Program

Tuesday, June 17

8:25 am Welcome: Martin Abbott, Publisher, AMM

8:30 am Keynote Presentation: Fireworks in Steel
Peter F. Marcus and Karlis M. Kirsis, Managing Partners, World Steel Dynamics

9:00 am Highlight Speaker: Leo W. Gerard, International President, USWA

10:15 am Panel I: Steelmakers of the Americas: Global, Regional, Commodity or Niche?

 

Moderator: Thomas C. Graham, Principal, TC Graham Associates
Panelists: James G. Bradley, President & CEO, Wheeling-Pittsburgh Santiago Clariond, President and CEO, IMSA Acero, Mexico

Daniel R. DiMicco, Vice Chairman, President & CEO, Nucor Corp.

John T. Mayberry, Retired Chairman and CEO, Dofasco Inc., Canada

12:00 noon Luncheon

Award Presentations:
The fourth "Willy Korf Award for Young Excellence" honors
Dr. Takashi Watanabe, Japan

The thirteenth "Willy Korf/Ken Iverson Steel Vision Award" honors
John T. Mayberry, Retired Chairman and CEO, Dofasco Inc., Canada

Luncheon Speaker:
Wilbur L. Ross, Jr., Chairman and CEO, WL Ross & Co.

2:15 pmPanel II: Global Steel: Synergies and Regional Realities

Moderator:Peter F. Marcus, Managing Partner, World Steel Dynamics
Panelists:John H. Goodish, Executive Vice President, Operations, U.S. Steel Corp.
Tetsuo Miyazaki, Member of the Board and Executive VP, JFE Holdings, Japan
Alexei Mordashov, General Director & Chairman, JSC Severstal, Russia
Michael Shanahan, Vice President, Boston Consulting Group

4:00 pmPanel III: Why Have Big Buyers Lost "Pricing Power?"

Moderator:Frank Haflich, West Coast Editor, AMM
Panelists:Bruno Bolfo, Chairman, Duferco SA, Switzerland
J. Paul Kadlic, Executive Vice President, Commercial, U.S. Steel Corp. John Lichtenstein, Partner, Accenture
Josef von Riederer, Former President, Eurometal, European Union
Dave Styka, Senior Supply Mgr, Raw Materials, Int'l Truck Engine Corp.
Bud Siegel, President & CEO, Russel Metals Inc., Canada

Wednesday, June 18

8:15 amPanel IV:What Role for Minis in the Global Market?

Moderator:Michael G. Botta, Director, World Steel Dynamics
Panelists: Donald F. Barnett, President, Economic Associates Inc.
Keith Busse, President & CEO, Steel Dynamics Inc.
John D. Correnti, Chairman & CEO, Birmingham Steel Corp.
Ahmed Ezz, Chairman, Al Ezz Steel Mills, Egypt

Francisco Rubiralta, Chairman & CEO, Celsa Group, Spain

9:30 amPanel V: Does Steel Have a Future in Futures?

Moderator:Martin Abbott, Publisher, AMM
Panelists:Neil Banks, Director of Operations, London Metal Exchange, UK Rod G. Beddows, Executive Director, Hatch Associates, UK
Fred Demler, Senior Vice President, Metals Division, ManFinancial
Simon Heale, Chief Executive, London Metal Exchange, UK

Mike Hutchinson, President & CEO, Sempra Metals Ltd., UK

Glenn Wright, President & CEO, Rockwood Risk Management

11:00 am Panel VI: China Unleashed: Who are the Beneficiaries and Casualties?

Moderator:Peter F. Marcus, Managing Partner, World Steel Dynamics
Panelists:Dr. Nicholas R. Lardy, Senior Fellow, Institute for International Economics Jim Lennon, Executive Director, Commodities Research, Macquarie Group, UK
Ye Meng, President, BaoSteel America Inc.

Michael J. Ratzker, Managing Director,Midland Metals Int'l, Canada

John Rothschild, Executive VP, Cometals, A Division of Commercial Metals Co.

12:15 pm Luncheon Speakers:

Dr. Nicholas R. Lardy, Senior Fellow, Institute for International Economics

Herwig Schlogl, Deputy Secretary General, OECD

2:00 pmPanel VII: Global Metallics Supply: Running on Empty?

Moderator:Michael Marley, Editor, Secondary Materials, AMM
Panelists: Alexander Abramov, President, EvrazHolding Group, Russia Benjamin M. Baptista Filho, Commercial Director, CST, Brazil
John Brinzo, Chairman & CEO, Cleveland Cliffs Albert Cozzi, Vice Chairman and CEO, Metal Management Inc. Alberto Hassan, CEO, Orinoco Iron CA

3:00 pmPanel VIII: TechnoSteel: What New Toys on the Shelf?

Moderator:Peter F. Marcus, Managing Partner, World Steel Dynamics
Panelists:Mark Brandon, Chairman & President, Danieli Corp.
Dr. Karl Schwaha, Executive Vice President & Board Member, VAI, Austria
Joachim Schwellenbach, Senior Executive VP, SMS Demag AG, Germany
Richard L. Wechsler, President, Castrip LLC

Steel Success Strategies XVIII

Winners Emerging

The conference this year was upbeat, with an active audience participation in the question and answer portion of the panels. We sensed a combination of excitement and positive feelings that we've not seen for at least the past few years. This was buoyed by a positive steel consumption forecast (possible global steel sheet shortage in 2004) by World Steel Dynamics.

It is now clear that, in the past five years, the stronger companies have grown even stronger and the weak even weaker. For some, stress and crisis has led to opportunity and reward.

Selected Viewpoints, Perspectives and Questions

China's growth hasn't come at the expense of the world economy as did Japan's in the mid-1980s. While steelmaking has exploded, the drivers behind recent trade account deficits with the U.S. were a result of a shift in manufacturing jobs in footwear and toys rather than a drain of steelmaking capacity. On a world basis, China for the first quarter 2003 posted a trade deficit itself. By 2005 when the Uruguay Round commitments are met, China will have one of the lowest import tariff rates of the large, emerging economies doing business with the U.S.

The exchange rate shuffle. Currencies pegged to the U.S. dollar were a topic of controversy. The impact of China's yuan (RMB) on North American steelmaking was addressed, as well as how it has affected the rest of the world's steelmaking businesses in terms of costs. The point was made that if there was a global currency, the USA steel sector would be globally competitive as low-cost producers.

WTO - friend or foe? There was much discussion about the role that the World Trade Organization (WTO) will play in enforcing any bilateral trade agreements reached under the OECD's efforts. ISG's Chairman, Wilbur L. Ross, Jr., referred to the WTO as the "Wealth Transfer Organization."

Steel futures a useful tool to reduce price risk? Steel futures are coming, according London Metal Exchange (LME) executives and other hedging experts, but there are several hurdles. Some key questions: How to resolve the delivery issues that will force price conversion at the close of the contract? How to protect against product becoming secondary the moment it's delivered - not resalable? Will the cost of the hedging mechanism be low enough to justify its use and are the banks looking to reduce risk against inventories? Who will be the initial players that will "commercialize" the use of the instruments? Is this another "Enronesqe" risky venture or a solid management tool?

The growing importance of the Middle East and emergence of Iran in that region. Is Iran another China?

Keynote and luncheon speakers…in a nutshell:

· Leo Gerard, president of the USWA, said the Union has not given concessions and that working with "enlightened management" at International Steel Group (ISG) and U.S. Steel Corp. has allowed the Union to achieve "humane consolidation," helping both companies and USWA members. He also urged industry leaders to support steel import tariffs, government programs for workers without healthcare benefits and initiatives to support American manufacturing. Gerard had some direct advice for "crybaby manufacturers" who opposed steel import tariffs by saying, "If you want to be able to make things (in the United States), you need a domestic steel industry."

· Wilbur L. Ross, Jr., chairman, International Steel Group and CEO/chairman WL Ross & Co., echoed the beneficial cooperation noted by Leo Gerard, president of the USWA and tackled American government policy-makers for being "hypnotized by the mantra of free trade." He said the rest of the world practices "foul trade," taking advantage of the openness of the United States by violating trade pacts. Ross also charged that the World Trade Organization's one-country, one-vote system was unfair to the United States. He referred to the WTO as the "Wealth Transfer Organization." He added that "every country but ours funds health care." Ross emphasized that the Section 201 steel import tariffs must be continued for another 18 months to permit ongoing consolidation of the USA steel sector. "Many steel consumers have been conned to support roll-backs of tariffs, even though steel prices have retreated to 20-year lows. No consumers are charging 1982 prices, and it's hypocritical of them to complain."

· Dr. Nicholas R. Lardy, Senior Fellow, Institute for International Economics, believes that China's 8% per annum GDP growth rate is sustainable. He pointed out that its transition to a market economy is more advanced than many perceive. For example, most of its markets are competitive, there is low concentration and no pricing power in most industries, price allocation is efficient and tariffs are relatively low at an average of 11-12% and declining to 8-10% by 2005.

· Herwig Schlogl, Deputy Secretary General, OECD, noted that hurdles remain before steelmaking nations approve the basics of a global steel subsidy agreement, but the man who oversees the 40-nation negotiations for the OECD added that it's imperative to resolve the issue by the end of 2003. He acknowledged that the issue of whether a subsidy pact would supercede the right to file countervailing-duty (CVD) trade litigation was a bone of contention among negotiators.

Steel Success Strategies XVIII

Winners Emerging

Session Highlights

Tuesday, June 17, 2003

Keynote Presentation: Steel Success Suprises. Too many wood choppers!

For an audience of more than 600 industry executives from around the world, Peter F. Marcus and Karlis M. Kirsis, managing partners of World Steel Dynamics Inc., Englewood Cliffs, N.J., provided an upbeat outlook, saying that they have grown increasingly bullish on the forecast for the global steel business in the remainder of 2003 and for the decade. "We've had a number of positive "analytical suprises" that caused us to adopt this more favorable outlook," Kirsis noted.

Marcus said that in the United States, the spot price of hot-rolled band started to recover in June after falling since late last summer. "The surprise is not that the price started to rally, but that, at the low point, the average price for the steel mills was about $50 per net ton above the prior low in December 2001," he explained. The low price in the United States in May 2003 was about $255 per net ton versus only $205 per ton in December 2001.

Kirsis pointed out that the same thing has happened to steel prices on the world steel export market. The steel industry's fourth pricing "death spiral" for hot-rolled band since 1995 has bottomed out at a price of $250 per tonne for Tier I mills, FOB the port of export, which is $75 per tonne above the December 2001 price at the bottom of the prior death spiral. "Moreover, the price bottomed out in this death spiral only four months after it began versus and average of 12 months in the three prior death spirals," he said.

The World Steel Dynamics (WSD) partners also noted that WSD is now hearing "a giant sucking sound," whereby economic growth in some countries or regions, such as China, India, the CIS, South America and the Middle East, is sucking growth away from Developed World countries. "For example, we look for a rising proportion of investment in new plant and equipment spending to shift to the Developing World," Marcus said. "That's the bad news. The good news is that the higher the proportion of global economic growth that occurs in the Developing World, the more steel intensive should be the global economy and the faster should be the growth rate for steel demand."

Early signs have appeared in 2003, according to Kirsis, that an endemic shortage of steelmakers' metallics is developing. He commented that the prices for steelmakers' raw materials, while declining in the past few months, remain far above the prior lows that were hit in 2001-2002.

Perhaps the biggest surprise was sprung by Marcus, who forecast that a global steel shortage may recur in early 2004. "In fact, WSD is placing the odds at 55:45 on this possibility," he added. "If so, world steel sheet export prices in the 2002-2004 time frame would be the most volatile in the history of the industry. Prices may go from Death Spiral to Shortage, back to Death Spiral, and then to Shortage again." He explained that a steel shortage may recur because:

1. The global steel demand outlook could be quite favorable by late 2003.

2. Seasonal forces will be turning positive by November.

3. Additions to steelmaking capacity are minor, except for China.

4. The weakening of the dollar has been a factor boosting world steel export prices.

5. The global steel industry, as of April 2003, was producing at a high effective-capacity operating rate.

6. A global metallics shortage may recur.

7. Steelmakers' coke remains in short supply on the world market. China is the only major exporter.

8. Steel buyers may decide that they want to boost their inventory given the favorable global economic outlook and the perception that steel prices are at bargain levels.

Other positive surprises cited by the WSD Managing Partners included:

· Concentration among steel producers in most countries and regions has become a positive for the steel mills in those areas.

· The Chinese steel industry may lose its "favored industry" status in its country in the 2004-2006 time frame.

· WSD's group of 20 "world-class" steelmakers, up from 13 last year, account for about 34% of global industry product shipments.

Highlight Speaker: Leo W. Gerard, president, United Steelworkers of America (USWA)

"We have not given concessions," Leo W. Gerard, USWA president said flatly. "What we have done in some circumstances is take lemons and turned them into lemonade." He noted that the Union worked with "more enlightened management" at International Steel Group (ISG), Cleveland, and Pittsburgh-based U.S. Steel Corp. Gerard said that such cooperation allowed the Union and those companies to accomplish "humane consolidation," that has benefited both the companies and the Union's members.

"Those who said the union was an impediment were substantially wrong," Gerard continued. He alluded to the fact that there was considerable support among the rank-and-file for the USWA's leadership strategy of playing a key role in facilitating the industry's consolidation. "Almost all officers of local unions were re-elected running on that platform," Gerard said.

Gerard also lashed out at corporate corruption and misguided investment practices, including an estimated $90 billion of what he called "misallocated capital" that Wall Street analysts diverted away from the manufacturing sector during the stock market bubble, and urged attendees to take a position against such practices.

The USWA president also emphasized the importance of saving manufacturing in the United States from a nearly $500 billion trade deficit. And he criticized "crybaby manufacturers" who opposed steel import tariffs. "If you want to be able to make things, you need a steel industry (in the United States)," Gerard stressed.

Panel I: Steelmakers of the Americas: Global, Regional, Commodity or Niche?

The moderator of this panel, Thomas C. Graham, president of consulting firm TC Graham & Associates, Pittsburgh, and former president of U.S. Steel Corp. and AK Steel Corp., said that at least two companies participating in his session were "sustained winners." They were Dofasco and Nucor.

And Daniel R. DiMicco, vice chairman, president and chief executive officer of Nucor Corp., Charlotte, N.C., had a straightforward answer to the issue on the table-whether or not steel mills in the Americas were becoming more global, regional, commodity or niche. "When I looked at that question," DiMicco said, "my answer came back yes, yes, yes and yes. There really is no one right way to go."

DiMicco noted that it is now clear to steelmakers that they are operating in a global economy and that they must avoid extremes in the areas of trade law violations and currency manipulations in order to be successful. "Extreme actions lead to extreme reactions," he said, "and extremes are never good." As an extreme example, DiMicco cited the USA's $500-billion trade deficit and efforts by Asian economies-mainly China-to control their currencies vis-a-vis the U.S. dollar.

"These are manufacturing issues," he explained. "They are not just steel industry issues. The dollar will adjust where it is allowed to adjust, not where it is manipulated. This is a critical issue going forward."

James G. Bradley, president and chief executive officer of Wheeling-Pittsburgh, which is aiming to emerge from Chapter 11 bankruptcy proceedings, said that the company's best chances for success hinge on its ability to be a strong niche player-even though the steel producer competes on the global stage. The plan is to use a $250-million loan guarantee from the United States government to build EAF steelmaking (as opposed to a $140 million blast furnace reline).

"This will allow us to concentrate our efforts on serving our customers up the value chain," Bradley commented. "We've got to get closer to our customers. Wheeling-Pitt has always been a niche player. Our push into more value-added products will allow us to continue what we have done in the past."

A steel processor, Imsa Acero SA de CV, Monterrey, Mexico, has focused on achieving a regional position in geographic terms, but a global one in terms of operations. "We are not a high-volume-oriented commodity company, but rather a high value-added steel processor," said Santiago Clariond, president and chief executive officer. "this means our priority is always to increase our value-added proposition first, and then to grow within these high-value segments. In this sense, we would be more of a niche player."

Clariond emphasized the need for clear positioning, noting Imsa has grown through internal initiatives and strategic acquisitions. "Within North America, Imsa Acero could be considered one of the steel industry's emerging winners," he said. "We are thriving despite current adverse economic conditions globally and regionally, and are strategically positioned to take advantage of a recovery in the North American economy."

John T. Mayberry, retired chairman and chief executive officer, Dofasco Inc., Hamilton, Ontario, Canada, said that sound strategies are the key to winning in global, regional, commodity or niche markets. "There are successful examples of all," Mayberry said. "You have to price on a regional basis to be able to compete with local suppliers. If you are going to be global, you need strong and reliable partnerships to serve your customers where they are."

He added that regional players will only be successful if they can differentiate themselves in the eyes of their customers. "You must have a strategy," Mayberry said. "A lot of producers have defaulted to becoming commodity producers because they failed to invest adequately in their plants. The result is that they ended up with old equipment and no choice but to serve the commodity market."

Willy Korf / Ken Iverson Steel Vision Award, presented to:

John T. Mayberry, retired chairman and chief executive officer, Dofasco Inc., Canada

The Willy Korf / Ken Iverson Steel Vision Award is made annually to individuals who have made a major contribution to the steel industry in terms of advancing change while at the same time promoting goodwill and integrity in the industry. The award is named for two men who demonstrated tremendous vision, innovation and willpower to alter the course of world steel -- and the 13^th such award was presented to John T. Mayberry, retired chairman of Canada's Dofasco Inc., based in Hamilton, Ontario.

Mayberry's vision has been steady and penetrating over the years, with the result being that Dofasco's standing in both the North American and global steel industries has risen despite frequent pricing pressures, competition from foreign mills, the growing number of mini-sheet mills, and generally declining demand for steel in North America in recent years. Dofasco has remained profitable through difficult times-and among the most profitable steelmakers globally in other times.

Mayberry, who retired as chairman and chief executive officer in May 2003, led Dofasco through a targeted investment program that both substantially reduced costs and upgraded product mix. The company was able to achieve major gains in labor productivity over the years without incurring any significant increase in its legacy costs for retired workers.

Examples of the company's successful strategies under Mayberry include the substantial ongoing modernizations of its major steel plant in Hamilton; its rising market share with large customers that demand the most critical of products and a number of joint ventures with foreign groups. The company recently started operating a tube mill and steel-processing plant in Monterrey, Mexico that produces tube used in automotive hydroforming; a joint-venture galvanizing plant in Hamilton that supplies steel to Ford Motor Co.; and a joint venture with Gerdau AmeriSteel in the operation of Gallatin Steel, a flat-rolled minimill in Ghent, KY.

Mayberry is on the board of directors of several major corporations including the Bank of Nova Scotia, Inco Ltd. and Hatch Ltd. He recently completed a term as chairman of the American Iron and Steel Institute and will complete a term as chairman of the International Iron and Steel Institute at its October annual meeting in Chicago.

Astrid Korf-Wolman, daughter of the late technology leader, presented the award to Mayberry. She also presented the fourth Willy Korf Award for Young Excellence to Dr. Takashi Watanabe of Japan.

Luncheon Speaker: Wilbur L. Ross, Jr., chairman and chief executive officer, WL Ross & Co., and chairman, International Steel Group

(Note: Due to numerous requests, Mr. Ross's remarks are reprinted below in their entirety.)

I would like to begin my talk today with two happy announcements about ISG. First, our hourly employees at the former Bethlehem Steel Facilities ratified our new contract with them. 89.8% of those who voted were in favor of the new contract. As a result, the Bethlehem plants now will have the same job classifications, work rules, active employee health benefits and pension arrangements as ISG.

Second, our Transition Assistance Program at Bethlehem has now received written acceptance from over 2,000 hourly workers. The Transition Assistance Program offered workers lump sum payments to leave the company. A worker with 30 years service got $50,000, scaling down gradually for those with less service. Adding these force reductions to the 600 salaried personnel we cut earlier, makes the total reductions since September to over 3,000. The combination of Bethlehem, LTV and Acme has fewer employees than Bethlehem alone did.

Those of you who were at the conference in San Diego may remember my forecast that as the industry consolidates, it becomes easier for management to cut production in periods of weak demand because multiple facilities means each one is a smaller percentage of the total. ISG has taken out some hot end facilities and also has posted the price at which it will sell basic products. We believe that other producers may adopt a similar strategy. It would be good if they did because this will make for less price and inventory volatility by producers and their customers. Historically, everybody over ordered in what were perceived to be rising price environments and under ordered in what were perceived to be falling price environments. This has been a crazy game in which producers and consumers played liars poker with each other. Less volatile pricing would benefit everyone and I can tell you that as the lowest cost producer we intend to do our share both in periods of weak demand as at present and in future periods of high demand. Producers who are tempted to be wise guys in today's environment should realize that if they are not statesman like, the low cost producers might be forced to respond with an extended period of very low prices.

 

The most insidious problem of unfunded post employment benefits is that they impact most severely those companies that down size in an effort to stay alive. As the ratio of retirees to active employees becomes larger, it becomes unaffordable. Bethlehem is a dramatic case in point. When it failed, it had seven times as many retirees as active employees and $5 billion of legacy costs. No company could support such a burden.

It is unacceptable that any American's life expectancy should be cut short because he or she happened to have worked for an employer that subsequently went bankrupt and terminated their retiree health benefits. It is equally unacceptable that any American business should be driven into bankruptcy by a foreign company who pays no health care benefits in either its native country or ours. The answer might be either a value added tax with some proceeds dedicated to health care benefit and from which our exports were excluded, or else a special purpose health care surcharge on all goods and services, including imports, that were consumed in this country and not exported.

The most egregious trade problem is the World Trade Organization ("WTO"). WTO operates by consensus and has 145 member countries, 144 of whom are determined to improve their trade balance with the U.S. In the WTO, the smallest nation has the same voice as the U.S. This guarantees that we will be treated unfairly. Under the present rules, WTO really stands for Wealth Transfer Operation out of the U.S. The WTO quickly ruled against the President's steel tariffs, just as they have ruled against 45 of the 46 actions our country has taken to try to enforce WTO rules. Just last week, a WTO arbitrator ruled that the U.S. must repeal by December 27 a law giving American companies the fines paid by foreign firms for unfair pricing. Can you imagine why victims are denied compensation from their abusers?

In contrast to its lightning fast action against our steel tariffs, WTO has made no progress toward ending the highly subsidized area of foreign agriculture, either at the Uruguay round of trade negotiations a few years ago nor at the current Doha round. France and Germany last week announced a private deal to preserve the European Union's Common Agricultural Policy, a euphemism for farm subsidies. If Europe won't reduce its subsidies, the Doha round is dead. Once again, France and Germany are knowingly causing the European Union to violate its agreement with the WTO.

Canada, whose exports to the U.S. have benefited greatly from NAFTA is still studying a year later whether to impose steel tariffs similar to ours and the European Union is banning genetically enhanced foods on the ridiculous claim that they are health menaces. Meanwhile Mexico violated both NAFTA and WTO rules by banning high fructose corn syrup imports from the U.S.

The result of all this skullduggery is that our gross imports are an astonishing $1.4 trillion, or 14% of our economy. Japan, an expensive place to manufacture and which, unlike the U.S., has

virtually no natural resources and must therefore import all of its oil, natural gas, coal, iron ore, copper and nickel and a high percentage of its timber miraculously holds imports to around 10% of its economy. Japan has had a favorable balance of trade every month for more than twenty years. Interestingly, Japan has higher steel production costs than the U.S. according to World Steel Dynamics, yet it exports steel to the U.S and complained about the President's tariff decision. What is missing in this picture?

Unfortunately, many steel consuming industries have been conned by foreign vendors into supporting the roll back of tariffs even though steel prices have virtually retreated back to the twenty-year lows they reached last year. In fact hot rolled band prices are barely where they were in 1992-1993. None of our customers' industries is still charging 1992 prices, so it is hypocritical of them to complain. It also is short sighted. If the foreign producers and the 50 leading law firms they have hired succeed in rolling back steel tariffs, the longer-term consequences will be three fold. First, additional domestic mills will shut down, thereby reducing customers' alternatives. Second, foreigners already supply more than 20% of this country's steel needs. If they get much more market share, they subsequently could set the prices as high as they want because the domestic industry would lack the capacity to prevent gouging. Third, and most importantly, if foreign countries knock out the steel tariffs, they next will go up the food chain and eliminate steel-consuming industries as well. Our customers don't yet understand that not only our survival, but theirs as well is at risk in the steel tariff controversy.

Think about it. Steel is very high in weight relative to value and therefore is not a logical candidate for intercontinental sales. Yet 40% of all steel sold in the World crosses a national border before it is consumed. If such an illogical export occurs in such huge volume, what will happen to autos, appliances and other steel consumers as the overseas manufacturers integrate further, emboldened by their victory over President Bush. It would be unconscionable to have won against physical terrorists only to lose to economic terrorists. France and Germany lead the charge at the UN opposing our war against Hussein and they are among the worst offenders in trade wars.

The problem is not confined to steel. The entire U.S. manufacturing sector has been hard hit in the past seven years because our trade deficit in goods has increased with all major trading partners: Europe 1,541%, Canada 262%, China 252%, Mexico 171% and Japan 49%. Imports now are larger than our domestic manufacturing and every industry is under siege - steel, apparel and textiles are on the ropes, consumer electronics are virtually gone, tire and rubber is a struggle, Airbus is gaining on Boeing, Polaroid is bankrupt and Kodak is under heavy attack. Xerox is in a tough struggle and so are our semi-conductor companies. The list is scary. We won't have much left of our standard of living if our only businesses are selling hamburgers to each other, trading stocks and suing our neighbors.

The good news is that the enlightened Union leadership of Leo Gerard and the powers of the Bankruptcy Court have enabled close to half of the steel industry to become globally competitive against unsubsidized imports and this may well be a pattern that could help other manufacturing sectors improve their competitive position. The bad news is that despite clear evidence of steel

dumping and despite the horrific effect of trade deficits on the economy, President Bush has been widely and unfairly attacked in the media for imposing steel tariffs to reduce dumping. Our industry has failed to educate editorial writers and elected officials to the following facts:

1. Consolidation by ISG, US Steel and Nucor has made roughly half of the U.S. industry globally cost competitive with unsubsidized imports.

2. Consolidation and cost cutting at the remaining weak companies needs another 18 months of tariffs to run its course.

3. The highly effective media and lobbying campaign by a self styled steel consumer group, CITAC (Consuming Industries Trade Action Coalition), is covertly sponsored by foreigners and, as reported by the Financial Times, uses bogus data to support its claims.

4. Vast numbers of steel company and vendor jobs have been saved by the tariffs.

If we do not immediately correct the erroneous opinions of the media, the Administration and the Congress, we will lose the tariffs in September, there will be a flood of imports, most of the currently bankrupt steel companies will liquidate and more will fail. We will have only ourselves to blame.

The solution is to change the way we relate to our elected officials. Historically, the domestic steel producers and the USWA have confined their lobbying efforts to issues that specifically affect our industry. I believe that this is a mistake. We must join forces with other industries that have been hurt by subsidized imports and with agricultural and other sectors whose exports have been impeded. Only by joint effort will we succeed because in most foreign countries, trade policy dominates diplomatic policy and therefore the power of each country is mobilized behind each and every trade issue. In the case of steel, World overcapacity is so large that the struggle is literally between a few American companies on the one hand and the rest of the World's governments on the other.

To start the process, I suggest that the leadership of the other steel companies join with me in inviting executives of every industry that has been unfairly treated by foreign governments to meet soon in Washington to develop a program for joint action. The objectives of the meeting would be to:

 

1. Give the President the support he deserves for his brave efforts to reduce foreign dumping of steel and lumber and to remove barriers to our exports of agricultural and manufactured food products.

2. Convince editorial boards and pundits that foul trade is the enemy of free trade.

3. Develop a campaign to require that our bilateral and multilateral trade agreement counterparties honor their contractual obligations.

4. Convince our government to force the WTO to make decisions that correspond to reality, perhaps by weighting each country's power by the amount of its imports.

5. Communicate to the public the economic consequences of our trade deficit.

6. Campaign to unhinge the Dollar from the Yuan.

 

In the time remaining, I will do my best to answer any questions you may have. Thank you for listening so carefully to my thoughts.

Panel II: Global Steel: Synergies and Regional Realities

 

John Goodish, executive vice resident, operations, U.S. Steel Corp., outlined three forces affecting the steel industry today: consolidation, globalization of the customer base, and subsidy pact to level the playing field.

The 201 trade action has allowed consolidation of the steel industry to take place. If there is to be growing international trade, the barriers need to be removed so that there is free trade and a stable market environment.

The subsidy pact would help to eliminate overcapacity. It should be based on two conditions: it should include all producers and it should contain transition rules.

Tetsuo Miyazaki, executive vice president, JFE Holdings, noted that the JFE Group was formed in April 2002 through the merger of Kawasaki Steel and NKK. The combined entity now has a capacity of 28 million tonnes, and is about the same size as Posco. They have been able to realize synergies and have improved profitability. This has been the result of:

1) Maintaining strong selling prices by not supplying excessive material to the market and taking a tougher stance in price negotiations.

2) Reducing fixed costs for maintenance and labor by closing as much excess capacity as possible.

3) Reducing variable costs by reducing middle management and using the best management practices from each company.

In terms of regional realities, the Asian region is strong. The Chinese demand has changed the picture for excess capacity in Japan. Pricing is strong in non-commodity products. JFE expects good profits this year.

Alexei Mordashov, general director & chairman, JSC Severstal, sees the allocation of steel production from Western countries to low cost countries. In this case, the best partners would be Brazil and Russia. Some of the advantages of Russia include low debt (especially as compared to Brazil), and good iron ore and coking coal resources.

Severstal and the other Russian steel companies have adopted modern management rules. Severstal's quality of steel is good. They are fully integrated and control most of their raw materials. They have good rail access.

There is growing domestic consumption, of about 26 mtpy. Industrial production growth is over 6% per annum. However, crude steel production is about 59 million tonnes, so the producers must export. The Russian producers are the low cost producers of commodity products. For higher quality products, there are not many customers in Russia.

 

Severstal is looking to be a supplier to the automotive sector. They are installing a new plate mill to serve the oil and gas sector. They have $2 billion in sales and an EBITDA of $500 million. They plan to be a leader in the industry.

Michael Shanahan, vice president, Boston Consulting Group, discussed three tensions in the steel industry.

1) Markets tend to bifurcate between global and local. The global OEM market is constrained but local labor adds value. In the local commodity market, the lowest cost producer dominates and sets the profits for the industry.

2) Assets don't bifurcate. Many companies can't meet their cost of capital.

3) In labor, local and global labor compete.

Panel III: Why Have Big Buyers Lost "Pricing Power?"

In perhaps the most heated panel discussion, some buyers maintained that consolidation without rationalization, coupled with mill clout, could hurt their businesses.

"There is no such thing as 'obsolete' capacity," said Bud Siegel, president and chief executive officer of Russel Metals Inc., Toronto. "Any capacity that has been idled is merely hibernating and waiting for somebody to bring it back to life." Siegel chided steelmakers for ineffective communications with their customers.

"Most steelmakers have no clue as to what it means to have a meaningful commercial relationship with their customer base," Siegel continued, pointing to a steep rise in sheet prices in mid-2002 after a perceived steel shortage emerged. "They (the mills) immediately and dramatically raised prices. This allowed offshore mills to import product into North America using the raised prices as an umbrella." Siegel criticized the industry for bringing back too much idled capacity in late 2002, which he maintained caused the price spike to collapse in the fourth quarter of 2002.

Bruno Bolfo, chairman, Duferco SA of Switzerland, noted that his company trades about 7.5 million tonnes of steel each year. But while Duferco buys steel, it is technically not the buyer because material is traded to end users. He said that large buyers who have capitalized on the fragmentation of the industry will now be more difficult to undercut, but will remain a threat.

Meanwhile, J. Paul Kadlic, executive vice president, commercial, U.S. Steel Corp., Pittsburgh, emphasized that industry consolidation would help buyers and sellers alike by stimulating better supply-chain management, more design partnerships with manufacturers and longer-term pricing agreements. He added that trust and mutual commitment are the keys to success.

"If you are not nurturing these kinds of relationships, you should change your mindset and change it quickly," Kadlic advised. He acknowledged that business relationships should not be

based exclusively on price, even though he allowed that the cyclical nature of the steel business still results in a win-lose scenario for buyers and sellers.

Concurring with Kadlic was John Lichtenstein, a partner with Accenture, Wellesley, MA, who stressed that the traditional view-that industry consolidation is about gaining pricing power-is inaccurate. "The principal value of consolidation is cost savings," Lichtenstein explained. "Consolidation should take customer-supplier relationships to a new level by fostering more cooperation, including supply-chain management efforts like synchronized scheduling."

David O. Styka, senior supply manager for raw materials at International Truck and Engine Corp., Warrenville, Ill., noted that in order for steel end-users to remain competitive for the long term they will have to increase their use of foreign steel, use more lower-priced minimill product and continue to move stamping, forging and assembly procurement to offshore locations.

"Unfortunately, this does not bode well for the domestic integrated mills," Styka said. "And this is certainly not the preferred scenario for manufacturers such as ourselves."

"Buying steel as a commodity in large quantities, you will most certainly have considerable pricing power," said Josef von Riederer, delegate of the executive board, ThyssenKrupp Materials AG. "The concentration of worldwide steel production has not yet led to structures that could in any way monopolize a global market." He added that it seems unlikely that basic products like hot-rolled coil-even being focused on by the London Metal Exchange in the near future-will ever be sold without serious competition.

Increasingly, the keys are supply chain management and building excellent relationships with customers. "Up to 80 percent of steel production is considered to be consumer-oriented at the moment of production," Riederer noted. "And you must not forget that the products we used to call finished products are basic materials for everyone else and hardly a piece of steel is used as it is when it leaves the mill."

Wednesday, June 18, 2003

Panel IV: What Role for Minis in the Global Market?

Keith Busse, president and chief executive officer of Steel Dynamics Inc. (SDI), Fort Wayne, Ind., maintained that the North American steel industry will benefit from the consolidation that is occurring, "but we have to get the exchange-rate issue resolved." He noted that the most important result of the consolidation will be that the cost structures of the mills will be vastly different than they were a decade ago.

"Improved cost structures will make the industry globally competitive. They will be at least 10 percent lower, if not more, than they were a decade ago," Busse added. "I'm not sure (consolidated integrated mills) will be as competitive as the minimills, but they will be closer. He noted that SDI could compete globally from a cost structure perspective and would look at opportunities to participate in the global arena. SDI did ship material to China earlier in 2003 and Busse said his company was ready to do more of that globally.

"If we were all trading in a global currency, the U.S. industry would be globally competitive," Busse stressed. "And SDI certainly would be one of the world's low cost producers."

Ahmed Ezz, chairman of Egypt's Ezz Industries, noted that his company was poised for growth in the Middle East, a region he called the world steel industry's "best-kept secret." Ezz said the Middle East "is one of the fastest-growing regions for steel consumption in the world." He pointed to his company's great competitive advantage with gas. "We have so much available that the Egyptian government is paying the oil companies to keep gas in the ground."

Ezz said that finished steel production in the Middle East totaled about 47 million tonnes in 2002-35 million tonnes of long products and 12 million tonnes of flat-rolled. His company made about 3 million tonnes of long products and 2 million tonnes of flat-rolled. He said that steel consumption in the Middle East was expected to grow about 4 percent per year over the next five years.

Opportunities for minimills are also present in Europe, said Francisco Rubiralta, chief executive officer, Spain's Celsa Group, provided a sound approach. He said his company's strategy had been to create both downstream and upstream synergies in England and elsewhere. Upstream synergies had been created with scrap companies, and downstream synergies with its customer base.

Such upstream (supply) synergies may be ahead of the curve. Donald F. Barnett, president, Economic Associates Inc., said that the big question mark in terms of minimill raw materials is the metallics issue. "I believe what will emerge," he said, "is a massive volume of world trade in metallics.

John D. Correnti, chairman and chief executive officer, BIR Steel Corp., Birmingham, Ala., said opportunities for growth existed even in the wake of the Section 201 tariffs. While Correnti maintained that he was "philosophically opposed" to tariffs-in part because they had allowed inefficient companies to continue to compete-he rated the Section 201 action "a five on a scale of one to ten." He allowed that his rating could reach an eight or a nine, based on how it had aided the domestic industry.

"A lot of the consolidation has happened through the Chapter 11 Route, and that is good," Correnti said. "But there are still a lot of weak sisters out there." He added that he believes the tariffs have taken a toll on the U.S. manufacturing base, "but not to the extent a lot of people believe. The question is, are we building a strong manufacturing base in the United States? Steel is not the issue; labor is. Materials are being fabricated in Korea and China not because of steel costs, but because of labor costs. Steel has become a convenient scapegoat."

Peter F. Marcus, managing partner, World Steel Dynamics asked Correnti during the question and answer session about rumors that he was contemplating building a new thin-slab minimill in the southeastern United States. "Are you crazy?" Marcus asked. Correnti dismissed such rumors and answered, "Only a fool who could make a lot of money would consider building a flat-rolled minimill in the southeastern United States."

Panel V: Does Steel Have a Future in Futures?

Futures contracts as hedging mechanisms for steel prices have distinct benefits and are destined to become available-perhaps next year, if the London Metal Exchange has its way.

Simon Heale, chief executive, London Metal Exchange noted that the LME could possibly launch the first steel futures contracts in mid-2004, while others are preparing to provide over-the-counter (OTC) hedging tools. "It will happen," said Rod Beddows, executive director of Hatch Beddows, London. "It's coming and it's coming soon."

The LME already has established specifications for hot-rolled sheet contracts in North America and Europe. Beddows said that if the idea took off, steel trading on the LME could be three times the LME's current total business.

The panelists agreed that the keys to success lie in the steel industry's willingness to familiarize itself with the details of hedging contracts and to conquer trepidation that a steel futures market would result in further commoditization of product and a loss of pricing control. Challenges for a futures market reside mainly in understanding the surprisingly complicated world of steel and putting in place what Beddows called "translation mechanisms" so the two parties could understand each others' businesses enough to move forward.

Heale said the LME wanted to follow the steel sector's practices as closely as possible. The LME was planning to use weighted average prices and to provide for physical delivery of material to settle contracts, if necessary.

Neil Banks, LME director of operations, helped ease concern about how the myriad of grades, sizes and chemistries of steel would be accounted for in LME contracts. "We establish a benchmark product and that allows you to hedge," he explained. "There will be no hedging on the add-ons. The rest is up to your business relationships and your skills of negotiation."

Glenn Wright, president and chief executive officer of Rockwood Risk Management LP, said his company's OTC trading would focus mainly on contract swaps. Rockwood would not hold any physical inventory. "It basically keeps you at a fixed price," he said.

 

Frederick R. Demler, senior vice president of the metals division at ManFinanicial Ltd., New York, said steel service centers could hedge their inventories in addition to providing clients with a fixed forward price. "There are many benefits to using futures, but I think the main one is the ability to manage price risk," he said.

Michael J. Hutchinson, president and chief executive officer of Sempra Metal Ltd., also urged steel industry executives to help build a viable steel futures trading system. He said that, unlike failed online efforts to establish trades that cost $5 to $10 per ton, trading on the LME would likely cost less than 25 cents per ton. "Being able to place futures contracts helps efficient producers and hurts inefficient producers," Hutchinson added.

Panel VI: China Unleashed: Who are the Beneficiaries and Casualties?

Jim Lennon, executive director, Commodities Research, Macquarie Bank Group stressed that China is extremely important to the global economy and its importance is accelerating. It has now reached a critical mass. It has entered into a metals intensity phase. This phase typically lasts a total of 10-15 years, and China is now 4-5 years into this period.

It has an extremely low cost structure. The linkage of the RMB to the US$ is a threat to other developing countries.

There are no signs of Chinese steel demand abating. And there is still a wide gap between consumption and production. Production will not exceed consumption for a long time. Flat product imports will still be needed. Demand could reach 375 million tonnes by 2020.

 

Ye Meng, President, BaoSteel America Inc., stated that the SARS situation is over and that the government learned from the experience. The steel industry has recovered and pricing is rising again.

There is low concentration in the Chinese steel industry. This is an unreasonable market structure. BaoSteel, the largest steel company in China, has only 10% of the market.

There will still be a need for imports for several years. There needs to be more high value added products made in China. There is still low variety. The steel consumption per capita is still low.

There are several major projects that will need steel: gas and water pipelines, railways, the 2008 Olympics, etc.

When individuals get property rights, this will lead to a new round of growth.

BaoSteel produced about 20 million tonnes in 2002 and had $9.4 billion is sales, an EBITDA of $847 million and a net profit of $482 million. Its strategy is to produce high quality, high-tech and value added products. It is continually upgrading. The most recent additions are the #4 blast furnace and a new cold-rolling mill. BaoSteel has good logistics. It is located on the Yangtze River and has built a new deep water port. Its environmental protection program is world class.

It plans to expand in sheet and pipe. It seeks partnerships with other leading steel companies. It intends to diversify and globalize. It will make a contribution to the world economy.

Michael Ratzker, Managing Director, Midland Metals acknowledged that Midland Metals did not start selling directly into China until 1998. They had previously thought it was too unreliable. Midland is the agent for Zaporizhstal. Zaporizhstal does not make very high quality product (4-10 tonne coils, no continuous casting). But they were able to make a few minor quality improvements and became a big supplier to China. Their prices are now only a 5% discount from the Tier I suppliers versus an 8-12% discount on product from Russia. They have stable customers in the pipe, guardrail and furniture markets.

They have gained much experience in dealing with the governmental policies, documentation requirements, and the "different" banking rules. They have all Chinese sales reps. Midland also exports Chinese steel to the U.S.

John Rothschild, executive vice president, Cometals, sees China as a roaring engine. They have a large need for raw materials. The question is where will they come from.

Demand will continue. There needs to be a build up of infrastructure in China such as roads, bridges, ocean vessels, autos, and residential and industrial buildings. The per capita steel

consumption rate is still very low versus many other countries. Demand will be about 260 million tonnes by 2005.

There will be a continuing need for steel imports. It appears the speculative amounts of imports are gone and there is a balance between imports and need.

Iron ore imports will also grow. The domestic iron ore is low grade and the transportation costs are high. About 231 mt were produced domestically and 111 mt were imported. Manganese imports were 2 million tonnes.

The Chinese steel industry is making substantial profits. The managements are becoming savvy and progressive. The industry will soon be world class.

Raw material suppliers will be among the greatest beneficiaries.

Luncheon Speaker: Dr. Nicholas R. Lardy, Senior Fellow, Institute for International Economics

 

Lardy reported many impressive statistics about Chinese growth:

• Chinese steel output has increased more than 50 million tonnes in 2 years.

• Chinese steel imports reached 24.5 mt in 2002 and 12 mt in the first 5 months of 2003.

• China is the world's largest recipient of foreign direct investment, a cumulative $470 billion.

• Global trade shrank in the rest of the world but grew 20% in China. China represents 5% of world trade. It was the 5^th largest in foreign trade, just ahead of the U.K. It will soon become the 4^th largest, pushing ahead of France.

He believes that this growth rate is sustainable. He pointed out that China's transition to a market economy is more advanced than many perceive. For example, most of their markets are competitive, there is low concentration and no pricing power in most industries, price allocation is efficient and tariffs are relatively low at an average of 11-12% and declining to 8-10% by 2005.

Foreign trade has been the driver to create a competitive market. Imports are 20% of GDP, plus 60% of the products made by foreign firms are sold domestically. This represents 40% of GDP.

The result has been a restructuring of the economy. Workers in state-owned businesses are down by 2/3. Steelworkers have gone from 3.2 million down to 2 million. Productivity is up. There is less wasteful output and less borrowing.

This restructuring is being financed by domestic demand. The share of foreign direct investment is declining (to 10%). The domestic savings rate is the highest in the world.

He sees a risk in that the growth in the Chinese economy is cyclical. It is subject to booms and busts. The government doesn't have the fiscal and monetary policies to moderate the volatility. He believes the country is now at the top of a boom period with prices rising.

China has created challenges for the big competitors in other developing countries in labor intensive products such as footwear, toys and apparel. Now they are affecting products from more developed countries such as computers from Taiwan. The message is that the steel shortage is not permanent.

Panel VII: Global Metallics Supply: Running on Empty?

Alexander Abramov, president, EvrazHolding, Russia, noted that Russian steelmakers had to ensure their positions by investing upstream in coal and iron ore mines. He said that the 1998 crisis there had unexpected benefits for the Russian steel sector. Completely new, young and entrepreneurial management had taken over the four key groups, of which EvrazHolding is the biggest. The group has more than 25 million tonnes of coal mining capacity, 12 million tonnes of sintering capacity-partly fed by iron ore from captive mines-and 14.5 million tonnes of steelmaking capacity.

He explained that the entry of steelmakers into the Russian mining industry had transformed it. Seven years ago, Abramov said, Russian mining company management was inefficient and fragmented, but in the past two years, huge steps have been taken to close inefficient mines and open promising new deposits. Low-priced energy in Russia has allowed Evraz to source iron ore fines at about $30 per tonne delivered and coking coal at about $32.50 per tonne.

Benjamin M. Baptista Filho, commercial director, CST, Espirito Santo, Brazil concurred with the short supply of upstream metallics. Since CST started two decades ago, the merchant slab market has grown from 3 million tonnes per year to about 25 million tonnes per year. He predicted that the market would surge to 40 million tonnes by 2010.

While CST shipped 5 million tonnes of slab in 2002, that level of availability is not a given because of CST's new hot strip mill, and in 2004-2005, it is planning to export only 3 million tonnes of slab, while focusing production on higher-value steel needs such as interstitial-free material and shipbuilding and tinplate grades.

John Brinzo, chairman and chief executive officer of Cleveland-Cliffs Inc., cited the 9 percent price rise in seaborne iron ore this year and gave an early prediction of another increase next year. Although Cliffs is North America's biggest iron ore supplier and its focus is "99 percent" domestic, Brinzo said that events in international markets have an impact on its business. Cliffs, for example, recently exported some iron ore to China.

To make a 10 percent return on capital, which Brinzo said is hard to achieve, Cliffs needs to keep its mines operating at full capacity because of high fixed costs. With several mines closing last year and in 2003, Brinzo forecast a tighter supply-demand balance throughout 2003.

Alberto Hassan, chief executive officer of Orinoco Iron CA, Venezuela, noted that demand for metallics had never grown as much as expected. Direct-reduced iron production, he argued, might have risen by 8 percent per year since 1990, but in the past five years growth had slowed to almost nil. Hassan pointed out that no new DRI modules were built in 2000-2002 and none were likely to be constructed in 2003.

He also stressed the environmental and social problems associated with growth in international pig iron trade, and that U.S. imports of pig iron could come under scrutiny on these grounds.

"Only China is installing a number of new blast furnaces," Hassan said, concluding that demand for virgin iron units-such as his company's HBI-would continue to grow, possibly leading to shortages.

Albert Cozzi, vice chairman and chief executive officer, Metal Management Inc., made three key points: 1) There will always be scrap. 2) The price of scrap will be capped by steel scrap substitute costs, and 3) scrap processing costs will always be less than SSS costs. He also offered five core values as to how he runs Metal Management:

1. The marketplace is the driving force, scrap is a "reverse" commodity, which can be said of all recyclables.

2. Measure success by customer satisfaction and shareholder value.

3. An entrepreneurial spirit that forces us to be the low-cost supplier.

4. Always think and act with a sense of urgency, and

5. Outstanding and dedicated people with a strong work ethic and who know how to work as a team.

 

 

 

Panel VIII: TechnoSteel: What New Toys on the Shelf?

Dr. Karl Schwaha, executive vice president and board member, VAI, addressed the issue of creating value for the steel industry from the engineering perspective. He emphasized the need for "holistic project execution."

"Whether the systematic coordination of a project is done by the investor or by the contractor is irrelevant," he said. "Important is that an integrated "holistic" view is put on the whole project during each stage of execution. Schwaha described the following elements of holistic project execution:

On-line progress monitoring by using the new communication tools to avoid surprises and to allow for counteractions in case of unexpected difficulties at an early stage.

3D CAD design in combination with pre-assembling and shop-testing minimizes engineering and manufacturing mistakes and assure short installation and commissioning periods.

Integrated automation and process simulation with "virtual reality" testing allow the efficient debugging of the software.

Computer assisted training of operating and maintenance personnel.

"The holistic design approach is impressively demonstrated in the automotive industry," Schwaha added.

Joachim Schwellenbach, senior executive vice president, SMS Demag, addressed developments for the total integration of steelmaking processes. One of which is the company's trademarked multi-purpose CONARC Plant-MPC for alternating between the production of carbon and stainless steel. Another was an "Integrated Arc Furnace" (IAF) a hybrid furnace for replacing a BOF vessel to accept a scrap charge. Meanwhile, SMS Demag's strip casting technology, trademarked as CSP is finding a niche mainly in the stainless steel sector-in particular at AST, Italy.

In fact, in carbon steel, direct strip casting continues to hold the most potential. But as brought up during the question and answer session, there are still some hurdles. An update on the operation of the world's first commercial strip caster for carbon and stainless steel was provided by Richard L. Wechsler, president, Castrip LLC. It's been operating at Nucor Crawfordsville for almost a year now, but not at the levels originally touted. Wechsler believes, however, the production marks are still well within reach. "When fully proven, the CASTRIP facility is expected to have an annual capacity of 500,000 tonnes of hot-rolled coil below 2-mm in thickness," he affirmed.

Wechsler noted that Castrip products can, in many applications, be substituted for cold-rolled steel, "and will likely create a new product category-already termed UCS-for flat-rolled sheet products." Nonetheless, for hot-rolled carbon steel products greater than about 2.5-mm, Wechsler said, "it is likely that conventional thick and thin slab casters followed by hot strip mills will remain the preferred processes, for at least the near term."

In the year since Castrip made its debut, the company has partnered up with several international suppliers, Wechsler noted. These include: IHI, Siemens, Hatch Associates, and Danieli.

Danieli, which recently opened a Beijing office to facilitate much of the steel projects taking place in China, was represented on the panel by Mark Brandon, chairman and president, Danieli Corp. Pittsburgh. He noted that innovations offering a quick return on investments are the ones to consider. These include: high-speed casting, scrap preheating, in-line heat treating, high-speed drawing, and several other Danieli developments.

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