AWPA member company representatives recently met for their Annual Meeting - this time in the Arizona desert. Over 200 attendees from 80 companies gathered in Scottsdale to meet with old friends and colleagues, learn more about the industry, and obtain insight on what the future might bring for the wire and wire products industry. Record high attendance, sunny skies and a perfect venue made this annual meeting one of the best ever - according to attendees. The two-day General Session featured many interesting speakers discussing such diverse topics as China, the new Congress, rod supply and an economic outlook. Janet Kopenhaver, AWPA's Director of Government Affairs, reviewed the new Congress and what trade issues are on the horizon for the 109th Congress. Among the issues that must be addressed: an extension of the President's Trade Promotion Authority (TPA); continued US membership in the World Trade Organization (WTO); passage of the Central American Free Trade Agreement (CAFTA); and various other free trade agreements. Following Kopenhaver was a panel on the state of the North American Rod Supply. AWPA thanks John Goodwin, CEO, International Steel Group; John Foster, Group Vice President, Ferrostaal Inc.; and Bob Moffitt, Vice President, Purchasing, Davis Wire Corporation for participating in this panel.
AWPA member company representatives discuss
the state of the North American rod supply. From left to right: John Goodwin,
CEO, International Steel Group; Bob Moffitt, Vice President, Purchasing,
Davis Wire Corporation; John Foster, Group Vice President, Ferrostaal Inc.;
and Fred Waite, AWPA Counsel, moderator.
Joe Downes, President, Industrial Materials Segment, Sterling Steel talks about his rod mill. Among the highlights: scrap prices for the industry are expected to start declining starting in 2006, after hitting a high this year of $255 per metric ton. Coke prices are also expected to start dropping. However, iron ore prices are expected to continue rising pretty dramatically over the next couple of years. Hot rolled sheet prices are expected to rise this year to $598 per metric ton - up from $582 in 2004, but they are expected to decline quite a bit in 2006 - down to $486 per metric ton. The dollar has also been declining against the euro in recent months. The industry itself still is seeing consolidation, the growth of the mini mills and integrated change. Production is expected to continue rising worldwide, with consumption largest in Asia (53%). North America accounts for about 7% of world wire rod consumption. Both domestic and import wire rod pricing has declined somewhat over the last couple of months. AWPA has a tradition of hosting rod mill representatives each year, and that trend continued with Joe Downes, President, Industrial Materials Segment, Sterling Steel and Tom Keller, Executive Vice President, Macsteel International. Downes described Sterling Steel's facility in Illinois. The company is on 172 acres and comprises a one million ton melt shop and 450,000 annual ton rod mill. Plans for Sterling Steel in the future include the implementation of a World Class Maintenance program; upgrading the plant infrastructure; installation of endless rolling process in 2005; and increase throughput by 20% in 2006. Keller offered similar information on his company. China trade was an important issue on everyone's mind and our program addressed it in several ways. World Steel Dynamics, a leading prognosticator in the steel industry, provided us with interesting rod production data for China. Traditionally we have an economist, and a good portion of his presentation also provided economic insight on the impact of the China economy on world trade. Of course, the members themselves spoke about this issue with one another, at every opportunity, along with other issues of importance for which they wanted feedback. Dr. F. John Mathis from Thunderbird, the Garvin School of International Management served as our economist this year. China accounts for 4% of the world's GDP, and in 2004 its real growth was in excess of 8%. Mathis stated that China's growth is "vulnerable and potentially explosive," but it is expected that the country will settle into stable growth of 7-8% over the next 3-5 years. Growth in China is centered in 10% of its economy - the export-driven sector. China has a dual economy - a buoyant export sector and a depressed domestic sector. However, China is undergoing urbanization, and this trend is expected to accelerate and create demand for infrastructure. One interesting note: most of China's trade surplus is accounted for by other Asian countries. The US, on the other hand, is in its third year of a growth cycle. Unemployment is at 5.5% and job growth is at a normal recovery rate of 3%. There has been slow growth in hourly earnings in the US, but labor productivity is growing dramatically. Health insurance costs continue to be a constraining factor. The US deficit is growing, currently at 5% of GDP. The key indicator of growth - real gross private non-residential investment - is only at 7%, whereas 10% is the level needed to jump-start growth. Fixed investment is not growing fast enough, but real GDP growth is sustainable and stable in the 3.5-4% range. Inflation is a non-issue at a level way below 3%, but dollar depreciation is expected to continue. Why is growth slowing in 2005? Several factors are contributing to this phenomenon, including high oil prices, slow job/wage growth, rising interest rates, uncertainty caused by Iraq and the war on terrorism, and the continuing weak recovery in Europe and Japan. Finally, attendees were given an enlightening look at the situation in China by Joe Innace, Managing Director of World Steel Dynamics. Innace informed the audience that global steel demand continues to rise - 7.6% in 2004 and expected 6% in 2005. Global steel production continues to meet demand, but is being hurt by high steel scrap prices and rising ocean freight rates. In 2005, we can expect to see a Chinese steel market that remains strong; a good rebound in US new orders; seasonal forces that remain positive; and a weak dollar. Innace predicts six events will be happening this year no matter what happens in China: 1. One-year contract sheet prices will rise sharply. 2. Home market prices will be on the downside. 3. Iron ore and coking coal prices will be much higher. 4. Scrap prices will probably decline. 5. Coke prices will be lower for China. 6. Profits will be good in 2005. China's rod production is expected to rise to 44.6 million tons in 2005, up from 40.6 million in 2004. The country's crude steel production will be 300 million tons in 2005, and has increased 20% over the last four years. China's steel market remains strong due to inventory liquidation, and should remain strong through 2005. This year's annual theme dinner brought the wild side out of the wire industry! Attendees surprised us this year by letting loose at the "Biker Blowout" by getting tattoos and posing in their "threads" on a Harley Davidson bike. No attendee was without a bandana or a do-rag and some totally outdid themselves... Our very own Doug King took the award for "King of the Road" while potential member Shelly Spittler was crowned "Harley Diva".
AWPA Legal Counsel Kim Young and Fred Waite
let it all hang out with their tattoos.
During the evening we took time to acknowledge many outstanding individuals. H O Woltz, III of Insteel Industries was presented with the presidential eagle and thanked for his outstanding leadership. For the fourth year, a recipient was selected to receive the Max Moore award. The Moore family, along with Kimberly Korbel, AWPA Executive Director, presented the Max Moore Entrepreneurial Spirit Award to John Mueller, Laidlaw Corporation. Congratulations John!
John Mueller, Laidlaw Corporation (center)
accepts the Max Moore Award from Kimberly Korbel, AWPA Exeuctive Director
(left) and Pat Moore.
The AWPA Sports Day brought many out to the course and the courts for a day of competition and fun. Some even tried their hand at fishing (yes, fishing), fly-fishing that is. We would like to congratulate the following individuals for their athleticism and maybe a little bit of luck...
From left to right: Jochen Koch, Morgan-Koch
Corporation, Diane Groom, Michael Huhndorf, Tree Island Wire USA, Emiliano
Mora, Arcelor International America, Stephen Mazak, Bekaert Corporation,
Kerrie Johnson, Jan Sorige, Enkotec Company, Frank Lewitsch, Stemcor USA.
Golf - Top Members Foursome Bill Snyder, American Spring Wire Milt Magnus, M&B Metals Products Keith Martin, Gerdau Ameristeel Alberto Cervino, GCR Eurodraw SPA Longest Drive Closest to the Pin John King, King Steel Bill Hillpot, WireTech, Inc. Tennis - First Place Michael Huhndorf, Tree Island Wire USA Fly Fishing - "Onliest" Fist Mary Jane Martin A big thanks to all of the sporting chairs: Mitch Presser, Ivaco Rolling Mills for helping with the golf tournament; Jan Sorige, TI Industries Ltd., for his resilience on the courts and John Foster who found fishing in the desert.
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