Steel Market Production Cuts – Gerdau Long Steel North America will be starting a planned maintenance outage today at its 700,000 tpy crude steel capacity meltshop and rolling mill in Beaumont, Texas with production set to resume in the next few days.

Steel Market Production Cuts – ArcelorMittal has reduced output at its plant in Dabrowa Gornicza, Poland to 30% of capacity with output as low as 220,000 tonnes per month according to one source.

Steel Market Production Cuts – Tata Steel Europe plans to rebuild its 2.1 million tpy capacity blast furnace 4 at its Port Talbot steelworks starting in July and taking 125 days to complete.

Steel Market Production Cuts – Italian flat products and pipemaking group Marcegaglia plans to cut flat steel production at its Ravenna, Italy plant in the next few months.

Steel Market Production Increases – Vietnamese Steelmaker Vina Kyoei broke ground on its new meltshop, billet caster and rolling facility in Ba Ria-Vung Tau, Vietnam which will double the mill’s capacity to 900,000 tpy when it is completed around 2013.

Sources: Steel Business Briefing, American Metal Market

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Our Advance/Decliner’s pickup from 4% to 23% last week was short-lived, as the index dropped back down to 18% as our China Index declined from 25% to 10% due to weak Chinese manufacturing data as well as a dip in iron ore prices.  A surprise interest rate cut late last week did not spur an uptick in steel pricing and industry leader Baosteel actually cut sheet prices from 1.8-7.0% on Monday, which will likely further dampen market sentiment this week.

Our Ex-China Index also declined, falling from 23% to 20% as Nucor’s $30/ton price cut for all long products more than offset an announced sheet price hike of €10-20/tonne by ArcelorMittal in Europe.  It was interesting to note that our European sub-index broke the critical 50 level for the first time since early April.

NOTE: Any reading below 50 means more price cuts were reported than increases.

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 – Chinese producer Anshan Steel will start 10-day maintenance on its CRC line and 15-day maintenance on its HRC line which will reduce output by 20,000 and 150,000 tonnes respectively.

Steel Market Production Cuts – A number of plate producers in east and north China have reportedly already begun their half-year maintenance shutdowns due to plate prices that are below cost and power shortages from a hot summer.

Steel Market Production Cuts – Italian producer Ilva temporarily halted production at its 3.6 million tpy capacity No 1 hot strip mill and at its electro-zinc line in Taranto, Italy starting yesterday in an effort to reduce output by 30% compared with 1Q12.

Steel Market Production Increases – Construction of Iranian producer Arfa’s new 800,000 tpy meltshop is reportedly almost 90% complete and will be put into operation within one full year.

Weekly domestic raw steel production dropped some 1.8% to 1.886 million tons (mt) for the week ending June 9, 2012, falling for the fourth consecutive week to the lowest level since January 14, 2012, and is now down some 5.9% from the post-recession high of 2.005 (mt) on May 12, 2012.  Despite the downturn, production is up some 2.4% compared to the year-ago level.  The lowest production level since the recession began was 800,000 for the week of December 27, 2008.

The capacity utilization rate also fell from 77.7% last week to 76.3% this week, but was slightly higher than the year-ago level of 75.3%.  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 – Chinese average daily steel production for the month of May fell 2.2% to 1.975 million tonnes from April’s 2.019 million tonnes according to data from China’s National Bureau of Statistics (NBS).

Steel Market Production Cuts – ArcelorMittal is reducing output at its Krakow and Dabrowa Gornicza steelworks in Southern Poland with the three operating blast furnaces at those locations said to be running at “minimal levels”.

Steel Market Production Cuts – Korean steelmakers are reportedly considering production cutbacks for billet due to falling export prices and an inability to cover costs along with production reduction incentives offered by the Korean power company Kepco.

Sources: Steel Business Briefing, American Metal Market, China’s National Bureau of Statistics

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May net Chinese steel exports jumped 14.8% to 3.88 million tonnes (mt) from 3.38 mt in April, despite a 2.2% decline in Chinese steel production to 1.98 mtpd from April’s record 2.02 mtpd.

The combination of near-record production in the face of waning steel demand is leading to recent record export levels and unlike mid-2010 when Chinese exports were hitting similar high levels, the rest of the world economies are already struggling with weaker steel demand.

May apparent steel consumption fell 3%, outpacing the 2.2% production decline.  Reflecting these weaker demand fundamentals, industry leader Baosteel overnight announced a 3.5% price cut for hot-rolled and cold-rolled sheets and a 1.8-7.0% price reduction for coated sheet for July shipments.

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According to just-released data from the Chinese National Bureau of Statistics, May finished steel exports surged 12% to a two-year high, while total steel net exports – the sum of exports less imports – rose 14.8% also to the highest level in nearly two years.

As expected, China’s overproduction of steel is spilling out into the West, and unlike mid-2010 when Chinese exports were hitting similar high levels, the rest of the world economies are already struggling with weaker steel demand.

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

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Steel Market Production Cuts – China’s steel output dropped 3.9% in the last 11 days of May to an average of 1.96 million tonnes per day from 2.039 million tonnnes in the second ten days of May according to the China Iron and Steel Association (CISA).

Steel Market Production Cuts – Anshan Iron and Steel has planned maintenance for 15 days later this month which will result in the loss of 100,000 tonnes of HRC.

Steel Market Production Cuts – ArcelorMittal has scheduled maintenance at its mills in Asturias, Spain and Dunkirk, France which will result in a reduction of 700,000 tonnes of steel over the course of the outages.

Steel Market Production Cuts – Tata Steel is relining the 2.1 million tpy blast furnace number 4 at its Port Talbot works in Wales.

Steel Market Production Cuts – Citing a deterioration in market trends, Italian steelmaker Ilva will idle its electro-galvanizing line and one of the coil mills at its Taranto plant starting June 10 for a period of at least a “couple” days, up to 4 weeks.

Steel Market Production Increases – UK producer Thamesteel Ltd. has been taken out of administration by its former owner, Al-Tuwairqi Group who intends to restart production at the plant on the Isle of Sheppey. The plant has an annual production capacity of 840,000 tpy of billet and 600,000 tpy of bar and rod.

Steel Market Production Increases – Italian steelmaking group Beltrame will begin production on its new plate rolling mill in Tarnos, Southern France, with an initial annual production capacity of 250,000 tpy which is set to later rise to 400,000 tpy.

Sources: Steel Business Briefing, American Metal Market, Zawya

The spot reference price for 62% Fe iron ore cfr North China fell some 2.7% this week to $131.40 on Friday, June 8, 2012. The current price is just 1.2% above the six-month low of $129.90 seen on May 23 and is down some 12.1% from the recent peak of $149.40 on April 13.

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