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Recent Developments in
the NAFTA Steel Industry
OECD Steel Committee Meeting
Paris
September 9, 2016
NAFTA Macroeconomic Data
2
Gross Domestic Product (GDP)
Percent Change (Y-O-Y)
2011 2012 2013 2014 2015 2016*
U.S. 1.6 2.2 1.7 2.4 2.6 1.5
Canada 2.5 1.7 2.0 2.5 1.1 1.3
Mexico 4.0 4.0 1.4 2.2 2.5 1.9
Industrial Production (IP) Percent Change (Y-O-Y)
2011 2012 2013 2014 2015 2016*
U.S. 2.9 2.8 1.9 3.7 1.3 -0.9
Canada 3.8 0.9 1.8 4.0 -1.3 -0.5
Mexico 3.4 2.9 -0.5 2.7 0.9 0.4
• Economic growth in
North America
remains weak, as
growth in U.S. and
Mexico is expected
to be less than
2015, while growth
in Canada remains
stagnant
• Industrial production
in the U.S. and
Canada is expected
to contract in 2016,
with lower expected
in Mexico Source: Blue Chip (U.S. and Canada), Mexico Economic Outlook Second
Quarter 2016, BBVA Research
*2016 Forecast
Offshore Finished Imports Continue to Capture Significant Market Share in NAFTA
3
Source: U.S. Census Bureau, AISI, Statistics Canada, Canacero
0%
5%
10%
15%
20%
25%
30%
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
2011 2012 2013 2014 2015
Fin
ish
ed
Im
po
rt M
ark
et
Sh
are
(%
)
Me
tric
To
ns
(M
T)
NAFTA Offshore Finished Steel Imports
Offshore Finished Imports % Market Share
NAFTA Production Declined by 9.2 Percent in 2015 and Remains Below Prior Year Levels
4
Source: AISI, Statistics Canada, Canacero
-
20
40
60
80
100
120
140
2011 2012 2013 2014 2015
Mil
lio
n M
etr
ic T
on
s (
MT
)
NAFTA Raw Steel Production
Mexico Canada United States
As Global Utilization Rates Weaken, NAFTA Remains Consistently Below World Levels
5 Source: AISI, Statistics Canada, Canacero, WorldSteel Association
60%
65%
70%
75%
80%
85%
2011 2012 2013 2014 2015
NAFTA and World Capacity Utilization Rates
World
NAFTA
6
NAFTA Steel Exports in Decline as Other Countries Increase Exports
Source: U.S. Census Bureau, Statistics Canada, Canacero
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
2011 2012 2013 2014 2015
Me
tric
To
ns
(M
T)
NAFTA Offshore Finished Steel Exports
NAFTA Direct Steel Trade Balance Deficit Surges to Approximately 28 Million MT in 2014 and 2015
7
Source: U.S. Census Bureau (Census), Statistics Canada, AISI, Canacero
-30,000,000
-25,000,000
-20,000,000
-15,000,000
-10,000,000
-5,000,000
0
2011 2012 2013 2014 2015
Me
tric
To
ns
(M
T)
Direct Steel Trade Balance
8
-25,000,000
-20,000,000
-15,000,000
-10,000,000
-5,000,000
02011 2012 2013 2014 2015
Ste
el C
on
ten
t in
Me
tric
To
ns
(M
T)
NAFTA Indirect Steel Trade Deficit with China and Rest of World (ROW)
Rest-of-World (ROW)
China
NAFTA Indirect Steel Trade NAFTA Steel Trade Deficit in Manufactured Goods Over 22 Million MT in 2015
Source: AISI, Global Trade Atlas
9
NAFTA Apparent Steel Use Declining Since Mid-2014
Source: U.S. Census Bureau (Census), Statistics Canada, AISI, Canacero
-
20
40
60
80
100
120
140
160
2011 2012 2013 2014 2015
Mil
lio
n M
etr
ic T
on
s (
MT
)
NAFTA Apparent Steel Use (ASU)
Mexico Canada United States
10
Since January 2015, employment in the steel industry in the U.S. has declined by 14,500 workers
Multiple U.S. facilities remain idled, including AK Steel Ashland Works (Kentucky), U.S. Steel Granite City Works (Illinois), and pipe/tube mills in Texas, Ohio and Alabama
Two major Canadian steel producers currently in bankruptcy (Essar Steel Algoma and U.S. Steel Canada)
Recent negative impacts of the global steel overcapacity to the Mexican steel sector include a 10 percent decline in employment over the past year and capacity utilization remains well below 70 percent in 2015-16
Impacts of Global Steel Overcapacity and Steel Import Surges
11
Steel Industry Employment in the U.S. Continues to Decline
130
135
140
145
150
155
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
2015 2016
Em
plo
ye
es
(T
ho
us
an
ds
)
Source: Bureau of Labor Statistics (BLS)
Steel Industry Employment in the U.S.
12
North American steel producers continue to be plagued by offshore imports, which are adversely affecting steel market conditions
—NAFTA remains one of the only regions with a significant direct and indirect steel trade deficits
Despite drops in volumes of offshore finished imports in 2015, import market share continues to be elevated, while production and employment levels have dropped significantly
Global steel overcapacity remains the biggest issue plaguing the North American and global steel markets
North American Steel Market Remains in Peril
