The number of active oil and natural gas rigs in the United States dropped 0.4% to 1,989 for the week ending February 10, 2012, but was still up 15.6% compared to last year.

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 this week decreased 0.2% from 710 last week to 709, but was 12.5% higher than year-ago levels.

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.

For the full report and our thoughts on this surprising pricing move, please contact us at info@steelmarketintelligence.com.

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According to trade press, domestic long product producers (including industry leader Nucor) are reversing January steel price moves effective immediately, as scrap price gains of $30/ton reversed themselves. Steel prices for beams and merchants are being reduced by the full $30/ton decline in the steel scrap surcharge (or 3-4%), while a $15/ton base steel price increase for rebar, will partially offset the surcharge drop, resulting in a smaller, net transaction steel price drop of $15/ton (or 2%).

China’s vice president, Xi Jinping, arrives in the U.S. today to visit politicians, leaders, and businessmen, and build relationships between China and the U.S.

Because China is more than half of the world’s steel production, there is very little that matters more to the domestic steel market than Chinese steel policy. Xi Jinping hopes to build his reputation as a “world statesman,” according to the Wall Street Journal’s “Asia Today” program.  For more details, watch the full video.

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Act Now – Urge your Representative to Vote Yes on H.R. 7, the American Energy & Infrastructure Jobs Act, which is legislation that will support American job creation and economic growth by fully utilizing our domestic energy resources and utilizing the revenues to invest in transportation infrastructure.

The Association of American Railroads (AAR) announced that the nation’s major freight railroads are projected to invest a record $13 billion in capital expenditures in 2012 to expand, upgrade, and enhance the nation’s freight rail network as well as to hire more than 15,000 new workers.

“As the demand to move more freight by rail increases and a significant percentage of the rail workforce hits retirement age, freight railroads are continuing to add and fill jobs nationwide…Freight rail spurs the American economy and supports jobs all across the country,” said Edward R. Hamberger, AAR President and CEO.

Railroad companies have been spending 17% of their annual revenue on capital expenditures in recent years, compared with the average manufacturer that spends roughly 3% on cap ex. According to Hamberger, railroad companies are reportedly spending 17 percent of their yearly revenue on capital expenditures, up from the average 3 percent for other manufacturers. Because they are privately-owned companies and owned independently, these investments won’t negatively impact taxpayers.

Freight railroads have roughly 175,000 employees nationwide, many of whom are veterans and reservists. One in five of recent new railroad hires are veterans. Rail employee compensation averages roughly $100,000 per year, with jobs ranging from engineers and dispatchers, to law enforcement, to information technology and industrial development.

“These jobs are well paying, highly skilled careers that cannot be offshored,” Hamberger said.

Source: Association of American Railroads (AAR)

Steel Market Production Increases – For 2012, participants in China’s iron ore market expect the country’s crude steel output to reach 700-720mt, representing a 3-5% y-o-y increase. If seen, this would be the lowest growth in the past decade.

Steel Market Production Increases – Emirates Steel has commissioned the region’s first heavy section mill as part of its expansion program at its integrated complex in Musaffah.

Sources: Steel Business Briefing and Gulf Construction

The advance figure for seasonally adjusted initial unemployment claims the week of February 4, 2012 totaled 358,000, a decrease of 15,000 from 373,000 the week of January 28, 2012. The seasonally adjusted four-week moving average also showed a slight decline, dropping from 377,250 to 366,250.

Insured Unemployment Figures Rise Slightly

In terms of seasonally adjusted unemployment figures, the advance seasonally adjusted unemployment rate the week of January 28, 2012 was 2.8%, a fractional increase from 2.7% the week of January 21, 2012. The advance seasonally adjusted total number of insured unemployed people rose about 2%, from 3.415 million to 3.515 million. However, the four-week moving average decreased about 1%, from 3.531 million to 3.498 million.

Actual Claims Show Higher Total

The actual (unadjusted) number of initial unemployment claims the week of February 4, 2012 was slightly higher at 397,810. However, there was also a slightly larger drop from the previous week’s unadjusted total of 422,287. The advance unadjusted unemployment rate the week of January 28, 2012 was 3.2%, unchanged from the prior week’s unrevised rate.

Fewer Federal Employees File Initial Claims, but More Vets

A total of 1,696 former federal civilian employees filed initial unemployment claims the week of January 28, roughly a 3% drop from 2,172 the prior week. However, there were 2,843 initial claims from newly discharged veterans, a 16% jump from 2,448 the previous week.

California Sees Highest Initial Claims Growth

The largest increases in initial claims for the week ending January 28 were in California (+4,571), Washington (+2,795), Florida (+2,293), Texas (+1,485), and Oregon (+1,420), while the largest decreases were in Tennessee (-1,855), Connecticut (-1,523), Oklahoma (-1,353), Alabama (-1,297), and North Carolina (-1,221).

Source: US Department of Labor

China’s mercantilist challenge to American manufacturing is rapidly spreading from low-value consumer goods to dozens of advanced manufacturing sectors, according to a new study from the USBIC.

The study, titled “Chinese Market Share in Advanced U.S. Manufacturing Grows at Accelerating Pace,” points out that China in 2010 supplied 7.5 percent of cross-section of high-value American manufactured products, and growth in these sectors accelerated during the current recession, rising 16 percent in 2009, and 19 percent in 2010. The report can be accessed by clicking here.

Study author Alan Tonelson said, “These findings demolish the still-widespread view that Chinese economic competition can be safely downplayed because it’s largely confined to cheap consumer goods. Dozens of America’s high value industrial crown jewels are steadily becoming just as vulnerable to Chinese competition as clothing, shoes, and toys.”

The USBIC report shows that China’s greatest advanced manufacturing successes in the U.S. market have come in electronics products, like computers (where China supplied 61 percent of Americans’ purchases in 2010) and broadcast and wireless communications equipment (nearly 29 percent).

Source: United States Business and Industry Council