Dollars and Sense The Sequel. John Nolan Vice President Steel Dynamics, Inc. Fort Wayne, IN USA

Transcription

1 Dollars and Sense The Sequel John Nolan Vice President Steel Dynamics, Inc. Fort Wayne, IN USA

2 Dollars and Sense The Sequel Steel 201/Foreign Exchange/Currency

3 More Than Two Hundred Steel Consuming Companies/Organizations Sign Letter to President Bush Urging Immediate Termination of the Steel Tariffs Wednesday October 29, 5:08 pm ET WASHINGTON, Oct. 29 /PRNewswire/ PRNewswire/ -- More than 200 companies and organizations representing steel-consuming and related industries from across the United States submitted a letter today to President George W. Bush asking that the Section 201 steel tariffs "be terminated at the earliest opportunity "

4 More Than Two Hundred Steel Consuming Companies/Organizations Sign Letter to President Bush Urging Immediate Termination of the Steel Tariffs Wednesday October 29, 5:08 pm ET nearly one quarter of steel-consuming companies reported to the ITC that their customers had shifted purchasing of finished parts overseas as a result of the steel tariffs,, the letter states, "this is business that has left the U.S. in the few short months that the tariffs have been in place -- business likely never to return.

5 Fact -- US steel consuming industries are 14.5 % of GDP Fact -- US apparent steel consumption is 0.5 % of GDP Let s do some math. Source: US Department of Commerce, Bureau of Economic Analysis

6 Fact -- US steel consuming industries are 14.5 % of GDP Fact -- US apparent steel consumption is 0.5 % of GDP The math -- Steel, direct or processed, domestic or imported, represents 3.4 cents of every steel consuming industry revenue dollar. Source: US Department of Commerce, Bureau of Economic Analysis

7 More Than Two Hundred Steel Consuming Companies/Organizations Sign Letter to President Bush Urging Immediate Termination of the Steel Tariffs Wednesday October 29, 5:08 pm ET this is business that has left the U.S. in the few short months that the tariffs have been in place -- business likely never to return. How much did the 201 tariffs impact that 3.4 cents?

8 How much did the 201 tariffs impact that 3.4 cents? (Statistical source: US Department of Commerce) 2H02/CY03 imports 25% of apparent consumption that s 42 million of 168 million tons consumed 201 imports were 75% of total imports Mexico, Canada, developing countries excluded that s 50% of the 75% 201 imports were 37.5% of total imports Other product exclusions were 10% of total imports net 201 imports were 27.5% of total imports or 7.7 million tons annualized

9 How much did the 201 tariffs impact that 3.4 cents? 201 tariffs averaged 22% during the 1 st 18 months Do the math again total imports were 25% of apparent consumption covered 201 Imports were 27.5% of total imports 201 tariffs were 22% 25% times 27.5% times 22% times 3.4 cents = 0.05 cents that s $2.1 billion on $1.45 trillion in annualized US Manufacturing GDP revenues or $ per ton for 7.7 million 201 tons

10 How much did the 201 tariffs impact that 3.4 cents? Do the math again 25% times 27.5% times 22% times 3.4 cents = 0.05 cents that s $2.1 billion on $1.45 trillion in annualized US Manufacturing GDP revenues or $75.00 per ton for 28 million annualized tons of total steel imports

11 How much did the 201 tariffs impact that 3.4 cents? Do the math again 25% times 27.5% times 22% times 3.4 cents = 0.05 cents that s $2.1 billion on $1.45 trillion in annualized US Manufacturing GDP revenues or $18.75 per ton for 112 million annualized tons of total steel consumption

12 Pic of China 2003 by Prof. Werner Antweiler, University of British Columbia, Vancouver BC, Canada. Permission is granted to reproduce the above image provided that the source and copyright are acknowledged.

13 2003 by Prof. Werner Antweiler, University of British Columbia, Vancouver BC, Canada. Permission is granted to reproduce the above image provided that the source and copyright are acknowledged.

14 2003 by Prof. Werner Antweiler, University of British Columbia, Vancouver BC, Canada. Permission is granted to reproduce the above image provided that the source and copyright are acknowledged.

15 2003 by Prof. Werner Antweiler, University of British Columbia, Vancouver BC, Canada. Permission is granted to reproduce the above image provided that the source and copyright are acknowledged.

16 2003 by Prof. Werner Antweiler, University of British Columbia, Vancouver BC, Canada. Permission is granted to reproduce the above image provided that the source and copyright are acknowledged.

17 2003 by Prof. Werner Antweiler, University of British Columbia, Vancouver BC, Canada. Permission is granted to reproduce the above image provided that the source and copyright are acknowledged.

18 Pic of China 2003 by Prof. Werner Antweiler, University of British Columbia, Vancouver BC, Canada. Permission is granted to reproduce the above image provided that the source and copyright are acknowledged.

19 RUBLE/DOLLAR RATE: NO MORE UPS AND DOWNS? MOSCOW, October 29, (RIA Novosti) - The ruble/us dollar rate will hardly see any big changes in the near future if the Central Bank of Russia does not intervene, the available balance of payments will l get the dollar down vs. the ruble the Central Bank is acquiring ever more dollars to build up its currency reserve, and does not put up with rate fluctuations the rate will be having token ups and downs close to RUR30/$1 stronger ruble will not harm the Russian economy. Present-day ruble strengthening is smooth enough, and objectively linked to the available balance, with exports spectacularly exceeding imports i

20 Unfortunately those slides don t tell the entire currency story

21 The Longest Peacetime Economic Expansion in US History Began in May of Was preceded by a 50% decline in the value of the US Dollar relative to the German Mark beginning in Restored over 1 million jobs to the durable goods manufacturing community. Was the legacy of Ronald Reagan s Administration to the American people.

22 The Longest Peacetime Economic Expansion in US History Began in May of Was preceded by a 50% decline in the value of the US Dollar relative to the Japanese Yen beginning in Restored over 1 million jobs to the durable goods manufacturing community. Was the legacy of Ronald Reagan s Administration to the American people.

23 The Longest Peacetime Economic Expansion in US History Began in May of Was preceded by a 50% decline in the value of the US Dollar relative to the French Franc beginning in Restored over 1 million jobs to the durable goods manufacturing community. Was the legacy of Ronald Reagan s Administration to the American people.

24 The Longest Peacetime Economic Expansion in US History Began in May of Was preceded by a 40% decline in the value of the US Dollar relative to the British Pound beginning in Restored over 1 million jobs to the durable goods manufacturing community. Was the legacy of Ronald Reagan s Administration to the American people.

25 Plaza Accord The Group of 5 September 22, 1985 Germany Japan France United Kingdom United States

26 Pic of China 2003 by Prof. Werner Antweiler, University of British Columbia, Vancouver BC, Canada. Permission is granted to reproduce the above image provided that the source and copyright are acknowledged.

27 The Longest Peacetime Economic Expansion in US History Was disrupted in the summer of 1995 by the Clinton Administration s strong dollar policy. Experienced a 65% increase in the strength of the Dollar relative to the German Mark near its end. Concluded with the subsequent loss of 2.8 million US manufacturing jobs. Was not the legacy of Bill Clinton s Administration to the American people.

28 The Longest Peacetime Economic Expansion in US History Was disrupted in the summer of 1995 by the Clinton Administration s strong dollar policy. Experienced a peak 65% increase in the strength of the Dollar relative to the Japanese Yen near its end. Concluded with a subsequent loss of 2.8 million US manufacturing jobs. Was not the legacy of Bill Clinton s Administration to the American people

29 The Longest Peacetime Economic Expansion in US History Was disrupted in the summer of 1995 by the Clinton Administration s strong dollar policy. Experienced a peak 60% increase in the strength of the Dollar relative to the French Franc near its end. Concluded with a subsequent loss of 2.8 million US manufacturing jobs. Was not the legacy of Bill Clinton s Administration to the American people

30 The Longest Peacetime Economic Expansion in US History Was disrupted in the summer of 1995 by the Clinton Administration s strong dollar policy. Experienced a peak 20% increase in the strength of the Dollar relative to the British Pound near its end. Concluded with a subsequent loss of 2.8 million US manufacturing jobs. Was not the legacy of Bill Clinton s Administration to the American people

31 Does FX materially impact US manufacturing? For steel, make no mistake about it the Russians are coming in the summer of 2004!!!

32 Recent Dollar Related Initiatives Group of 7 statement from Dubai Continued IMF/World Bank focus on currency US/TPSC hearings on China s s WTO Accession Pending Congressional legislation (as of Mar 04) Shumer et al, Senate China currency bill English et al, House China currency bill John Snow testifies before Senate Banking Committee Treat currency manipulation an export subsidy/cvd The real possibility of a 301 on currency

33 So what is a 301 on currency? Pic of China 2003 by Prof. Werner Antweiler, University of British Columbia, Vancouver BC, Canada. Permission is granted to reproduce the above image provided that the source and copyright are acknowledged. Section 301, Trade Act of 1974 President empowered by Congress Foreign government focus Counters acts, practices, policies Unjustifiable Unreasonable Burden or restrict US commerce NAM driving this bus "Prospects continue to improve!!

34 Dollars and Sense The Sequel John Nolan Vice President Steel Dynamics, Inc. Fort Wayne, IN USA Thank you very much!!