Dollars and “Sense” “The Sequel” · 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

John NolanJohn NolanVice PresidentVice President

Steel Dynamics, Inc.Steel Dynamics, Inc.Fort Wayne, IN USAFort Wayne, IN USA

Dollars and “Sense”Dollars and “Sense”“The Sequel”“The Sequel”

Steel 201/Foreign Exchange/Currency


More Than Two Hundred Steel Consuming Companies/Organizations More Than Two Hundred Steel Consuming Companies/Organizations Sign Letter to President Bush Urging Immediate Termination of thSign Letter to President Bush Urging Immediate Termination of the e Steel TariffsSteel Tariffs

Wednesday October 29, 5:08 pm ETWednesday October 29, 5:08 pm ET

WASHINGTON, Oct. 29 /WASHINGTON, Oct. 29 /PRNewswirePRNewswire// ---- More More than 200 companies and organizations than 200 companies and organizations representing steelrepresenting steel--consuming and related consuming and related industries from across the United States industries from across the United States submitted a letter today to President George W. submitted a letter today to President George W. Bush asking that the Section 201 steel tariffs Bush asking that the Section 201 steel tariffs "be terminated at the earliest opportunity…" "be terminated at the earliest opportunity…"



…… nearly one quarter of steelnearly one quarter of steel--consuming consuming companies reported to the ITC that their companies reported to the ITC that their customers had shifted purchasing of finished customers had shifted purchasing of finished parts overseas as a result of the steel tariffsparts overseas as a result of the steel tariffs, the , the letter states, "this is business that has left the letter states, "this is business that has left the U.S. in the few short months that the tariffs have U.S. in the few short months that the tariffs have been in place been in place ---- business likely never to return.“business likely never to return.“

Source: US Department of Commerce, Bureau of Economic AnalysisSource: US Department of Commerce, Bureau of Economic Analysis

• Fact Fact ---- US steel consuming industries are 14.5 % of GDPUS steel consuming industries are 14.5 % of GDP•• Fact Fact ---- US apparent steel consumption is 0.5 % of GDPUS apparent steel consumption is 0.5 % of GDP

•• Let’s do some math.Let’s do some math.

Source: US Department of Commerce, Bureau of Economic AnalysisSource: US Department of Commerce, Bureau of Economic Analysis

• Fact Fact ---- US steel consuming industries are 14.5 % of GDPUS steel consuming industries are 14.5 % of GDP•• Fact Fact ---- US apparent steel consumption is 0.5 % of GDPUS apparent steel consumption is 0.5 % of GDP

••The math The math ----•• Steel, direct or processed, domestic or imported,Steel, direct or processed, domestic or imported,

represents represents 3.4 cents3.4 cents of every steel consuming industryof every steel consuming industryrevenue dollar.revenue dollar.



…… “this is business that has left the U.S. “this is business that has left the U.S. in the few short months that the tariffs in the few short months that the tariffs have been in place have been in place ---- business likely business likely never to return.”never to return.”

How much did the 201 tariffs impact that 3.4 cents?How much did the 201 tariffs impact that 3.4 cents?

How much did the 201 tariffs impact that 3.4 cents?How much did the 201 tariffs impact that 3.4 cents?(Statistical source: US Department of Commerce)(Statistical source: US Department of Commerce)

•• 2H02/CY03 imports 25% of apparent consumption …2H02/CY03 imports 25% of apparent consumption …–– that’s 42 million of 168 million tons consumedthat’s 42 million of 168 million tons consumed

•• 201 imports were 75% of total imports201 imports were 75% of total imports•• Mexico, Canada, developing countries excluded … Mexico, Canada, developing countries excluded … –– that’s 50% of the 75%that’s 50% of the 75%–– 201 imports were 37.5% of total imports201 imports were 37.5% of total imports

•• Other product exclusions were 10% of total importsOther product exclusions were 10% of total imports–– netnet 201 imports were 27.5% of total imports or…201 imports were 27.5% of total imports or…

7.7 million tons annualized 7.7 million tons annualized


•• 201 tariffs averaged 22% during the 1201 tariffs averaged 22% during the 1stst 18 months18 months

•• Do the math again …Do the math again …–– total imports were 25% of apparent consumptiontotal imports were 25% of apparent consumption–– covered 201 Imports were 27.5% of total importscovered 201 Imports were 27.5% of total imports–– 201 tariffs were 22%201 tariffs were 22%–– 25% times 27.5% times 22% times 3.4 cents = 0.05 cents25% times 27.5% times 22% times 3.4 cents = 0.05 cents••that’s $2.1 billion on $1.45 trillion in annualized US that’s $2.1 billion on $1.45 trillion in annualized US

Manufacturing GDP revenues or …Manufacturing GDP revenues or …

$272.73 per ton for 7.7 million 201 tons$272.73 per ton for 7.7 million 201 tons


••Do the math again …Do the math again …–– 25% times 27.5% times 22% times 3.4 cents = 0.05 cents25% times 27.5% times 22% times 3.4 cents = 0.05 cents••that’s $2.1 billion on $1.45 trillion in annualized US that’s $2.1 billion on $1.45 trillion in annualized US


$75.00 per ton for 28 million annualized$75.00 per ton for 28 million annualizedtons of total steel importstons of total steel imports


Do the math again …Do the math again …–– 25% times 27.5% times 22% times 3.4 cents = 0.05 cents25% times 27.5% times 22% times 3.4 cents = 0.05 cents••that’s $2.1 billion on $1.45 trillion in annualized US that’s $2.1 billion on $1.45 trillion in annualized US


$18.75 per ton for 112 million annualized$18.75 per ton for 112 million annualizedtons of total steel consumptiontons of total steel consumption

•• Pic of ChinaPic 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.








RUBLE/DOLLAR RATE: NO MORE UPS AND DOWNS?RUBLE/DOLLAR RATE: NO MORE UPS AND DOWNS?

MOSCOW, October 29, 2003. (RIA MOSCOW, October 29, 2003. (RIA NovostiNovosti)) -- The ruble/US dollar rate The ruble/US dollar rate will hardly see any big changes in the near future … if the Centwill hardly see any big changes in the near future … if the Central Bank of ral Bank of Russia does not intervene, the available balance of payments wilRussia does not intervene, the available balance of payments will get the l get the dollar down vs. the ruble … dollar down vs. the ruble … the Central Bank is acquiring ever more the Central Bank is acquiring ever more dollars to build up its currency reserve, and does not put up widollars to build up its currency reserve, and does not put up with rate th rate fluctuationsfluctuations … the rate will be having token ups and downs close to … the rate will be having token ups and downs close to RUR30/$1RUR30/$1 … stronger ruble will not harm the Russian economy.… stronger ruble will not harm the Russian economy.

PresentPresent--day ruble strengthening is smooth enough, and objectively linkedday ruble strengthening is smooth enough, and objectively linkedto the available balance, with exports spectacularly exceeding ito the available balance, with exports spectacularly exceeding imports … mports …

Unfortunately … those slides don’t tell the entire currency story …

The Longest Peacetime Economic ExpansionThe Longest Peacetime Economic Expansionin US History …in US History …

• Began in May of 1991.• Was preceded by a 50%

decline in the value of the US Dollar relative to the German Mark beginning in 1985.

• Restored over 1 million jobs to the durable goods manufacturing community.

• Was the “legacy” of Ronald Reagan’s Administration to the American people.



decline in the value of the US Dollar relative to the Japanese Yen beginning in 1985.





decline in the value of the US Dollar relative to the French Franc beginning in 1985.





decline in the value of the US Dollar relative to the British Pound beginning in 1985.



““Plaza Accord” Plaza Accord” –– The Group of 5The Group of 5September 22, 1985September 22, 1985

•• GermanyGermany•• JapanJapan•• FranceFrance•• United KingdomUnited Kingdom•• United StatesUnited States




• 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.



• 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



• Experienced a peak 60% increase in the strength of the Dollar relative to the French Franc near its end.





• Experienced a peak 20% increase in the strength of the Dollar relative to the British Pound near its end.



Does FX materially impact US manufacturing?Does FX materially impact US manufacturing?

For steel, make no mistake about it … the Russians are coming in the summer of 2004 !!!

Recent Dollar Related InitiativesRecent Dollar Related Initiatives•• Group of 7 statement from DubaiGroup of 7 statement from Dubai

•• Continued IMF/World Bank focus on currencyContinued IMF/World Bank focus on currency

•• US/TPSC hearings on ChinaUS/TPSC hearings on China’’s WTO Accessions WTO Accession

•• Pending Congressional legislation (as of Mar Pending Congressional legislation (as of Mar ‘‘04)04)–– Shumer et al, Senate Shumer et al, Senate –– China currency billChina currency bill

–– English et al, House English et al, House –– China currency billChina currency bill

•• John Snow testifies before Senate Banking CommitteeJohn Snow testifies before Senate Banking Committee

•• Treat currency manipulation an export subsidy/CVDTreat currency manipulation an export subsidy/CVD

•• The real possibility of a 301 on currencyThe real possibility of a 301 on currency

So what is a 301 on currency?So what is a 301 on currency?

• 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!!”"Prospects continue to improve!!”



John NolanJohn NolanVice PresidentVice President

Steel Dynamics, Inc.Steel Dynamics, Inc.Fort Wayne, IN USAFort Wayne, IN USA

Thank you very much!!


Documents

Dollars and “Sense” “The Sequel” · 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