The number of active oil and natural gas rigs in the United States increased 1.1% to 1,972 for the week ending April 20, 2012. The rig count is up 9.6% from the year-ago level and is just 2.7% off the 2011 high of 2,026 for the week ending November 4, 2011.

The highest weekly rig count in the United States since 1940 was recorded on December 28, 1981, at 4,530; the lowest was recorded on April 23, 1999, at 488.

The number of rigs in Canada fell 11.0% to 146 this week from 164 the week before, marking the eleventh straight weekly decline. The rig count is 2.1% below the year ago period.

The highest rig count for Canada was 727 on February 3, 2006; the lowest was 29, recorded on April 24, 1992.

Source: Baker Hughes Inc.

New Report Preview

March global steel production rose another 2.3% to a new all-time record of 4.264 million tonnes per day (mtpd), with nearly 2/3 of the uptick due to Chinese output nearing prior all-time records.

The global production recovery has been uneven, with US production still down 12% from pre-recession highs, while Chinese production is actually up 48% over the same time frame. The irony of course, is that in March as Chinese production neared all-time highs, some 8.2% of the Chinese total – 5.03 million tonnes – was exported.

Our full report is available to subscribers only and provides further thoughts on global steel production and pricing and the implications for steel equities.

For a free trial subscription, please contact us.

The spot reference price for 62% Fe iron ore cfr North China fell to $148.40 on Friday, April 20, 2012, down 0.7% from $149.40 last week, which was the highest level since October 18.  The week-on-week drop was the first since the week ending March 9.

The post-recession low was $59.10 on March 27, 2009, while the high was $190.19 on February 17, 2011.

Source: The Steel Index

Steel Market Production Increases – The Chinese Iron and Steel Association (CISA) reported on Wednesday that crude steel production for the first 10 days of the month averaged 2.03 million tonnes per day, up 7% from the last 11 days of March and a new all-time record.

Steel Market Production Increases –Jiangsu Yulong Steel Pipe, a Chinese welded pipe producer intends to begin production at a new longitudinal submerged arc welded pipe plant at its plant in Huocheng County in early 2013. The new operation will increase production capacity by 120,000 tonnes per year.

Steel Market Production Cuts –Due to declining demand for electro-galvanized products in Europe, ArcelorMittal intends to reduce output at its second line in Dudelange, Luxembourg. The line, along with the already idled number 1 line, has a combined production capacity of 400,000 tonnes per year.

Sources: Steel Business Briefing

Steel Market Production Increases – SSI UK’s steelmaking operation on Teesside in northeast England has produced its first slabs since its furnace was relit over the weekend. The company expects to achieve a production rate of 3.6 million tpy of slab for shipment to SSI’s rolling operations in Thailand.

Steel Market Production Increases – Meigang, a sister company of Baosteel has begun a trial operation of its number 3 casting line at its new Nanjing steelworks. The location’s number 4 continuous casting line is slated to begin trials in May – which together with the number 3 line would increase the company’s billet capacity by 4.1 million tonnes per year.

Steel Market Production Increases – Turkish steelmaker Erdemir plans to install a new cold rolling mill at its Eregli works in Malatya and intends to increase its tin plating capacity by an unspecified amount as well.

Steel Market Production Increases – Spanish steelmaker Grupo Hierros Añon has obtained a preliminary license for the steelworks it intends to build in the northern Brazilian state of Ceará. The facility is expected to begin initial production in the first half of 2013 with an eventual capacity of 2 million tonnes per year.

Steel Market Production Increases –Shanxi Province-based Chinese steelmaker Zhashui Tongxin Rolled Steel Co. has begun construction on steel plate and bar facilities that will have production capacities of 400,000 and 300,000 tonnes per year respectively. The facilities are expected to be commissioned at the end of September this year.

Sources: Steel Business Briefing, American Metal Market, MySteel, SteelOrbis

New Report Preview

After trading in a tight range of 71-74% over the last month, our Advance/Decliner Index dropped from 74% to a two-month low of 63% this week (any reading over 50 means that the number of price increases exceeded the number of declines).

The decline was driven by our Ex-China Index falling from 73% to 58% as pricing showed less strength in the Middle East and weakened in Europe and the CIS.  Our China Index was unchanged at 75% as Chinese steelmakers raised domestic prices for some steel products and increased export prices as well.

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.

New Report Preview

The American Institute of Architects’ (AIA) ABI Index – a leading economic indicator of non-residential construction activity 9-12 months into the future – posted a reading above 50 for the fifth successive month in March, coming in at 50.4, modestly below February’s 51.0 (any reading higher than 50 means the number of architects reporting “rising billings” outpaced the number reporting “declining billings”).

The new project inquiry index declined sharply in March, falling 6.8 points to 56.6, down from February’s 63.4, which was the highest level since July 2007.

Some highlights in the report included both the Commercial/Industrial Index and the Northeast Index hitting more than four-year highs during the month.

Our full report is available to subscribers and provides further thoughts on the March ABI Index as well as the impact on steel equities.

For a free trial subscription, please contact us.