American Iron and Steel Institute Moderator: Lisa Harrison .../media/Files/AISI/Press...

American Iron and Steel Institute

Moderator: Lisa Harrison

05-16-2013/1:30 p.m. ET

Confirmation # 68994280



May 16, 2013

1:30 p.m. ET

Operator: Good afternoon. My name is (Hope) and I will be your conference operator

today. At this time, I would like to welcome everyone to the American Iron

and Steel Institute Press Briefing. All lines have been placed on mute to

prevent any background noise. After the speakers’ remarks, there will be a

question and answer session. If you would like to ask a question during this

time, simply press star, then the number one on your telephone keypad. If you

would like to withdraw your question, press the pound key.

Thank you. Miss Lisa Harrison, you may begin your conference.

Tom Gibson: OK. Are we -- we’re live then? OK. OK. Welcome to this morning’s press

briefing. I’m Tom Gibson, President and CEO of the American Iron and Steel

Institute. AISI serves as the voice of the North American steel industry in the

public policy arena and advances the case for steel in the marketplace as the

preferred material of choice.

Together, our member companies represent over three-quarters of both the

U.S. and North American steel capacity.

Participating in today’s press briefing are:

AISI Chairman, Mike Rehwinkel, who is President and CEO of EVRAZ North America

AISI Vice Chairman, Mike Rippey, who is President and CEO of ArcelorMittal USA

AISI Vice Chairman, Chuck Schmitt, who is President of SSAB Americas



05-16-2013/1:30 p.m. ET


AISI Director, John Ferriola, who is CEO and President of Nucor Corporation

AISI Director, Sergei A. Kuznetsov, who is CEO of Severstal North America

AISI Chairman, Mike Rehwinkel, will kick things off by commenting briefly

on the latest industry data. Mike will also touch on our policy priorities for

2013. And each participant will offer his thoughts on some of the industry

policy priorities. After those opening comments, I’ll open the floor to Q&A.

I do have one request. Please remember before asking your question to give

your name and news organization.

And with that, I’ll turn it over to Mike. Thanks.

Mike Rehwinkel: Thanks, Tom. We’re nearly halfway through 2013 and though the economy is

recovering at a moderate pace, there are still some challenges for the

remainder of the year including possible tax increases, across the board cuts in

government spending, high unemployment and slowing growth in the

manufacturing sector.

However, there have been some recent reports that make us cautiously

optimistic. Domestic capacity utilization was 77 percent in the first quarter,

up from the previous quarter when it was 70 percent. Total finished import

market share year-to-date is at 23 percent.

Capacity utilization is below 80 percent and the most recent still important

monitoring analysis data for April showed another strong month for imports.

We continue to urge the U.S. government to be more proactive regarding the

unfair trade that would cause harm to our recovery.

The confirmation process for the Administration’s recently announced

nominees for the key trade and economic positions in government – The

Secretary of Commerce and the U.S. Trade Representative – presents an

opportunity for the Administration and the nominees to take a strong stand

against unfair trade.



05-16-2013/1:30 p.m. ET


Industry-wide, first quarter shipments were 24 million tons. We expect to see

some strengthening in demand in the second half of the year. Steady

improvement in automotive demand according to the Automotive Market

Research Council-Wide Vehicle Original Equipment Committee means that

North American white vehicle production will reach 15.86 million units with

about a 3 percent increase annually through 2018.

In 2014, production is estimated at 16.34 million units. Metal packaging

demand, measured for steel and aluminum in North America, is forecasted to

grow about 13% from 2011 to 2016, according to a 2012 report from The

Freedonia Group.

The construction sector is also projected to see modest growth in 2013. The

positive factors supporting construction growth are fragile; however, it could

easily be overwhelmed by the general health of the U.S. economy.

Overall, housing starts in 2013 with projected increase approximately 23

percent, but bear in mind that this gross is from the very low levels of activity

experienced in the collapse of the housing bubble.

Non-residential building construction is forecasted to improve by 6 percent in

2013 with strongest growth in the resale, warehouse and hotel markets. The

education health care construction forecast continues to be sluggish.

Highway and bridge construction is projected to rebound about 3 percent.

The power generation transmission market is forecasted to slow down in 2013

due to the completion of several large projects. We should see modest to

strong growth and electric transmission infrastructure however.

Pipeline construction, which rebounded substantially in 2012, should continue

strong growth in 2013 along with natural gas and shale gas development.

But this point is very important. The energy renaissance that can benefit our

industry and create jobs needs to be unencumbered by overly stringent federal

regulation.



05-16-2013/1:30 p.m. ET


As I mentioned in my testimony before the House Energy and Commerce

Committee in March, we need a reasonable streamlined regulatory approval

process for the construction in permitting of new facilities or modernization of

existing ones.

The bureaucratic permitting process has become controlled by special

interests that raise issues outside the purview of the process simply to delay an

approval. A case in point is to propose the Keystone XL pipeline.

It will provide a competitively-priced, reliable North American supply option

for Gulf Coast refineries and has met extensive regulatory approvals –

including the State Department’s - yet it is being delayed in a tug of war

between State, the EPA and the President. This could undermine the goal of

secure, stable energy supplies in our country.

Overall, we believe that slightly expanding demand in the auto sector, energy

and construction markets, and hopefully the construction of the Keystone

pipeline, we contribute to a growth trend in steel shipments in ’13 and ’14.

This year, AISI has, again, identified several policy priorities that my

colleagues will touch on. One; enforcing fair trade, but keeping our trade

laws strong and strictly enforced. Two; avoiding excessive government

regulation that reduces industrial competitiveness. Three; investing in

transportation infrastructure. Four; developing tax policies to support U.S.

manufacturing competiveness. Five; promoting cooperative worker health

and safety programs. And six; putting a national energy strategy in place that

promotes development of informal and abundant energy supply.

Now, I’d like to ask Mike Rippey if he would touch on a potential growth

market ahead, especially from the auto perspective.

Mike Rippey: Thank you, Mike, and good morning, everyone. The companies represented

here today at this annual meeting operate at the cutting edge of material

science. We produce high technology solutions for our customers and we do



05-16-2013/1:30 p.m. ET


so with advanced equipment operated by highly skilled and tech -- in a tech-

savvy workforce.

We provide great jobs for American workers and for our country. Some of

these materials include advanced high strength steels, which you likely have

heard much about. They have helped auto makers reduce vehicle weight

without sacrificing safety, sustainability and affordability for the past 10 years.

I wanted to share with you a quote about the evolution of vehicles and it’s a

simple quote. “The day of the passenger car made primarily of iron and steel

is on the lane and it will give ground to aluminum, magnesium and plastics.”

This is a quote from an -- from an article in Cars Magazine and it’s from 1953.

It clearly wasn’t true then, and it’s not true today. In fact, the ironic thing is

that Cars Magazine is no longer here, but steel certainly is.

Since the early 1900’s, steel has been the preferred material for automotive

design – it’s strong, formable, and low cost. But, customer expectations and

government regulations such as CAFE have challenged automakers to

increase safety, improve fuel economy and reduce CO2 emissions, all at the

same time – a huge challenge.

Steel is meeting this challenge.

When the Transportation Department and the EPA first announced the goal of

bringing the fleet to a corporate average fuel economy of 54 and a half miles

per gallon by 2025. There were those -- pardon me -- those who proclaimed

game over for steel.

We know otherwise and to demonstrate this, we obtained from the EPA an

NHTSA, the very computer models they used to assess fuel-saving

technologies and set up the standards. These models show that the weight

reduction we can achieve with advanced steels combined with anticipated

powertrain improvements can get fleet to 54 and a half miles per gallon.



05-16-2013/1:30 p.m. ET


Models also show that steel gets the fleet to 54 and a half at lower costs and

lower greenhouse gas emissions and other materials. So what’s the reason for

steel’s continued success? The answer is simple. While there are a number of

competing alternative materials, none offer the complete package of safety,

light-weighting, affordability and sustainability offered by steel.

Thank you. Chuck will now make a few comments about the importance of

our energy future. Chuck?

Chuck Schmitt: Thank you, Mike. Our industry’s international competitiveness depends on

our ability to capitalize on the discovery and development of North America’s

shale resources as was outlined in (Michael Palmer’s) presentation in this

morning’s session.

As an industry, we consume large amounts of natural gas that will benefit

from the increased supply resulting from shale production, which keeps gas

both reliable and available at low costs.

Secondly, the steel piping two products that U.S. steel makers produce are

integral to the expiration, production and transmission of natural gas and oil.

Greater development of our domestic shale resources means greater demand

for steel that translates into more jobs, more investment, and that’s good for

everyone.

But a number of current thorough regulatory efforts threatened to limit the

amount of domestic oil and natural gas resources available for access and

production, number one, EPA has finalized air emission regulations from new

on-shore oil and gas production sites by 2015 and may potentially regulate

water usage at these sites in the same timeframe.

Department of Interior proposed rules to regulate natural gas, production from

public lands, and Department of Interior 5-year plan for outer continental shelf

oil and natural gas access would prevent production from 85 percent of the

outer continental shelf.

And finally, EPA regulations of electricity generating utilities including the

Across State Air Pollution Rule, Mercury and Air Toxic Standards Rule, or



05-16-2013/1:30 p.m. ET


Utility MAC, a new source performance standards for greenhouse emissions,

they raised the cost of electricity to large industrial customers like steel.

We as an industry are doing everything we can to increase energy efficiency

and are leading the way by effectively setting par for steel industry efficiency

worldwide. AISI members made substantial gains in reducing their energy

uses, as well as their environmental footprint over the last two decades.

The domestic steel industry has voluntarily reduced the energy intensity by 27

percent since 1990 while reducing its greenhouse gas emissions by 33 percent.

The U.S. Department of Energy recently indicated that the steel industry in the

United States has the lowest energy intensity and second lowest carbon

dioxide emissions intensity of any major steel producing country.

In closing, we need a comprehensive and market-driven energy policy built

around promoting full domestic energy sources support for industrial energy

efficiency improvements and the development of breakthrough technologies.

As members of AISI, this is one of our major priorities. I will now turn things

over to (John Ferriola).

(John Ferriola): Good morning. In order to strengthen our economy in competitiveness, we

need a healthy and growing manufacturing sector. To recover, our economy

needs jobs. The steel industry played a significant role in our nation’s

economic recovery because we’re a big jobs multiplier.

Every one job in the American steel industry supports seven additional jobs in

the U.S. economy. The current surge of steel imports puts our ability to reap

the benefits of our job-creating investments at risk.

Total steel imports increased 17 percent from 2011 and a whopping 38 percent

from 2010. Steel imports were up in every major product area and for most

major steel producing countries. The reason we are seeing this import surge is

that while America is a free market, many major steel producing countries are

not. Foreign governments in countries like China, India, Brazil and Egypt

interfere in the steel market through their state-owned enterprises, import



05-16-2013/1:30 p.m. ET


restrictions, raw material export restrictions and subsidies that are in violation

of international trade rules.

These types of trade restrictions not only distort trade and steel products, but

also trade and steel-making raw materials as well. The fact is U.S. steel

makers and their workers can successfully compete with anyone in the world

on a level playing field, but we cannot compete against governments.

Some examples of trade distorting activities by other countries, Brazil doubled

its import duties on up to 100 products including 17 steel products and is

proposing increasing their export tax on scrap metal.

China by far are the worst offender, highly subsidizes its steel industry, which

is government owned and government controlled, and its market remains

heavily distorted and closed to outside competition.

And last year, China’s steel capacity reached an astonishing 970 metric tons --

970 metric tons of capacity. And to put that in perspective, comparing it to

the U.S. capacity and the United States capacity, which is about 120 million

tons, you can see it just warps the U.S. capacity.

And now, Japan is also being allowed into the Trans-Pacific Partnership, the

TPP, trade talks despite the historically closed nature of the Japanese auto

market and Japan’s recent actions to substantially weaken its currency.

There is a solution to these problems. Strong trade enforcements. This

includes removing trade barriers abroad and opening those closed markets. It

also means using the trade laws to address market distortions like dumping

and unfair subsidies, and addressing new types of trade issues such as evasion

and circumvention, and the effect of stated owned enterprises.

We have a tremendous opportunity to revitalize the American manufacturing

sector and strengthen our economy. If we have strong trade enforcement

coupled with upper policy areas discussed here today, America can once again

be a nation that makes and builds things, bidding jobs and process.

Thank you. I’ll now turn things over to Sergei.



05-16-2013/1:30 p.m. ET


Sergei A. Kuznetsov:

Thank you, (John). Good afternoon.

The North American steel industry has long identified environmental

stewardship and commitment to sustainability as part of our industry's

strategic plan and our vision for the future. The industry is aggressively seeing

ways to reduce our environmental footprint even while producing the

advanced and highly recyclable steel that our economy needs.

Steel's superior performance minimizes environmental impacts when

measured through the entire life cycle.

As Mike mentioned, through the development and application of new

steelmaking technologies, the steel industry has reduced energy intensity by

27 percent and CO2 emissions by 33 percent per ton of steel shipped since

1990. The continuous recyclability of steel is fundamental to these

advancements. The overall recycling rate for steel has reached an all-time high

of 92 percent.

More than 85 million tons of domestic steel scrap was consumed by

steelmaking furnaces--recycling more than paper, plastic, aluminum and glass

combined.

This is largely because steel is the engine that drives the recycling of many

consumer goods, as evidenced by the recycling rates of many common

products, including automobiles (94.5%), appliances (90%), steel containers

(70.8%), structural steel (98%), and construction reinforcement steel (70%).

A key tool for the industry for advancing sustainability is the Life Cycle

Analysis approach, which is essential to measuring the real environmental

impact of a material. Steel has life cycle advantages over competing materials



05-16-2013/1:30 p.m. ET


because of its relatively low energy use, high recyclability, conservation of

natural resources and the extensive re-use of by-products.

Steel (inaudible) lifecycle advantages over competing materials because of a

relatively low energy use, higher (inaudible), conservation of initial resources

and the extensive reuse of byproducts.

The steel industry is looking further than simply “going green” because,

unlike other industries, we already have been green for years. Sustained

commitments, promoting green living through recycling and innovative

thinking will keep the steel industry ahead of the curve for the benefit of all of

us.

With that, I’ll turn it back to Tom.

Tom Gibson: OK. Thank you, Sergei. At this time, we’ll take questions. We’ll all take a

person -- a question from the one, then one from the phone. I think we may

have more reporters on the phone than in the room, so we’ll -- for a couple of

rounds, you may adjust that.

So when you ask a question, please state your name and news organization

before your question. Yes?

Female 1: (Inaudible) and I was just wondering what kind of infrastructure

projects need to be done that would really further, I guess, not only your

company’s (inaudible)?

Tom Gibson: Well, we -- this is Tom Gibson for those on the phone. We need a -- we need

a long-term solution on highway funding, first off. We’ve got a stop gap that

gets us through another year and a half until September 2014, but we need a

long-term -- long-term bill to address that. That’s where the roads and the

bridges are addressed.

Yesterday, the Senate did pass a Water Resources Development Bill for

(inaudible) and dams. I think we saw with low water levels on the rivers over



05-16-2013/1:30 p.m. ET


the winter, you saw what the effects can be if a routine maintenance is not

kept up. They had to do some emergency dredging. They had to remove

some (inaudible). The (inaudible) and dams -- the condition of the (inaudible)

and dams is no better than our bridges.

So passing a water bill is a good first start. There is an issue for all of these

public funding bills that’s tied to the topics that we talked about this morning

and that’s the funding question, especially in the case of highways. The bill

had relied on historically gas tax as its main funding source.

When we last did that bill -- or not last did the bill -- we did the bill about 10

years ago and projected on gas receipts far exceeding the actual need now.

Vehicles have changed, people’s driving habits have changed and the gas tax

is not any longer producing enough money.

So in the next generation, the funding issue really has to be front and center

because the need exceeds current funding levels. We’re just barely keeping

even now.

(John)?

(John Ferriola): This is (John Ferriola). I’d just like to build upon that and make a couple of

gentle comments about the infrastructure. Infrastructure in the United States

is in terrible condition, terrible condition, which poses a danger not only to

our citizens, but our ability to compete in the manufacturing sector with the

rest of the global countries.

You have to have a strong, safe, efficient infrastructure in order to be able to

enjoy the logistical competitive advantages that keeps us on par with our --

with other -- with other countries. So building upon what you said, Tom, I

encourage our government to take further action, continue to invest in

infrastructure, find ways to make it happen. We know the government is

challenged financially as are the states, but we must find a way to invest in our

infrastructure in the United States.

Tom Gibson: Thanks. We’ve got to take one from the phone. On the phone, do we have a

question?



05-16-2013/1:30 p.m. ET


Operator: At this time, if you’d like to ask a question, press star, then the number one on

your telephone keypad. Your first question comes from the line of (Ed

Crooks), Financial Times.

(Ed Crooks): Hi. Good afternoon. (Ed Crooks) here from the Financial Times. Thanks

very much for taking the call. You talked a bit about the energy revolution. I

was interested in really trying to get you to sort of characterize the scale of it

and to just talk a little bit about how important it is for the industry and for

your company specifically.

When you look at what’s going on in gas and perhaps oil as well and the

effect on demand fuel products and the effect on energy costs, is there some

(inaudible) which is kind of, you know, nice to have and helpful and sort of a

good thing for the steel industry, but not really kind of transforming the

fundamentals of the business or is there something that you would really

describe as transformational and leading to a -- kind of a completely different

outlook for the way you’ve -- for -- about the future of steel in the United

States?

Mike Rehwinkel: Mike Rehwinkel. I’ll start first. There’s a number of us here that will

comment to that because it is a transformation. First, I’ll just -- I’ll use just

the -- what is the renaissance (inaudible) with just the pipeline production

itself is that the current pipeline production in North America will greatly

stand and that is just the natural steel that we produce (inaudible) quality go

into those pipes, and that in itself is going to cause the renaissance where

we’re having steel used in our good pipe going across, and it needs to be

North American steel-produced. Not foreign-produced.

And that’s the point that we’re trying to make to the import surge, but I think

the real renaissance is going to be low gas prices and probably Mike or (John),

would you like to comment to that?

(John Ferriola): Well, I think the exciting aspect of it is the ability that it will bring to

resourcing a lot of manufacturing back into the United States. Certainly, it’s

going to create a need for more steel that goes into the pipes to bring the gas



05-16-2013/1:30 p.m. ET


underground to the -- to the user, but in addition to that, it will allow

manufacturing to resource back into the United States.

With manufacturing coming back, there’s many large equipment

manufacturers coming back to the States today. The new plants are being

built in the states. That provides a greater demand for our product so it

improves our ability to supply the market not only through the steel going into

the direct use of gas, but also indirectly through the insurgence of

manufacturing in the United States.

Sergei A. Kuznetsov: Yes, this is Sergei. (Inaudible) it is transformational and we’re seeing

many other industries (inaudible) energy related industries. The investments

are coming back into the country and while, you know, some companies

(inaudible) parts of the world, a lot of them are not thinking (inaudible) in the

United States because of the (inaudible) for low-cost energy and steel

(inaudible) products.

So always under construction (inaudible) going to those plants is going to

(inaudible) industry a lot. And one would think, I’d like to mention, the

results, the direct benefit to the industry, it’s the lower production cost, the

(inaudible), you know?

We are an industry that depends on energy and we’re seeing the benefits today

right now immediately from the lower cost of (inaudible).

Tom Gibson: Yes, we -- the industry as a whole consumed 327 billion cubic feet of natural

gas in 2011 the last year we had full data and you can do the math on what a --

what the difference between a $12, $13 natural gas world is and the $3 or $4

net dollar natural gas world.

And I’d just point to the chemical industry as a prime example of an industry

that was largely relocating to areas where natural gas was cheap and

affordable and it was going off shore at a very rapid pace and those ethylene

crackers (inaudible) built in the United States.

And you have to get the gas out of the ground, you have to get the gas in the

cracker, then you’ve got to build the cracker and all that involves steel. Then



05-16-2013/1:30 p.m. ET


you’ve got to get the product out to the other people who take the primaries

and convert that into the products that you see, some of them sitting there, that

water bottle on your table.

So it’s just -- it transformed the industry in fundamental ways.

Mike Rippey: This is Mike Rippey from (ArcelorMittal). I think there’s an often overlooked

benefit to the transformational changes that are taking place in our energy

sector and has the effect on consumers, you know?

Consumers consume large amounts of natural gas to heat their homes every

winter and their home heating bills have been reduced dramatically as natural

gas has gone from $12 to the $3, $4 level that we’ve experienced today.

So as they have more disposable income, that income is available to put into

our economy and drive demand for appliances and automobiles and all of the

other things that the citizens of our great country consume every day.

So there’s a liquidity effect on the consumer balance sheet as well. So the

transformation extends beyond our industry and all aspects of our society.

(John Ferriola): If I -- if I can make one more comment, Tom...

Tom Gibson: Yes.

(John Ferriola): All of these great benefits that we’ve mentioned to you are dependent upon

the gas staying at home so that it can provide all of these benefits. So we

besiege our government to take a hard look to current discussions that are

going on concerning the exploitation of our natural gas.

With that, we would export these opportunities, these job-creating

opportunities that we’ve discussed up here today.

Tom Gibson: A question in the room?

Female: (Inaudible) hoping that the second half would turn around. (Inaudible)?



05-16-2013/1:30 p.m. ET


Tom Gibson: I’ll start first and probably, Chuck, you’ll probably add to that as far as plates

and coil (inaudible). So where really the main issue I see is that there’s just

tremendous surge in foreign produced pipe coming into North America

because of the energy renaissance.

And so the pipe is made obviously with our good pipes and our -- with our

good plates and our good coil. And so those of us producing plate and coil are

not experiencing that renaissance because it’s -- that plate and coil is being

made overseas into pipe.

And so for this to pick up, you said it right. We’ve got to have some type of

government interaction in Canada and the U.S. to restrict that low-cost

unburdened pipe coming into North America. That’s the first start of this to

make the second half better than the first half.

Chuck Schmitt: Exactly. Just to expand on that a bit -- and I don’t know if, Tom, could

probably quote the world steel figures from recent conferences -- but the

bigger picture there is overcapacity and overcapacity that exists in Europe. It

certainly exists in Asia today; although, far less in North America.

And so with a lack of, you know, confidence in a strong growth of economy

today, you know, coupled with an oversupply, as Mike described, is not really

bringing the windfall that we would’ve expected that comes with this

renaissance.

Tom Gibson: Yes. And since Chuck cued up overcapacity, you know, we’re in a world

right now where there’s about 2 billion tons of steel-making capacity and 1.5

billion tons of steel-making demand, and that is -- that is just having dramatic

effects on the -- on the industry and we still see capacity being added. A lot of

its state-sponsored or state supported.

Sergei A. Kuznetsov: Yes, and I would add to that. With all the strong fundamentals as we see

on the (inaudible) situation that exists today in the marketplace that doesn’t

allow the (inaudible) make (inaudible) to be available to really invest in the

capacities, to be available to be (inaudible), to invest in new technologies, et

cetera, et cetera.



05-16-2013/1:30 p.m. ET


So this (inaudible) we’re seeing in the industry are simply (inaudible) the

normal levels. And despite all the strong fundamentals (inaudible)

transformational things that we talked about.

Tom Gibson: Let’s take one from the phone.

Operator: Your next question comes from the line of (Myra Pinkham), (Metal Center

News).

(Myra Pinkham): Hi. You talked -- as far as construction, you talked about the

infrastructure side housing. How about non-residential, which has been a

lagging market, and what kind of impact is that having on the specific steel

products that are used for non-residential construction?

Chuck Schmitt: I probably have a number on non-residential that’s not in front of me. Non-

residential has been very -- a very regional kind of thing depending on where

you are, what the non-residential market looks like.

Overall, it’s flat. (Larry), you got a -- you have a number in your head on

non-residential?

(Larry): (Inaudible).

Chuck Schmitt: Yes, I learned never to guess on giving out a number especially on the phone,

but we can get -- we can get the number. It is -- it is a very flat to slow growth

kind of scenario that we’re seeing in non-residential as there’s been a, you

know, absorption of a lot of that vacant capacity, the vacant square footage as

a result of the downturn, but it is a -- it’s a regional phenomenon with some

areas performing better than others.

Sergei A. Kuznetsov: Right. And the problem was (inaudible) see, you know, hardly any

growth there, and that’s what’s holding back (inaudible), for example, and

there’s a lot of capacity that is available there to sort of (inaudible) market.

So once the demand comes back, you know, we’re going to see a much

stronger environment, but until it’s there, that’s one of the things that is

(inaudible).



05-16-2013/1:30 p.m. ET


Tom Gibson: A question in the room?

Female: Hi. I wanted to go back to energy and transformation of natural gas. Are you

guys specifically designing and, like, (inaudible) things like that for

commercial fleets and (inaudible) considered using natural gas in

locomotives?

Are you guys working with OEM industries to (inaudible) new products to

capture that (inaudible)?

Tom Gibson: Anyone want to take on that?

(John Ferriola): I would say I’m in the rail business producing rail. And so what we have seen

is the rail business is full. And because you’ve seen the stats of hauling the

crude from the Dakotas in particular down to the refiners is that rail is very

full with these cars going there.

So one segment of that is flourishing is the rail segment. You’ve seen

(inaudible) announcement on the earnings because of that. So that is -- that is

one thing we are working on is just the hire street rail and that we continue to

work on that because of the place of the product coming down.

As far as the tanker cars or barges and such, Chuck, if you -- it -- really it

ramped up some, then it kind of slowed down some is probably what I would

say from that perspective. Any other comments on that?

Mike Rippey: Mike Rippey. We -- I just -- go ahead, Chuck.

Chuck Schmitt: I’m sorry.

Mike Rippey: No, go ahead.

Chuck Schmitt: That -- as was presented from the gentleman from Marathon, there is a bit of

time lag from, you know, when you look at the light of this production and

bringing it online, building pipelines, getting pipelines approved, and this

rapid growth of rail as Mike described is one of the outcomes of that.



05-16-2013/1:30 p.m. ET


It also extends to the waterways, the barges, and even trucking as described.

So it certainly has expanded into a wide range of transportation opportunities,

particularly to fill this fine line before additional pipelines can be brought

(inaudible).

Tom Gibson: And if you’re asking specifically about fuel tanks and fleet vehicles, if that

was where you’re going, we have a very -- a very aggressive strong program

in vehicle tanks right now and we have data that shows that steel tanks

outperform plastic tanks. You’re not going to put compressed natural gas into

any other (inaudible).

So -- and we can get -- we can get more information for you on that from our

market development program. We’ll follow up with you.

Female: Thank you.

Tom Gibson: A question on the phone?

Operator: Your next question comes from the line of (Allison Martell) with Thompson

Reuters.

(Allison Martell): Thanks. So I know that several steel industry leaders have asked Congress to

pass legislation directing commerce to treat undervalued currencies as a

subsidy, which I imagine would open the door to some more counter

(inaudible) duties.

I’m interested in the update on how you -- how that’s going, if you’re getting

any traction there, and can you talk about any other specific trade policies that

you’d like to see?

Tom Gibson: Well, as far as specific trade policies we’d like to see, we’re pushing very hard

to see a currency bill passed. We’ve had action in both Houses of Congress

over the past couple of years. We need both House of Congress to act in the

same year to pass -- to pass currency legislation.

Other things that could -- that would help is we’ve been supporting very

strongly the enforced act that would -- that would help us where if you get a



05-16-2013/1:30 p.m. ET


favorable ruling to actually enforce it and avoid evasion of orders that exist --

and again, this is a bill that’s had some success from one House to the other.

We need to get this bill moving in both Houses this year. We’re soliciting

additional co-sponsors.

We had some progress in this in the Senate. One of the bill’s champions is

Senator Ron White. And so we’re looking forward to seeing that bill move a

little bit -- a little bit further down the line and actually become law.

Anybody else want to...

(John Ferriola): Tom, I’d just like to make a general comment about it. Our trade remedy

actions tend to be very, very reactive and not at all proactive, and we need to

have that changed. The current idea of having to suffer through serious injury

and harm before any action can be taken, it is clear that rules are being

violated is a silly way to approach the problem. You need to be much more

proactive and less reactive.

We need to take action before harm and injury occurs once we can prove that

they are, in fact, violating our laws.

Tom Gibson: Next question in the room?

Male: (Inaudible). Can you talk a little bit more about the prospects for auto

in 2013 and (inaudible)?

Mike Rippey: Mike Rippey. We continue to see good demand from our automotive

customers continuing through the balance of ’13 and well into ’14 and beyond.

There’s clearly a lot of pinned up demand and (inaudible) at historic levels

given some of the effects of the recession going back into 2009 and ’10.

So there’s certainly a lot of demand for automobiles continuing on through

2018. In particularly, when you look at the demographics of the driving

(inaudible) population in the United States, there’s a lot of new drivers

coming into the market for the first time and perhaps some of their ability to

consume has been held back by the high unemployment rates that exist in our

country particularly for the young.



05-16-2013/1:30 p.m. ET


So as those young people find jobs, I suspect they’ll be like most of us and

look to enjoy the benefits of car ownership. So we see continued strong

demand for the next many years in automobiles.

Tom Gibson: I think we covered more quickly in autos that maybe was projected two or

three years ago. I think we’re going to end this year -- I think current

estimates are about 15.8 of North American vehicles built in projections for

2014 o r 16.4. That’s good, but it’s still below the -- you know, the 2005,

2000 average -- 2005, 2007 average of 17 million vehicles.

So it’s gotten better and that is a very strong market for steel, but it still -- it

still has a little room to go before we get back to where we were before the

recession.

Next question on the phone? I think we -- have we hit all the reporters in the

room for at least one question? We have. I’m going to take a couple on the

phone because I think I’ve got a cue on the phone. Next question on the

phone?

Operator: Again, if you would like to ask a question, press star one. And there are no

further questions via the phone line.

Tom Gibson: OK. Unless I go for another -- OK. We’ll -- go ahead.

Female: (Inaudible)?

Male: Tom, you want to...

Tom Gibson: Yes, sure. The U.S. E.U. negotiation is just at the beginning. The -- you

know, we really haven’t started that yet. There’s a consultation process that

goes on before that begins in earnest. There are no tariffs between the U.S.

and the E.U. on steel.

I think that we supplied comments to the U.S. government on the -- on the

issue. One of the issues -- big issues that seems to be out there is regulatory

harmonization. To make it easier, one objective is to make it easier, let’s say,

for an automobile producing in the United States to be exported to Europe, but



05-16-2013/1:30 p.m. ET


to have regulations in both countries that are equivalent, and that would be --

that would be a good thing for the U.S. auto makers that desired ship to

Europe.

There’s -- you know, there’s an issue in Europe right now with some of the

regulatory policies that they’ve adopted, but if regulatory harmonization

means adoption here of some European-style regulations in other areas and

how they regulate factories and sources of emissions, that can be a real

problem.

So we have some questions there and we’re going to -- we’re going to be

heavily involved. We’ve been in consultations with our government trade

negotiators. We look forward to having the U.S. T.R. confirmed. (Michael

Kroman’s) been nominated to be U.S. T.R. The hearings haven’t been

scheduled yet to the best of my knowledge. We’re hoping that’ll be a quick

negotiation because they need the leadership there in place in order to be able

to accomplish this even while they have the TPP negotiations going on, which

have become -- have a very aggressive deadline and have become, I think, a

little bit more complicated with the -- with the addition of Japan. It will

become a formal part of negotiations later this summer.

That’s it? OK. Well, I want to thank you all for attending the press briefing

and look forward to seeing you at the rest of the conference. Thank -- and

thank my colleagues, thank my bosses here for participating. Thank you very

much.

Sergei A. Kuznetsov: Thank you.

Chuck Schmitt: Thank you.

Operator: Thank you. This does conclude today’s conference call. You may now

disconnect.

END

American Iron and Steel Institute Moderator: Lisa Harrison .../media/Files/AISI/Press...

Documents

Transcript of American Iron and Steel Institute Moderator: Lisa Harrison .../media/Files/AISI/Press...