Steel Market Production Cuts – Czech plate and sections producer Evraz Vitkovice Steel shut down its heavy sections mill on March 31 due to a lack of demand for long products. The mill has an annual capacity of 120,000 tpy, representing 10% of Evraz Vitkovice Steel’s total capacity.

Steel Market Production Increases – Workers at Schnitzer Steel subsidiary, Cascade Steel Rolling Mills have returned to work today after a Monday evening walkout that was unauthorized by the United Steelworkers Union. The Cascade Steel Rolling Mills have an annual production capacity of approximately 800,000 tpy.

Sources: Steel Business Briefing, American Metal Markets

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During Ternium’s March Investor Day held recently, management detailed strategic plans, including the company’s expectation to capitalize on growing Latin American steel demand through the Usiminas deal.

The combined entity will be the leading player in Latin America, according to the company, and Ternium is looking to grow further through both upstream and downstream expansion.  Like some of its industry peers, TX is also seeking to take advantage of inexpensive natural gas prices, with the potential construction of a DRI-based steel mill.

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Steel Market Production Cuts – Workers at Cascade Steel’s Rolling Mills, a subsidiary of Schnitzer Steel Industries Inc., are reportedly poised to go on strike due to the failure in negotiating a new contract covering some 300 United Steelworkers. According to the Union, the company has been given a 72 hour strike notice which has the potential to halt production at the 800,000 tpy mill.

Steel Market Production Increases – Baoji Petroleum and Steel Pipe Company subsidiary Liaoyang Steel Tube has started production at its new welded pipe facility in Liaoyang. The facility has a production capacity of 150,000 – 200,000 mtpy of spiral welded pipe.

Sources: SteelOrbis, American Metal Market

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Our Advance/Decliner Index posted another small decline this week, dropping to 71% from last week’s 73% and 74% recorded two weeks ago (any reading over 50 means that the number of price increases exceeded the number of declines).

Our China Index was the driver of the small overall drop as the reading declined from the mid-August 2011 high of 92% seen last week to 55% as pricing for steel products was mixed during the week.  Improved pricing in East Asia, the CIS and Europe lifted our Ex-China Index from 68% to 76%, nearly offsetting the downturn in China.

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

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Weekly domestic raw steel production dropped 2.4% to 1.900 million tons (mt) for the week ending March 31, 2012, but was up 4.9% 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 a decrease, coming in at 76.9% compared to 78.8% last week, but was higher than the year-ago level of 74.1%. 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.

Note: AISI weekly production data only includes real-time input from 50% of producing members; the remainder of the data is a guesstimate based on each company’s prior-month production and therefore the weekly AISI data lags when there are production cuts or increases going on.

Source: AISI and Steel Market Intelligence

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MMX Mineração e Metálicos (MMXM3) reported 4Q adjusted EBITDA of R$45.4m, a decline of 41% sequentially, but ahead of the Street’s $19.0m forecast.  Iron ore sales totaled 1.9m tonnes, a decrease of 8% from 3Q and a 6% drop compared with 4Q 2010. Overseas volume accounted for 42% of the total, a higher percentage than the 2010 level of 33%. Management said the higher percentage of exports hurt margins, as the port tariff didn’t drop in step with lower export prices in the quarter.

Guidance was for relatively flat iron ore production in 2012 versus 2011 (7.5 million tonnes).  The company said 1Q production would be hurt by heavy rainfall, although lost production would be made up over the remainder of the year.

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Evraz (EVR) reported 2011 adjusted EBITDA of $2.90B, slightly below the Street’s $2.953B, but a 23% gain from 2010, on revenues of $16.4B, a 22% increase. Management attributed 92% of the revenue growth to price increases, while higher iron ore and coking coal prices led to EBITDA growth from the company’s Mining segment.

Guidance was for a modest increase in steel consumption in 2012, led by demand from emerging markets, with the market remaining volatile.  Evraz expects Russian construction steel demand to reach pre-crisis levels in 2012, with long product growth of 10%.

The company’s mills in Russia are running at 100%, while those in North America are running at 90%.

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