Steel Market Production Cuts – ArcelorMittal’s 1.8 mtpy capacity coil plant in Sestao, northern Spain, is expected to continue to be idled during March, due to minimal scrap purchases in the last two weeks.

Steel Market Production Cuts – Moldova Steel Works’ (MMZ), which has been idle for the last two months, should have resumed production in the past few days, but its restart will be delayed for a few more weeks due to scrap procurement issues.

Sources: Steel Business Briefing

Steel Market Production Cuts – Luxembourg-based steel producer ArcelorMittal has extended the temporary idling of two blast furnaces at its Florange site in eastern France due to poor demand and slower than expected recovery.

Steel Market Production Increases – Mechel, the Russia-based metal and mining company, has resumed the operations at three out of its four mills in Romania, and production at the remaining plant, Targoviste is due to restart on February 27^th.

Steel Market Production Increases – Vallourec SA is nearing completion of its new 500,000 tpy seamless pipe mill in Youngstown, Ohio, with the mill on schedule to restart commercial production this summer as it ramps up to the targeted capacity.

Steel Market Production Increases – Vietnam’s SSE Steel is defying difficult market conditions to bet on the future of the construction sector in Vietnam by adding 350,000 tpy of new rebar and wire rod capacity by the end of 2012.

Sources: American Metal Market and Steel Business Briefing.

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After falling to a 10-week low of 49% last week, our Advance/Decliner Index rebounded to 66% as steel prices strengthened in the MENA region on the back of higher scrap prices, pushing our Ex-China Index up to 71% from 50%.

Our China Index remained mostly stable at 50%, compared with 46% the week prior.  The Chinese market is still treading water – with some increases here and there, but just as many decreases.  We suspect the usual post-holiday pickup is not yet appearing largely because the holidays were so early this year and winter is still blunting construction demand.

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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The American Institute of Architects’ ABI Index – a leading economic indicator of non-residential construction activity 9-12 months into the future –  remained above 50 in January, coming in at 50.9, virtually unchanged from 51.0 in December, and the first three-month string of readings above 50 since last spring.  The reading above 50 means the number of architects reporting “rising billings” outpaced the number reporting “declining billings.”

The new inquiries index remained near a four and a half year high at 61.2, while six out of the eight sub-indices posted readings above the 50 mark, indicative of billings growth.

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

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January global steel production rose a less than seasonally normal 0.9% to 116.7 million tonnes (mt), compared with the typical monthly gain of 2.5%, as Chinese production fell by 0.2% and output in South Korea dropped 13.9%.  Production was down some 7.8% compared with year-ago levels as production in Asia and the EU were down some 11.4% and 5.6%, respectively, with China posting the largest year-on-year decline – at 13.0% – since October 2008.

Production in the EU rose a seasonally-normal 11.9% driving the overall gain, while US production increased for the third straight month to the highest level since September 2008.

Korea also posted a significant year-over-year decline of 9.6%, which was unexpected given the additional steelmaking capacity Korean steelmakers have brought online.  The decline is good news for the US market which saw a 39% increase in imports from Korea in 2011.

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

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