This category includes establishments that manufacture metal additive alloys for both ferrous and nonferrous metals using electrometallurgical or metallothermic processes. Establishments primarily engaged in manufacturing electrometallurgical steel are classified in SIC 3312: Steel Works, Blast Furnaces (Including Coke Ovens), and Rolling Mills.
331112 (Electrometallurgical Ferroalloy Product Manufacturing)
331492 (Secondary Smelting, Refining, and Alloying of Nonferrous Metals (except Copper and Aluminum))
The following alloying metals are those most commonly used to enhance iron and steel: nickel, molybdenum, manganese, silicon, aluminum, phosphorus, calcium, sulfur, lead, and selenium. Tungsten carbide powder and spiegeleisen also are produced in this industry. Alloys have three main purposes: to eliminate undesired elements in a base metal; to add special characteristics, such as strength, heat resistance, and corrosion resistance; and to neutralize unwanted properties of a metal.
Electrometallurgical products firms were shipping about $968 million worth of products per year in the early 2000s. Nickel and molybdenum are the most common alloys produced in the industry. Nickel is used primarily to create stainless steel; molybdenum is used to strengthen steel for aerospace and other specialty steel applications. Specialty metals production accounts for about 65 percent of primary nickel consumption. About 75 percent of all molybdenum consumedin 1998 went into iron and steel, with major enduse applications as follows: machinery, 35 percent; electrical, 15 percent; and transportation, 15 percent.
North American metal workers have been strengthening and enhancing iron and steel with alloys since the 1600s. Only since World War II, however, has the mining and production of the alloying metals emerged as a significant industry. Since that time, the federal government has promoted the extraction and processing of various ferrous and nonferrous alloys as a means of insuring reserves for national defense and security.
Demand for alloy metals surged from the 1950s through the 1970s, as the U.S. economy expanded and new alloying technologies broadened the industry's market. The auto and capital equipment industries, particularly, became major consumers of ferroalloys during that period. By the end of the 1970s, the electrometallurgical industry employed about 6,000 workers and was shipping about $700 million worth of products each year.
As maturing markets, high production costs, and metal substitutes reduced U.S. steel production in the 1980s, growth of alloy demand slowed—despite the fact that the percentage of metals that used alloys continued to rise. The value of shipments ranged from $707 million in 1982 and $661 million in 1983 to $667 million in 1986. Employment in 1986 plummeted to 3,600 people.
As steel and other metal orders rose in the late 1980s, the alloy market rebounded, sending the value of shipments past $1.2 billion by 1988. Despite a huge increase in production tonnage, however, industry profitability sagged as the competitive and glutted market steadily eroded prices. The price of nickel, for instance, fell from $6.49 per pound in 1988 to about $3.55 by 1996. Similarly, molybdenum prices dropped to about $3.20 per pound in the late 1990s; it had traded at $7.00 to $8.00 per pound as recently as 1994. Therefore, the value of all electrometallurgical shipments remained at around $1.30 billion in 1996 and 1997.
Entering the 1990s, producers of ferrous and non-ferrous alloys expected a mild reprieve from glutted markets and faltering prices. However, nickel prices were expected to rebound only slightly, perhaps to $4.00 per pound. As the 1990s ended, there was an oversupply of nickel, leading to a sharp drop in prices. In 1998, prices averaged only around $2.20 per pound, with a 1999 price averaging $2.33 per pound.
Molybdenum was forecast to rise in price slightly by the end of the century, to $4.00 or $4.25. After holding steady at $4.50 per pound, prices dipped below $4.00 per pound, rebounded to $4.30 per pound, and then dropped to a low of $2.15 per pound in the late 1990s. In summer 1999 the price was $2.60 per pound.
U.S. consumption of molybdenum in steel applications dropped about 10 percent in 1998, prompting several North American producers to reduce production in 1999. World demand for molybdenum in alloys, including stainless steel, was expected to be about the same in 1999 and 2000 as in 1998. Increased usage in duplex steels was expected to compensate for reductions in other areas.
Producers expected little revenue growth going into the new century, as world steel production remained static. Through 2003 U.S. steel shipments were forecast to grow by only 1 to 2 percent. Weak demand globally, coupled with large inventories, were also expected to keep prices low and even to lead them to decline over a ten-year period. U.S. steel mill exports were expected to remain around the 1997 level of 5.4 million tons for the following two years.
Increased production of nickel-based superalloys in the late 1990s was expected to do little to bolster nickel's price due to the alloy's growing stockpile. In the late 1990s, an increase in stainless steel production increased nickel consumption. However, the resulting oversupply of stainless steel was expected to lead to a weakened nickel demand.
Stagnant prices at the end of the century were viewed against a backdrop of price-fixing accusations levied against some of the largest electrometallurgical products companies. One federal civil antitrust complaint was filed in the late 1990s against five silicon firms, alleging a price-fixing conspiracy to boost sales prices. Defendants in the suit were American Alloys Incorporated of New Haven, West Virginia; Applied Industrial Materials Corporation of Pittsburgh; Elkem Metals Company of Pittsburgh; Globe Metallurgical Incorporated of Cleveland, Ohio; and SKW Metals & Alloys of Niagara Falls, New York.
Elkem Metals Co. and American Alloys Inc. pleaded guilty to price-fixing violations of the Sherman Act in a U.S. Justice Department criminal suit. Criminal charges against SKW Metals & Alloys also were filed. Other civil suits were filed in the late 1990s, as well. Allegheny Teledyne, for example, filed lawsuits alleging price-fixing, fraud, and violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act against American Alloys Inc. and Globe Metallurgical Inc.
Total industry shipments in 2000 increased to $968 million from $940 million in 1999; however, this figure reflected a decline from 1998, when industry shipments were valued at $1.43 billion. The cost of materials increased from $551 million in 1999 to $575 million in 2000.
The largest producer in the industry in the late 1990s was Elkem Metals Company of Pittsburgh, Pennsylvania, with annual sales of $190 million. Founded in 1962, the company employed 2,000 workers in the mid-1990s, but that roster dropped to roughly 1,300 in the late 1990s as the steel industry increasingly looked to buy its ferroalloys overseas. Second-largest was Globe Metallurgical Inc. of Cleveland, Ohio, with other operations in Alabama and Oregon and a subsidiary in Ardingly, England. Globe's annual sales in 1998 were $160 million.
Other large electrometallurgical corporations in the late 1990s included Steel of West Virginia of Huntington, West Virginia, with estimated sales around $113 million; Thompson Creek Metals Company of Englewood, Colorado, with annual sales around $100 million; and American Alloys Inc. of New Haven, West Virginia, with annual sales around $50 million.
In 2000, the electrometallurgical products industry employed 3,234 workers, with 2,089 in production. Production workers earned an average of $18.21 per hour the same year, up from $15.60 in 1992.
However, because income growth in the industry comes largely from increased productivity, employment was expected to decrease or hold steady toward the turn of the century. The number of workers employed in most sectors of the industry was expected to decline by 10 to 50 percent by 2005. Similarly, every occupation in the steel industry was forecast by the Bureau of Labor Statistics to decline between 1994 and 2005. New manufacturing and information technologies that increase automation will yield most of the productivity gains.
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