Steel Market Production Increases – Gerdau plans to begin operations at a new continuous caster at itsMonroe,MImill next month.

Steel Market Production Increases – Nucor plans to install a new reheat furnace at itsWallingford,Conn.rolling mill that will increase capacity to 300,000-350,000 tpy of rebar, wire rod and wire mesh from 250,000 when it is completed in July 2013.

Steel Market Production Cuts – ThyssenKrupp will likely be cutting working hours at its German operations by mid-August according to a workers representative

Sources: Steel Business Briefing, American Metal Market

The number of active oil and natural gas rigs in the United States fell 0.6% to 1,953 for the week ending July 13, 2012, down from 1,965 last week.  The rig count is still 2.5% above the year-ago level.

The highest weekly rig count in theUnited 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 12.1% to 296 compared with 264 last week and the highest count since March 23, 2012.  Despite the increase, the count is down 24.9% from the year-ago level.

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

Source: Baker Hughes Inc.

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Contrary to CISA’s June production estimate showing a nominal monthly drop, official June output came in at 2.01 million tonnes per day (mtpd), up 1.6% from May, to the second highest of all-time, and just 0.6% shy of April’s all-time record.

The uptick in Chinese production in the face of waning steel demand is disconcerting as steelmakers have continued to ship overproduction around the globe, resulting in June net Chinese steel exports rising 5.4% to a two-year high of 4.09 mt.

While Beijing’s multiple stimulus-attempts are good news longer-term for steel in China, in the short term, we believe that stimulus announcements are backfiring, keeping production too high, as steelmakers wait for promised new orders to come in as they continue to lose money.

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

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Our Advance/Decliner Index gained for the second straight week, increasing from 26% to 34% (but still below the key 50 level meaning more price decreases were announced than increases) as domestic steelmakers raised sheet prices and Brazilian steelmakers raised steel prices across-the-board due in part to the weakening real against the dollar.  Pricing strength seen in the MENA region last week proved fleeting, while pricing in East Asia weakened on the heels of continued export price cuts out of China.

Our China Index rose from zero to 11% as just one price increase was recorded during the week despite Beijing announcing the second interest rate cut in less than a month.  Spot prices in China have continued downward so far this week, as we think the marketplace is viewing the rate cut as an indicator of a real downturn in the economy – and a negative this time around – rather than a positive.

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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Steel Market Production Cuts – Korean steelmaker Dongkuk has begun summer maintenance seven days early at its EAF based Incheon works due to an accident – the outage had previously been scheduled for July 17-27.

Steel Market Production Cuts – Tata steel’s strip unit in the UK has announced that it will take some production pauses at its facilities in Port Talbot and Lainwern, Wales over the summer.

Steel Market Production Increases – Chinese pipemaker Zhengzhou Jinghua Welded pipe plans to commission a new 520,000 tpy production capacity electric resistance welded (ERW) pipe plant by the end of July.

Steel Market Production Cuts – Czech plate and sections producer Evraz Vitkovice will be halting production for almost a month starting July 17^th due to a planned interruption of the hot metal supply from ArcelorMittal Ostrava.

Steel Market Production Cuts – Central Trinidad Limited (Centrin) has extended its 30-day shutdown until August 17 at its 120,000 tpy plant citing an inability to find buyers for its excess inventories after it lowered prices.

Sources: Steel Business Briefing

Steel Market Production Cuts – China’s Ministry of Industry and Information Technology (MIIT) has issued a list with planned annual crude steel production capacity cuts totaling 7.8 million tpy that will affect 22 steelmakers along with the closure of blast furnaces at 27 works for a reduction in total pig iron capacity of 10.4 million tpy. These cuts will be fully implemented by September of this year.

Steel Market Production Cuts – According to the China Iron and Steel Association (CISA), daily steel production in China fell to 1.965 million in the last ten days of June – a decrease of 0.3% from the number reported in the middle ten days and down some 1.7% from the number reported in the first ten days.

Steel Market Production Cuts – Chile’s Compañía Siderúrgica Hauchipato (CAP Acero) plans to reline its No. 2 blast furnace at its Talcahuano longs plant for 90 days during which time it will be running the 1.4 million tpy facility at half capacity.

Steel Market Production Increases – Chinese welded line pipe maker Baoji Petroleum Steel Pipe (BSG) has inaugurated its new 300,000 tpy electric arc welded pipe (ERW) facility in Xi’an city with most of the new production to be oil country tubular goods (OCTG).

Steel Market Production Increases – Chinese steelmaker Kunming Iron and Steel has commissioned two converters at its new facilities in Anning that bring the company’s annual production capacity to 2 million tpy.

Steel Market Production Cuts – Workers at Venezuelan steelmaker Sidetur have been on strike since the end of last week – it is as of yet unclear how this will affect the company’s 1,300 tonnes per day of billet as well as its production of angles, plate and rebar.

Steel Market Production Cuts – Ukrainian steelmaker Alchevsk has announced that it will be reducing production of rolled steel products in July by 15% from June, bringing final production to around 250,000 tonnes in the month.

Sources: Steel Business Briefing, SteelOrbis, MySteel

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We believe long product steelmakers will be announcing immediate base price increases of $20-25/ton, partially offsetting the $45/ton surcharge decline by roughly half, resulting in net transaction prices dropping by $20-25/ton, while we expect commodity plate prices to continue downwards given the continued high level of imports.

As evidenced by Steel Business Briefing’s domestic pricing assessment for sheet rising by 1.7% this week, the $40/ton spot price hike announced last week is starting to take hold as buyers begin to worry about potential labor disruption in the face of strong flat-rolled demand.

Our full report provides further thoughts about domestic and global steel prices as well as the implication for steel equities.

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