Thursday, June 25, 2009
U.S. Steel sees order pick-up, blasts China
Wednesday, 24 June 2009
U.S. Steel Corp, which has been operating at less than half its capacity during the economic downturn, is on the verge of ramping-up production as orders improve, its chairman and CEO said Tuesday. John Surma also blasted China for undermining the global steel industry through subsidies and tax benefits and called on the country to play by world trade rules.
"Our general policy is to keep production in line with what our customer demands are," he told Reuters in an interview. "There has been some improvement in order rates and from that you may derive that we are about to make a bit more steel.
"We're going to be supplying our customers with what they order and we are getting some better order flows," he said during a steel conference organized by American Metal Market.
Surma did not give an exact time frame or details of an increase in production, but indicated the possible restart of a blast furnace in Granite City, Illinois.
The economic downturn has forced most steelmakers to reduce production in the face of slumping demand and Surma has jokingly referred to the industry as "40-percent land," since U.S. Steel and many producers are at less than 50 percent capacity.
China potentially "destructive" to world steel market
During an address to the Steel Survival Strategies conference, Surma attacked China on the same day U.S. Trade Representative Ron Kirk said the United States had launched a World Trade Organization (WTO) complaint against China over its export restrictions on raw materials.
"We were pleased to see the USTR initiated a WTO case today on certain raw material export restraints," said Surma, who also mentioned a previous complaint involving steel pipes, which are used in the oil and gas industry.
"We believe that activity did damage the OCTG (Oil Country Tubular Goods) market," he said, adding it forced curtailment in production and employee layoffs.
He noted that global economic stress is bound to create tensions within the world trading system, with every company working to improve its own position.
"But in countries and regions that are unconstrained by the due process requirements of the U.S. justice system, we are already seeing signs of trade actions that seriously undermine the global steel market," Surma said. "Nowhere are these destabilizing actions more apparent than in China,"
China is the world's largest steel producer and exporter, and companies like U.S. Steel "are competing with what amounts to a coordinated, national enterprise," he said. "Because of its size, and its system, the Chinese steel industry has the potential to be very disruptive to our global industry."
Monday, China's Ministry of Finance said it would cut taxes on some exported steel products by 5 percent to 10 percent starting July 1, to help domestic producers ease their excess supply.
Surma criticized the move as "an example of the kind of very destabilizing, nontransparent policy changes that can take place at a moment's notice.
"American producers ... stand to be harmed by these trade-distorting actions, which ... China took characteristically without any transparency in process or policy."
He noted China is free to develop its industrial capacity according to its economic plan.
"But when a product of that system enters the global market, we do have a basis to comment or object and we believe China must comply with the rules," he said.
U.S. Steel stock was up 1.7 percent at $34.71 in afternoon trading on the New York Stock Exchange.
Source: Reuters
