to acquire the Harris Steel Group , of Canada, for $1.07 billion. Already the second- largest American steel producer, Nucor operates mini- mills in 18 states across the US and has been seeking to broaden its scope. Its relationship with the Canadian steel maker dates to 2004, when Nucor paid $21 million to acquire a 50% stake in Harris’s 11 reinforcing steel products operations in the United States. Harris, based in North York, Ontario, also has 23 plants in Canada. On completion, the deal will be the biggest-ever for Nucor. ❖ First acquisition for Arcelor Mittal is a Mexican steel company The European steel makers Mittal Steel Co NV (Rotterdam) and Arcelor SA (Luxembourg) announced on 20 th December last year that they had bought Mexico’s Sicartsa from Grupo Villacero for $1.44 billion. As well as an integrated steel plant, a mini-mill, and two rolling mills in Mexico, the deal includes the acquisition of the mini-mill Border Steel Inc (Vinton, Texas). Mittal is in the process of completing its $33.4 billion acquisition of Arcelor. The combination, due to be completed by April or May, establishes Arcelor Mittal as a giant with close to 10% of global steel production. The companies said their combined forces in Mexico would lead to the creation of Mexico’s largest steel producer, with an annual capacity of 6.7 million tons. Besides the acquisition of Sicartsa, Arcelor Mittal also enters into a 50- 50 joint venture with Grupo Villacero to distribute its long steel products in Mexico and the southwestern United States. Sicartsa had revenue of $956 million in 2004, but its sales were curtailed by a labour strike that halted production for 46 days in 2005 and for four months of 2006. Border Steel had 2005 sales of $110.8 million.

the importance of emergency planning. “Global tele- communications cannot be underestimated,” he told Einnews . “Everything from billions of dollars in international trade to personal communication is silently carried by our industry. When we go dead, the world goes dead.” Elsewhere in telecom . . . In the last quarter of 2006, shares of Motorola Inc – the world’s second-largest mobile-phone maker – dropped the most in more than four years. The Schaumburg, Illinois-based company had introduced cheaper phones in China and India to meet competition from companies, including market leader Nokia Oyj , hurting Motorola profit. Nokia, of Finland, is China’s top handset seller, with a market share of 36.6% in the third quarter, as compared with Motorola’s 23.3%, according to researcher IDC. China is the world’s largest mobile phone market by number of users. The networking and communications technology company Cisco Systems, Inc (San Jose, California) expects to triple its employees in India, from the current 2,000, in three to five years. John Chambers, Cisco’s chief executive, said in December last year that half of all future growth in the workforce would come from India and that the company was considering setting up a manufacturing plant there. Cisco said it had dedicated more than $750 million of the $1.1 billion investment announced in 2005 toward research and development and training in India. ❖ ❖ Steel exports from China, supplier of one-third of the world’s steel, could drop as much as 23% in 2007 – to 40.1 million tons from 52.1 million tons last year – as a result of government cuts in tax incentives, according to the China Iron and Steel Association. Lower steel exports would help trim China’s growing trade surplus with the US, a source of chronic friction between the two countries. In October, the last month for which figures are available, the Chinese sold a record $24.4 billion more goods to Americans than it imported from them. China, which makes more steel than the US, Russia, and Japan combined, has since 2004 tightened up on bank loans and shut mills to rein in capacity growth. Even so, a near-doubling of steel exports last year intensified concern in the US that China is unfairly aiding producers with subsidies, tax breaks, and a weak currency – charges denied by Chinese officials. “China’s rising steel exports were purely a result of market demand,” Wang Shouwen, foreign trade director at the Ministry of Commerce, told Bloomberg News (20 th December) in Beijing. “[In 2007] China will continue to discourage the exports of low value-added products.” Mr Wang said that more talks with the US on steel export issues were planned for the first half of the year. China, which became a net steel exporter only in 2005, has held nine rounds of such talks with South Korea, 11 with Japan, and two with the United States. Steel Fewer steel exports from China may ease trade friction with the US

30

Wire & Cable ASIA – March/April 2007