The number of active oil and natural gas rigs in theUnited Statesfell 0.6% to 1,924 for the week ending July 27, 2012, down from 1,935 last week and the lowest since August 5, 2011.  The rig count is now a scant 0.8% above the year-ago level.

The highest weekly rig count in the United Statessince 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 again this week by 3.1% to 338 compared with 328 last week and is the highest count since March 23, 2012.  Despite the increase, the Canadian rig count is down 14.4% from the year-ago level.

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.

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AK Steel announced a widely-anticipated second $40/ton sheet price hike earlier today; we expect peers to… more.

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Steel Market Production Increases – French pipemaker Vallourec reportedly plans to roll its first seamless pipe this fall at its new 500,000 tpy capacity Youngstown seamless pipe works after having successfully pierced its first billet at the end of June.

Steel Market Production Cuts – Zhu Hongren, a chief engineer at China’s Ministry of Industry and Information Technology (MIIT) confronted China’s problems with overproduction by stating that over the next five years the Ministry will halt excessive capacity expansion, offer support to backwards capacity reductions and slash the number of steelmakers through support of M&A.

Steel Market Production Cuts – ArcelorMittal’s CEO Lakshmi Mittal refused to rule out new European production cuts in the company’s 2Q12 conference call and went on to say that its integrated mill in Florange will remain idled until next year and that its blast furnaces in Gijon, Spain and Dunkirk, France will be down for maintenance during Q3.

Steel Market Production Cuts – German steelmaker ThyssenKrupp’s Steel Europe plans to introduce short-time working hours at its locations in Duisburg-Hamborn, Duisburg-Hüttenheim,Bochum,Dortmundand Siegerland with their Finnentrop location initially excluded.

Steel Market Production Increases – Russian steelmaker NLMK has announced the successful commissioning of its new 3.4 million tpy Blast Furnace No. 7 at itsLipetsksite which along with a new basic oxygen furnace (BOF) will increase crude steel output by 36% to 12.4 million tpy.

Steel Market Production Increases – Egyptian mill Taybah Steel is reportedly hopeful that it will receive a power allocation from the Egyptian government for its new 450,000 tpy capacity electric arc furnace billet plant by the end of the year.

Steel Market Production Increases – Armenian steel producer ASCE Group OJSC has ordered a new 200,000 tpy capacity billet mill from Austrian plantmaker Siemens VAI Metals Technologies that is scheduled for completion in mid-2013.

Sources: Steel Business Briefing, Bloomberg, MetalBulletin, SteelOrbis, SteelGuru, Vallourec Corporate Website, NLMK Press Release

Steel Market Production Cuts – Chinese steelmaker Liuzhou Steel plans to suspend its blast furnace in Guangxi province for 45-50 days for a total loss of 200,000 tonnes of hot metal and to halt HRC, bar and wire rod lines for 15 days starting July 24th with a total output loss of 120,000 -140,000 tonnes of HRC.

Steel Market Production Cuts – Chinese steelmaker Hebei Wu’an Xianjin plans to halt production on a blast furnace for a 3-month overhaul with a total loss of 180,000 – 200,000 tonnes of crude steel over the period.

Steel Market Production Cuts – Chinese steelmaker Taiyuan Steel will be conducting maintenance on one of its HRC lines for 20 days starting in early August with a total output loss of 80,000 tonnes.

Steel Market Production Cuts – Chinese steelmaker Jinan Steel began 5-day maintenance on its HRC line on July 24^th with a total output loss of 25,000 tonnes expected.

Steel Market Production Cuts – Chinese steelmaker Anshan Steel reportedly plans to conduct maintenance on their cold-rolled and HRC lines for 8-10 days in late July.

Steel Market Production Cuts – ArcelorMittal Piombino will idle its Italian operations for the whole month of August and reportedly plans to halve its workforce in September.

Steel Market Production Cuts – Chilean steelmaker CAP Acero has ceased production of cold rolled coils (CRC) at its 100,000 tpy capacity plant in Talcahuano, Chile with production scheduled to resume at the end of the year or or early 2013 according to some sources.

Steel Market Production Cuts – Spanish steelmaker Alfonso Gallardo group’s Corrugados Azpeiia mill in northern Spain has reportedly been idled since mid-June due to a strike despite the company having targeted output at 350,00o tpy during the strike.

Steel Market Production Cuts – Japanese steelmaker Kyoi Steel plans to stop steelmaking and rolling operations for 20 or 21 days this summer.

Sources: Steel Business Briefing, Bloomberg, MetalBulletin, SteelOrbis, SteelGuru

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Our Advance/Decliner did a dead-cat bounce this week, posting a small increase, driven by an uptick in our Ex-China Index, as our China Index plunged following a sharp drop in iron ore prices… more

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June steel imports declined to 2.59 million tons to the lowest level so far this year, as declining domestic prices narrowed the pricing gap with foreign steel making it less attractively priced… more

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On the AK Steel conference call minutes ago, CEO Jim Wainscott said that the company’s order book was looking “as strong as it’s been in two years” and that the first sheet price increase has held… more

Our full report, which is available to subscribers only, provides further thoughts about domestic and global steel prices as well as the implication for steel equities.

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