New Report Preview

February preliminary steel imports rose a surprising 5.6% to 2.69 million tons (mt) from 2.55 mt in January, mainly due to an unexpected surge of imported semi-finished steel from Brazil, which we estimate increased nearly 80%.  Finished steel imports actually dropped 0.4% in the month, while semi-finished as a total rose 31.1%.  We generally compare preliminary monthly data to prior month preliminary data – however, in January there was an unusually meaningful +10.5% revision that will likely leave final February imports down sequentially.

Brazilian semis are running up nearly 45% over the past eight months compared to 1H 2011 and we believe most of the tonnage is headed to Thyssen’s Alabama rolling mill. The average run-rate for the last three months is some 295,000 tons per month, or around 75% of the mill’s ultimate rolling capacity.

Meaningful import increases were also seen for wire rod (up 100.1%) and sheet (up 9.5%).  The largest decrease on a tonnage basis was for line pipe, which fell 28.2%, while declines were also seen for heavy structural shapes (down 30.4%), cut-to-length plate (down 16.5%), rebar (down 9.1%) and OCTG (down 5.8%).

Our full report is available to subscribers and provides further thoughts on February imports as well as our outlook for the coming months and implications for steel equities.

For a free trial, please contact us.

Steel Market Production Cuts – Commercial Metals is planning an outage at its Birmingham, AL steel mill in early May. The mill produces structural shapes and has 800,000 tpy of raw steel capacity and 600,000 tpy of rolling capacity. The outage is likely slated for the week of May 7.

Steel Market Production Increases – Romanian longs producer Ductil Steel has restarted operations at its Otelo Rosu works following a two week stoppage.

Steel Market Production Increases – Japanese producer Nippon Steel has announced that it is increasing capacity at its number 4 blast furnace at its Yawata works by 18 percent. The upgrade is expected to be initiated during the 4^th quarter of 2012 and completed within 85 days.

Sources: American Metal Market and Steel Orbis

New Report Preview

February preliminary steel imports rose a surprising 5.6% from 2.55 million tons (mt) in January to 2.69 mt, mainly due to an unexpected surge of imported semi-finished steel from Brazil, which we estimate increased nearly 60%.  Finished steel imports actually dropped 0.4% in the month, while semi-finished as a total rose 31.1%.

Meaningful import increases were also seen for wire rod (up 100.1%) and sheet (up 9.5%).  The largest decrease on a tonnage basis was for line pipe, which fell 28.2%, while declines were also seen for heavy structural shapes (down 30.4%), cut-to-length plate (down 16.5%), rebar (down 9.1%) and OCTG (down 5.8%).

Our full report is available to subscribers and provides further thoughts on February imports as well as our outlook for the coming months and implications for steel equities.

For a free trial subscription, please contact us.

New Report Preview

Our Advance/Decliner Index came in at 73% this week, essentially flat compared with last week’s 74% (any reading over 50 means that the number of price increases exceeded the number of declines).

Our China Index hit the highest level since last August 2011 – when the slowdown started – rising from 80% to 92% as Chinese steel prices strengthened despite increased noise of a macroeconomic slowdown.  The nominal drop was driven by our Ex-China Index falling for the second straight week from 72% to 68% mainly due to weaker prices in the MENA and CIS regions.

Our full report provides further thoughts about global steel pricing trends and our outlook as well as implications for steel equities.

For a free trial subscription, please contact us.

Steel Market Production Cuts – Steel Production has been temporarily shut down at Erasteel Söderfors in Sweden since March 20^th due to the spill of a thirty tonne charge. Production is scheduled to restart soon.

Steel Market Production Increases – Nucor Corp.’s steel mini-mill in Marion, Ohio has resumed production after 6 days offline due to an unexpected power outage. The company reports that they took advantage of the outage to do maintenance that had been planned during an outage scheduled for May 13^th.

Steel Market Production Increases – ArcelorMittal in Duisburg, Germany, is near completion for the hot commissioning stage of its new wire rod mill in Ruhrort. The mill has a capacity of 690,000 tpy and is expected to exit its start-up phase in May or June.

Steel Market Production Increases – Chu Kong Petroleum & Natural Gas Steel Pipe Holdings, a major Chinese linepipe maker, has announced that it intends to add another 660,000 tpy of SSAW capacity in the next year. This expansion will bring Chu Kong’s total capacity to 2.71 mtpy.

Sources: Steel Business Briefing, American Metal Market

Weekly domestic raw steel production increased 1.8% to 1.947 million tons (mt) for the week ending March 24, 2012 and was up 5.6% against the year-ago level. The highest production since the recession began was 1.959 mt on March 10, 2012, while the lowest was 0.8 mt on December 27, 2008.

The capacity utilization rate also posted an increase, coming in at 78.8% compared to 77.4% last week and higher than the year-ago level of 75.4%. The highest capacity utilization rate since the recession began was 79.3% on March 10, 2012, while the lowest was 33.5% on December 27, 2008.

We attended Steel Business Briefing’s Steel Markets North America 2012 conference last week, and one of the most interesting parts of the conference was the live interactive pricing and demand survey which showed that most participants anticipate further increases in steel prices, scrap prices and steel demand.

One observation we found fascinating was that respondents were far more optimistic on HRC pricing than rebar, with most participants forecasting an uptick as high as 18% for HRC and just 10% for rebar, despite entering peak construction season and people continuing to talk about new sheet capacity impacting the domestic market.

Some 67% of respondents expect hot-rolled sheet prices to peak at $800/ton or below, while 15% expect prices to peak at $850/ton, 11% believe prices have already peaked, and 7% think prices will peak at over $900/ton.  At the time of the conference, domestic HRC ranged from $680-690/ton.

For rebar, some 47% of respondents expect prices to peak at $800/ton or below, while 31% believe rebar prices have already peaked at the $730-750/ton range.  Some 19% of participants are forecasting rebar prices to peak at $840/ton, with 3% expecting rebar to peak at over $880/ton.

Some 40% of respondents expect overall steel prices to peak in 2Q, while 27% of participants are forecasting prices to peak in 1Q as well as 3Q, with the remaining 6% expecting prices to peak in 4Q.

On the scrap front, some 47% of respondents believe that shredded scrap prices will peak at $500/ton or below, while 38% expect prices to reach $525/ton.  At the time of the conference, domestic shredded scrap ranged from $440-445/ton.

Some 60% of respondents expect steel demand to strengthen over the next six months, while 20% expect stable demand and just 9% believe demand is set to fall.  Some 11% believe demand will rise and fall, but did not know which trend would play out.