Steel Manufacturers Association Annual Board of Directors Meeting Presented by The David J. Joseph...
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Transcript of Steel Manufacturers Association Annual Board of Directors Meeting Presented by The David J. Joseph...
Steel Manufacturers AssociationAnnual Board of Directors MeetingSteel Manufacturers AssociationAnnual Board of Directors Meeting
Presented by
The David J. Joseph CompanyFebruary 14 - 16, 2007
2
The David J. Joseph Company Corporate LocationsThe David J. Joseph Company Corporate Locations
3
Brokerage Offices and Mill Services LocationsBrokerage Offices and Mill Services LocationsWashington
Oregon
CaliforniaIdaho
Montana
Nevada
Wyoming
Utah
ArizonaNew Mexico
Colorado
North Dakota
South Dakota
Nebraska
Kansas
Oklahoma
Texas
Louisiana
Arkansas
Missouri
Iowa
Minnesota
Wisconsin
IllinoisIndiana
Michigan
Ohio
Kentucky
Tennessee
MississippiAlabama
Florida
Georgia
South Carolina
North Carolina
Virginia
West Virginia
Pennsylvania
MD
New York
Maine
VT
NH
MA
CT
DE
NJ
Ferrous Brokerage Offices
Mill Services Sites 1/2007
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The David J. Joseph Company Processing RegionsThe David J. Joseph Company Processing Regions
1/2007
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Busheling vs. Shredded CompositesBusheling vs. Shredded Composites
sww2a
-50
0
50
100
150
200
250
300
350
400
450
03 04 05 06 07
Do
llars
Per
Gro
ss T
on
-50
0
50
100
150
200
250
300
350
400
450D
olla
rs Per G
ross Ton
Busheling vs. Shredded Composites
Busheling
shredded
Shredded
Bush vs. Shred
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Steel EconomySteel Economy
► Historically, U.S. GDP below 2.89% has resulted in a contraction in steel usage
► In the 4th quarter of 2006, producers reduced production to react to build up of inventories
► U.S. demand for raw materials to produce steel declined► Impact on domestic commodity prices► Export market helped determine domestic prices and acted as pricing
floor
7
0
2
4
6
8
10
12
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J2003
F M A M J J A S O N D J2004
F M A M J J A S O N D J2005
F M A M J J A S O N D J2006
F M A M J J A S O N D
Mill
ions
of
Net
Ton
s
Steel Service Center Inventories2003 - 2006
Tight supplies rising steel prices double orders inventory build.Inventories at Service Centers rose 23% from April 2004 to April 2005, then declined by 18% by year end. Inventories rose 22% from Jan-Oct 2006 before declining slightly in November.
Tight supplies rising steel prices double orders inventory build.Inventories at Service Centers rose 23% from April 2004 to April 2005, then declined by 18% by year end. Inventories rose 22% from Jan-Oct 2006 before declining slightly in November.
SmewsStats/SVC INV
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Significant growth in demand was met by developing new supplies and by re-orienting to domestic markets scrap previously exported.Significant growth in demand was met by developing new supplies and by re-orienting to domestic markets scrap previously exported.
Millions NT
Est.
1991 2001 2002 2003 2004 2005 2006
46 64 65 63 69 66 70 Domestic Demand
10 8 10 12 13 15 14 Export
56 72 75 75 82 81 84 Total Demand
54 62 64 65 67 67 67 Domestic Scrap Production
<1 1 <1 <1 <1 <1 <1 Domestic Pig & DRI
2 9 11 10 15 13 17 Import Scrap, Pig & DRI
0 0 0 0 0 0 0 Balance
Market Clears
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FRD Major Currencies Dollar Index vs. ScrapFRD Major Currencies Dollar Index vs. Scrap
frb1
FRB Major Currencies Dollar Index and IA Shredded Composite
75
85
95
105
115
125
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
FR
B M
ajor
Cur
renc
ies
Dol
lar
Inde
x 19
73 =
100
30
60
90
120
150
180
210
240
270
300
330Iron A
ge Shredded C
omposite
U.S. DollarFRB Index(left axis)
IA Shredded Composite(right axis)
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Shredder Capacity + Planned AdditionsShredder Capacity + Planned Additions
Shredder operations and capacity has increased nearly 25% Shredder operations and capacity has increased nearly 25% since the early 2000’s. Announced new shredders and since the early 2000’s. Announced new shredders and planned increases to existing operations will add planned increases to existing operations will add approximately 240,000 tpm of shredding capacity in the next approximately 240,000 tpm of shredding capacity in the next couple of years.couple of years.
Normal # Shredders Production
2002 – 04 205 1.7 M/tons per month2006 208 2.1 M/tons per month
Planned:New 14 180,000Incremental 3 60,000
11
Advanced TechnologiesAdvanced Technologies
Eddy Current
Sandflo
Gamma Metrics
12
Residue Pricing ChartResidue Pricing Chart
45.00
55.00
65.00
75.00
85.00
95.00
105.00
Jan2004
Mar May Jul Sep Nov Jan2005
Mar May Jul Sep Nov Jan2006
Mar May Jul Sep Nov Jan2007
Cen
ts p
er P
ound
AMM NF Auto Shred Twitch (90% Alum)
Platts US Auto Shreds/Twitch
Platts US LG Auto Shreds
ALUMINUM AUTO SHREDAmerican Metal Market & Platts Metals Week
2004 - 2007
Notes: AMM Secondary Smelter prices are first effective, high side.Platts prices are monthly averages of high side prices.
13
TransportationTransportation
► Throughout scrap industry, significant investments continue to be made in transportation assets
► Increasingly becoming a part of “total investment capital” versus an outsourced service
► Transportation shortages have been a primary driver of market volatility
14
Metal Management Alter Trading PSCMar 2006 – Morris Bros. Feb 2006 – Max Phillips & Sons Jan 2007 – Akron RecyclingMay 2006 – Omni-E. Chicago Jul 2006 – Becker I & M
Sep 2006 – Gopher State Scrap & Metal EMRSchnitzer Steel Jan 2007 – Samuels Recycling May 2006 – Southern Recycling
Aug 2006 – Advanced Recycling Jun 2006 – Camden Iron & Metal Carolina Recycling Oct 2006 – Great Western I&M
OmniSource Mar 2006 – Columbia Steel & Metal Mar 2006 – K&F Industries Sep 2006 – merging w/Atlantic Scrap Proc River Metals RecyclingJan 2007 – Mervis I & M Oct 2006 – Tri-State ServicesJan 2007 – Capital City Shredders Cycle Systems
Dec 2006 – Gem City Iron Trademark Metals RecyclingCommercial Metals Mar 2006 – Recycling Center of Palm Beach
Jun 2006 – Yonack I & M Smorgon Steel Oct 2006 – Scrap-All. Inc.Dec 2006 – Industrial Metal Recyclers
Gerdau Ameristeel Texas Port RecyclingJan 2006 – Porter Bros. Ferrous Processing & Trading Feb 2006 – Northwest RecyclingMar 2006 – Fargo I & M Jan 2007 – M. Weingold & Co.
Selected Current Scrap ConsolidationsSelected Current Scrap Consolidations
15
Scrap FuturesScrap Futures
► Primary reasons it hasn’t (won’t ?) occur:► Traded products must be universally acceptable
►Ferrous scrap qualities / traits vary from region to region► Liquidity requirement
►Speculators need a liquid financial market ►Credit-worthiness of market participants►Private nature of scrap industry limits the availability of financial information
► Regionalization►Ferrous scrap more freight sensitive than many other commodities (i.e., low value
to weight ratio)►Physical attributes / qualities of scrap vary from region to region
► Price Discovery Mechanism►There must be a Buyer / Seller of last resort (inventory must be held)