Steel Market Production Cuts – Speculation is mounting that RG Steel LLC will idle tinplate production at its Sparrows Point, Md., facility due to low bookings that resulted from financial instability and concerns among would-be buyers.

Steel Market Production Increases – Turkish integrated producer Isdemir will relight BF No.2 this evening or tomorrow, and BF No.3 that went offline late last week is functioning again.

Steel Market Production Increases – In Libya, Lisco, the state-owned Libyan steel producer, is still not fully operational, but in February the company restarted its No.1 and No.2 rebar rolling mill.

Steel Market Production Increases – China’s Ministry of Industry & Information Technology (MIIT) has predicted that China will produce 730 mt of crude steel in 2012 (an average daily output of around 1.99m t/day), up 6.8% from 2011’s 683 mt.

Steel Market Production Increases – Mexico’s Industrias CH SAB de CV (ICH) expects to bring the first stage of its previously announced $500m billet plant in Mexico’s northeastern state of Tamaulipas on stream in May or June this year, with capacity of 350,000 tpy.

Steel Market Production Increases – ArcelorMittal is to invest an additional €17 million ($22.9 million) in its facility at Florange in eastern France.  The company will also invest in additional maintenance work to ensure that the idled blast furnaces are ready to be restarted in the second half of 2012 in the event of an economic recovery.

Sources: American Metal Market, Steel Business Briefing

Many Manufacturing Indexes Show Slower Growth

The Purchasing Managers Index (PMI) registered 52.4% in February, down 3% from 54.1% in January. However, as a PMI score above 50% indicates growth, the PMI is still expanding, but at a slower rate. Other manufacturing indexes which showed slower growth compared to the prior month include New Orders (54.9%, down almost 5% from 57.6%, Production (55.3%, down about 1% from 55.7%), Employment (53.2%, down 2% from 54.3%), and Backlog of Orders (52%, down 1% from 52.5%).

Prices Lead Manufacturing Indexes with Faster Growth

Several manufacturing indexes showed faster growth in February compared to January, led by Prices (61.5%, up 11% from 55.5%). Exports (59.5%, up 8% from 55.5%) and Imports (54%, up 3% from 52.5%) also grew at a faster rate. Supplier Deliveries moved from contraction to expansion (53.6%, up 9% from 49%).

Inventories Go in Wrong Direction

The two inventory-related manufacturing indexes both displayed poor performance in February. Customer Inventory increased its rate of contraction (46%, down 3% from 47.5%), while Inventories remained flat just below the growth line at 49.5%.

11 of 18 Manufacturing Industries Grow

Of the 18 manufacturing industries, 11 are reporting growth in February, in the following order: Apparel, Leather & Allied Products; Machinery; Primary Metals; Transportation Equipment; Petroleum & Coal Products; Fabricated Metal Products; Paper Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; and Chemical Products. The four industries reporting contraction in February are: Furniture & Related Products; Nonmetallic Mineral Products; Plastics & Rubber Products; and Electrical Equipment, Appliances & Components.

Source: Institute for Supply Management

January US construction spending declined 0.1% from December, according to figures from the Department of Commerce. Seasonally adjusted construction spending during January 2012 totaled $827 billion, 0.1% less than the revised December 2011 total of $827.6 billion. However, January’s total was about 7% higher than $772 billion recorded in January 2011.

We’d point out that the seasonally adjusted numbers may present a more rosy picture than reality given the sharp boost construction markets most probably felt due to unseasonably warm weather this winter; in particular highway spending will perk up in warmer winter months, and the data supported that this month.

Overall Private Construction Spending Stays Flat

Private construction spending during January 2012 totaled a seasonally adjusted figure of $538.7 billion, essentially flat with the revised December 2011 estimate of $538.7 billion (taking margin of error into account). Residential construction occurred at a seasonally adjusted annual rate of $253.6 billion in January, about 2% higher than the revised December estimate of $249.2 billion. However, nonresidential construction dipped slightly, to a seasonally adjusted annual rate of $285 billion in January, 1.5% below the revised December figure of $289.5 billion.

Compared to January 2011, private construction spending rose almost 12% from $482.1 billion. Residential construction grew almost 7% from 237.6 billion, and nonresidential construction increased close to 17% from $244.4 billion.

Highway Spending Rises, Overall Public Construction Spending Drops Slightly

In January, the estimated seasonally adjusted annual rate of public construction spending was $288.3 billion, 0.2% less than the revised December number of $289 billion. Educational construction came in at a seasonally adjusted rate of $71.6 billion, roughly 1% less than the revised December estimate of $72.2 billion. Highway construction declined marginally, totaling a seasonally adjusted $83.7 billion in January, compared to $83.9 billion in December.

Compared to January 2011, public construction spending fell 0.5% from $289.9 billion. Educational construction grew 2% from $69.9 billion and highway construction grew 4.5% from $80.1 billion.

Source: Department of Commerce

Steel Market Production Cuts – Italian bar and rod producer Acciaierie Venete has halted crude steel production at its works in Sarezzo due to a fire that broke out on Monday night, and the company expects to restart production in two to three days; Sarezzo has a nameplate capacity of 540,000 tpy of crude steel.

Steel Market Production Increases – SSI will relight its Redcar plant back to life in less than two weeks, as part of its GBP1.6 billion expansion plan.

Steel Market Production Increases – RG Steel LLC started to bring the 4,000 tpd Warren blast furnace back online last Sunday, and the company expects to resume steelmaking later this week.

Sources: Steel Business Briefing, Steel Guru, American Metal Market

The US economy grew at an annual rate of 3% according to today’s revision of Q4 2011 Real U.S. GDP by the Bureau of Economic Analysis (BEA) from the previously reported 2.8%. This uptick was not expected, as a Bloomberg survey of economists had predicted no change from the number initially reported, and in fact some 35% of the economists surveyed had looked for a downward revision. According to the BEA, the upside reflected an upward adjustment to consumer spending for services and a downward adjustment in consumer spending on durable goods.

Current-dollar GDP, the market value of the nation’s output of goods and services, increased 3.9%, or $144.7 billion, during Q4 2011 to a level of $15.3 trillion from about $15.1 trillion in Q3 2011. During Q3 2011, current-dollar GDP increased 4.4%, or $163.3 billion, from about $14.93 trillion.

2011 GDP Increases at Slower Rate than 2010

For the full year 2011, U.S. real GDP increased 1.7% from annual 2010 levels. This was a slower rate of increase than the 3% growth in GDP recorded between 2009 and 2010. BEA data indicates the increase in real GDP in 2011 primarily reflected positive contributions from personal consumption, exports, and nonresidential fixed investment that were partly offset by negative contributions from state and local government spending, private inventory investment, and federal government spending.

Current-dollar GDP increased about 4%, or $567.9 billion, in 2011 to a level of about $15.1 trillion from about 14.53 trillion.  In 2010, current-dollar GDP increased 4.2%, or $587.5 billion from about $13.94 trillion.

The deceleration in real GDP in 2011 primarily reflected downturns in private inventory investment and in federal government spending and a deceleration in exports that were partly offset by a deceleration in imports and an acceleration in nonresidential fixed investment.

Source: Bureau of Economic Analysis, Bloomberg

New Report Preview

Our Advance/Decliner Index increased to 70% from 66% last week, and has now risen two weeks in a row since falling below the critical 50% level.  Strength was most evident in the MENA region, the CIS and East Asia as prices have rebounded mainly on the back of higher scrap prices as well as modestly improved demand in some countries following China’s Golden Week holidays.

Our China Index remained flattish at 53% compared with 50% the week before as the Chinese market is still treading water.  We suspect the usual post-holiday pickup in the country is not yet appearing largely because the holidays were so early this year and winter is still blunting construction demand.

In the global market, flat product pricing continues to remain strong, while long product prices showed a meaningful improvement last week as international scrap prices continued to climb and iron ore prices have now rebounded over 6% in the last 10 days.

Our full report provides further thoughts about global steel pricing trends and our outlook as well as implications for steel equities.

For a free trial subscription, please contact us.

Steel Market Production Cuts – Stoppages caused by disgruntled workers cost Sidor, a Venezuelan steel and iron ore producer, US$361m in lost output in 2011, and recent protests may mean that the company misses its 2012 production target of 3.7 mt of crude steel.

Steel Market Production Increases – Eastern China’s Xiwang Special Steel Company will commission a 500,000 tpy heavy bar rolling mill by the end of this month, increasing its finished steel capacity to 2.1 mtpy.

Steel Market Production Increases – Northern China’s Anshan Iron & Steel (Angang) is expected to begin production at its Putian mill with an annual production capacity of 700,000 annealed CRC and 300,000 HDG in the middle of this year.

Steel Market Production Increases – A slew of new SBQ bar capacity expansion projects are in the works due to steady demand from the automotive and heavy equipment markets. So far, the announced capacity increases include a $76m expansion by Steel Dynamics; an $85.2m project by Republic; a $67m expansion by Gerdau; a $290m expansion by Nucor, and a $225m expansion by Timken.

Steel Market Production Increases – UAE-based steelmaker, Emirates Steel, is currently taking bids for equipment for phase 3 of its expansion, which will increase HRC output by more than 50% to 4.6 mtpy from 3 mtpy, and the contract will be awarded in April, nine months earlier than initially scheduled.

Sources: Steel Business Briefing, American Metal Market