The number of active oil and natural gas rigs in the United States fell 1.4% to 1,945 for the week ending April 27, 2012, the lowest count since August 5, 2011.  Despite the fall, the rig count is still up 7.0% from the year-ago level.

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 decreased 8.2% this week to 134 from 146 last week, marking the twelfth consecutive drop.  The rig count was one rig higher than last year however.

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.

The spot reference price for 62% Fe iron ore cfr North China fell to $145.40 on Friday, April 27, 2012, down 2.0% from $148.40 last week.  The price of iron ore had posted continuous declines from the recent peak of $149.40 on April 13 through Thursday when the price fell to $143.80 – the lowest since March 23, 2012 – before rebounding slightly today.

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

Steel Market Production Increases – ArcelorMittal’s new 600,000 tonne per year seamless pipe mill in the Saudi Arabian city of Jubail is slated to begin testing late this summer with production planned to start at the beginning of 2013.

Steel Market Production Increases – Russian billet producer Volga-Fest has suspended production at its 270,000 tonne per year EAF-based mini- mill due to transformer issues. The mill primarily exports to the Middle East.

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Ternium S.A. (TX) reported 1Q EBITDA of $372.0m, beating the Street’s forecast of $355.2m, and up 2% from 4Q’s $365.2m due to modest increases in both prices (up 0.2%) and volumes (up 0.4%) and a slight drop in overall costs (down 0.3%).  North American shipments were up 6.2% sequentially.

Guidance for 2Q is for slightly higher operating income on the back of stronger shipments, reflecting a “gradual” economic recovery in the Americas, most notably in North America.  The company is not expecting much movement in pricing or its cost structure in the second quarter, although TX could see a small drop in costs due to lower slab costs at its Mexican operations.

Management went on to say the economic and demand situation in North America is “relatively good,” and the company is expecting some increased demand, most notably in Mexico.

Our full report is available to subscribers only and provides further thoughts on Ternium’s 1Q conference call, as well as our opinion on the stock and the implication for other steel equities.

For a free trial subscription, please contact us.

Steel Market Production Increases – Brazilian steel producer Usiminas expects its new 2.3 million tonne per year hot strip mill in Cubatão to begin commercial production at some point this quarter.

Steel Market Production Increases – Indonesia’s largest steel manufacturer PT Gunung has ordered a new EAF and ladle furnace from plantmaker SMS Siemag. The combined 1.2 million tonne per year capacity furnaces are scheduled to be commissioned by mid-2013.

Steel Market Production Increases – Four Egyptian steelmakers that have completed, or are on the verge of completing production of new steel mills, are reportedly pressing the government to allow them to connect to the public grid to begin production. The plants have a combined 4 million tonnes per year of billet capacity.

Steel Market Production Increases – Eastern Chinese pipe producer Jiangsu Tianhuai is set to commission a 500,000 tonnes per year seamless pipe mill in May.

Steel Market Production Increases – Chinese steelmaker Yingkou Jiachen will carry out trial production in May at its new long steel facility. The facility has an annual production capacity of 3 million tonnes of wire rod and steel bar.

Steel Market Production Cuts – Evraz North America has temporarily idled its 500,000 tpy rod and bar mill in Pueblo, Colorado following the accidental death of an employee there.

Steel Market Production Cuts – Nippon Steel reportedly halted production of two galvanizing lines at its Kimitsu works at the end of March, that had combined production capacity of 620,000 tonnes per year.

Steel Market Production Cuts – Sumikin Steel & Shapes has temporarily ceased production at its H-beam plant in western Japan following a problem with a heating furnace. The outage which is expected to last until late May could reduce output by 30,000 tonnes.

Sources: Steel Business Briefing, American Metal Market, SteelOrbis

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March preliminary steel imports rose 7.8% from 2.7 million tons (mt) in February to 2.9 mt, the highest since last May at 2.96 mt, which was the post-recession high. The most meaningful increases were for semi-finished steel (up 15.4%), line pipe (up 50.8%), cut-to-length plate (up 43.1%) and OCTG (up 21.6%).

The increase puts year-to-date imports more than 31% above year ago levels. Because preliminary imports are some 10.7% below where March licenses predicted, we suspect there will be an upward revision that lifts final March imports above levels seen last May to a new post-recession high.

Our full report is available to subscribers and provides further thoughts on March imports as well as our outlook for the coming months and implications for steel equities.

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Steel Market Production Increases – Workers at Cascade Steel Rolling Mills in McMinnville, OR will return to work this Friday after going on strike beginning April 8. Negotiations regarding a new contract with the union are ongoing.

Steel Market Production Increases – Shaanxi Yanchang Petroleum Group, began construction of a 500,000 tonne per year seamless pipe plant in Ansai County in central China’s Shaanxi province on April 17. The project is scheduled for completion in 2013.

Steel Market Production Cuts – Ukrainian steel producer Donetskstal has postponed the launch of its first EAF. The 1.5 million tonne per year capacity EAF had initially been due for commissioning in May and is now scheduled to launch in October 2012. The producer has just closed four open hearth furnaces ahead of schedule.

Steel Market Production Cuts – Egyptian bar and wire rod producer Beshay Steel has suspended production at its steelworks in Sadat City due to a strike by its workers there. The strike has idled 2 million tonne per year of finished steel capacity.

Steel Market Production Cuts – Taiwan’s China Steel Corp will halt production at its plate mill from late May until early June for 20 days of annual maintenance. The outage will result in 30,000 – 50,000 tonnes of production being lost.

Sources: Steel Business Briefing, American Metal Market

Weekly domestic raw steel production rose 1.4% to 2.003 million tons (mt) for the week ending April 21, 2012, surpassing last week’s previous post-recession high of 1.975 mt, and is up 7.6% 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 climbed to 81.1% compared to 79.9% last week and was higher than the year-ago level of 76.1%.  Capacity utilization also set a post-recession high this week.  The lowest capacity utilization rate since the recession began was 33.5% for the week of December 27, 2008.

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