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The June ISM Steel Survey continues to reflect American manufacturing’s scaled-back expectations for the US economy and their own business outlook.  More buyers are worried about their own near-term outlook and the economy, and more buyers are scaling back expansion plans and hiring.

The only pickup we see in the survey this month is in foreign steel mill quoting activity, astonishing since domestic prices have scaled back to levels comparable to most foreign home market prices, so if economics were driving foreign deliveries, these should be declining.

Our full report is available to subscribers and provides further thoughts on the June ISM steel survey as well as implications for the steel industry and equities.

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According to the Steel Import Monitoring and Analysis (SIMA) licensing program, June steel import licenses declined 4.9% to 2.54 million tonnes (mt) from May’s 2.67 mt.  The overall decline was driven by weakness in the sheet market, as total sheet imports dropped 12.8% from May’s level, and are now down 26.3% from a multi-year high in April.  Semi-finished licenses bucked the overall downtrend, rising a modest 4.4%, as Brazilian semi-finished tonnage jumped some 81.7% in June, following a 41.8% fall to a year low in May.

Bucking the overall downtrend, June Chinese imports are poised to potentially reach the highest level since early 2009 (just before the huge Chinese oil pipe case was filed), while Korean tonnage looks set to increase 9.4% from May levels to near record levels.

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

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Steel Market Production Cuts – The Serbian Government has announced a change in plans for the 2.4 million tpy capacity Zelezara Smederevo plant, with the No. 2 BF at the plant now scheduled to be closed from July 10 until September 1.

Steel Market Production Cuts – German Steelmaker ThyssenKrupp is reportedly considering cutting work hours at its German operations in light of slowing steel demand.

Steel Market Production Increases – Mexican bar and sections producer Simec has begun production on a new plant in Sao Paolo, Brazil with some 500,000 tpy wire rod and rebar capacity that is scheduled to begin operating in 2013.

Sources: Steel Business Briefing, Reuters

Steel Market Production Cuts – Japanese steelmaker JFE plans to cut H beam production by 10% for the months of July through September from April through June.

Steel Market Production Cuts – Chinese steelmaker Xinyu Iron & Steel will be performing maintenance on its HRC and plate production line in July for a total lost output of 80,000 to 100,000 tonnes.

Steel Market Production Cuts – Chinese steel producer Shougang Changzhi began maintenance on its H beam production line on June 28 with production slated to fall by a total of 15,000 tonnes over the course of the 8 day outage.

Steel Market Production Cuts – Gerdau Long Steel North America shut down its steel mill in Jacksonville, FL on Tuesday of last week due to flooding from Tropical Storm Debby though production at the rolling mill and EAF was able to restart on Thursday.

Steel Market Production Increases – Italian plantmaker Danieli group is planning to quickly restart production at the 120,000 tpy Croatian seamless pipe  mill, Zeljezara Sisak that they purchased recently purchased from Commercial Metals Company.

Sources: Steel Business Briefing, SteelGuru, Commercial Metals corporate website

Weekly domestic raw steel production rose by 1.5% to 1.881 million tons (mt) for the week ending June 30, 2012, breaking a string of six weekly consecutive declines since the post-recession high of 2.005 (mt) reached on May 12, 2012 and up some 1.5% compared to the year-ago level.  The lowest production level since the recession began was 800,000 for the week of December 27, 2008.

We would caution readers that only half of the AISI reporting companies release their weekly production in ‘real time’ so the other half of this data is estimated – using prior months’ reported production & operating rate. What this means is that when business is improving or deteriorating, the weekly data has a meaningful lag.

Capacity utilization also rose from 75.0% last week to 76.1% this week and higher than the year-ago level of 75.8%.  The lowest capacity utilization rate since the recession began was 33.5% for the week of December 27, 2008; the highest was 81.1% on May 12, 2012.

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

Steel Market Production Cuts – Ukrainian miner and steel producer Metinvest has suspended BF 2 – one of five – at its Ilyich Iron & Steel works for maintenance  – effectively reducing output by a fifth at the 13,000-14,000 tonnes per day plant.

Sources: Steel Business Briefing

The price of iron ore fell some 2.5% to $134.00 for the week ending June 29, 2012, halting an eleven-day upward trend.  The price dropped from $137.40 last week, which was the highest level since May 11, 2012, and current levels are down 26.0% from the peak of $181.00 in the past twelve months.

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

The number of active oil and natural gas rigs in the United States fell 0.4% to 1,959 for the week ending June 29, 2012, the third consecutive weekly drop and now a two-month low.  Despite the decline, the rig count is up 3.9% from the year-ago level of 1,886.

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 rose 9.7% this week to 261, climbing up from 238 last week and reaching the highest count since March 30, 2012.  The rig count is also up 8.8% from the year-ago level of 240.

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.

Steel Market Production Cuts – In the present market, Romanian coil and plate producer ArcelorMittal Galati reportedly sees no chance of restarting its two idled BFs which have a combined crude steel capacity of 2.2 million tpy.

Steel Market Production Cuts – A fire at Japanese producer JFE’s West Japan works yesterday has forced the company to bank their No. 5 blast furnace – leaving 3 furnaces still running at the 10 million tpy  crude steel capacity works that produces sheet, plate, pipe and sections.

Steel Market Production Cuts – Finish steelmaker FNsteel has filed for bankruptcy which, according to the company’s vice president could lead to the shuttering of the company’s 600,000 tpy crude steel capacity integrated steelworks.

Steel Market Production Increases – Chinese steelmaker Yuzhong has successfully commissioned a new long steel mill in Yushi with an annual output capacity of 1.1 million tpy of bar and 1.6 million tpy of wire rod.

Steel Market Production Increases – Chinese producer Rizhao plans to officially start production this July at its new 520,000 tpy welded pipe mill in Mazhou.

Steel Market Production Increases – Chinese line pipe maker Chu Kong has commissioned a new 300,000 tpy welded pipe mill in Guangdong.

Steel Market Production Increases – Chinese steel pipe producer Baoji Petroleum Steel Pipe has produced the first steel pipes at its new 120,000 tpy welded pipe plant in Karamay.

Sources: Steel Business Briefing, SteelOrbis

Steel Market Production Cuts – The Serbian Government stated in an email today that it officially intends to stop production at the Zelezara Smederovo plant for at least three months starting in July – the plant is currently producing at 60,000 tons a month with an annual capacity of 2.4 million tpy.Steel

Market Production Cuts – Moroccan longs producer Sonasid is currently performing maintenance on its EAF and mill in Jorf Lasfar with other area producers also expected to be down for a few weeks in July.

Steel Market Production Cuts – Tata Steel is reportedly considering delaying the relighting of its 2 million tpy capacity BF4 at its plant in Port Talbot, Wales when its rebuild is completed in November 2012.

Sources: Steel Business Briefing, Reuters