Dec. 18, 2006 — The American Iron and Steel Institute (AISI) has completed a new analysis of U.S. “indirect” steel trade for the years 1999-2005. The report identifies the volume and value of steel incorporated in finished products for eight major consumer markets imported and exported between the United States and 11 major countries and four regions.

The AISI report shows that U.S. indirect steel imports (36.9 million net tons) and U.S. indirect exports of steel (20.0 million tons) both reached new highs in 2005, while the U.S. indirect steel trade deficit last year increased to 16.9 million tons (up from 15.9 million tons in 2004, though still below the all-time record of 19.9 million tons in 2002).

America’s significant deficit in indirect steel trade does not, however, project into the automotive sector, where the indirect steel trade deficit has actually been declining since 2002. The 2005 deficit for this sector (which remains the single largest source of indirect steel imports) was, at about 8.8 million net tons, over 20% smaller than the deficit in 2002. This sharp decline reflects in part the increasing automotive production in the United States, largely by foreign producers such as Toyota, Nissan, Honda and Hyundai that rely mainly on domestically produced steel.

While the decline in the automotive sector’s indirect steel deficit over the last several years is one positive development, the significant overall deficit in America’s indirect steel trade highlights continuing structural problems for U.S. manufacturing, says AISI. Of particular concern to domestic steelmakers is the fact that U.S. indirect steel imports from China last year (over 5.1 million tons) increased 21% from the level in the previous year (2004). The United States’ 4.6-million-ton indirect steel trade deficit with China in 2005 was 3.0 million tons greater than in 1999.

“China and other countries continue to engage in protectionist, mercantilist industrial policies and trade practices, including through the manipulation of their currencies to subsidize their exports of manufactured products to the United States,” said Andrew G. Sharkey III, President and CEO of AISI. “As a consequence, the U.S. steel industry is seeing many of its customers forced to shift production out of the United States. If this trend continues, we will witness a permanent contraction of the domestic manufacturing sector, with dire consequences for the entire U.S. economy.”

AISI publishes data on U.S. indirect steel trade by world areas and steel-consuming markets expressed in tons of steel. These reports, which date back to 1984, provide data on the total amount of indirect steel trade each year in the U.S. economy, and show the main sources of foreign competition faced by major steel-using industries in the United States. This latest report, which is now available to the public, includes detailed data for the last seven years (1999-2005).