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Our Advance/Decliner Index fell again, dropping from 30% to 27%, the lowest reading since early December (meaning more price cuts were reported than increases).

Our China Index drove the weakness with no price increases in the week as CISA’s late April production flash showed a 1.5% increase from mid-April to a new 10-day record, with full-month output estimated at 2.026 million tonnes per day (mtpd), which would annualize to 741 million tonnes, some 8.5% higher than previous high.

Our Ex-China Index was mostly stable, rising from 33% to 35%, as an uptick in pricing in the MENA region was offset by weakness in all other regions, including East Asia, where until now pricing had been resilient.

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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Metalico (MEA) reported 1Q earnings of $0.05/share, in line with the Street’s $0.04/share, but above 4Q’s loss of $(0.06)/share as ferrous scrap shipments jumped 28% and non-ferrous scrap soared 56% versus 4Q.

Guidance was qualitative with MEA expecting 1H 2012 results to underperform record 1H 2011 levels, but 2H 2012 results to outperform 2H 2011.  The company said that some 7,400 tons of ferrous scrap were in-transit as of 3/31, which will be recognized in 2Q.

The company expects steel industry capacity utilization and ferrous scrap prices to remain “relatively” stable, although “some pockets of weakening mill demand may occur” and the challenge for MEA will continue to be sourcing material at acceptable margins.

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

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Russel Metals (RUS) reported 1Q earnings of C$0.53/share, beating the Street’s $0.51 and 4Q earnings of C$0.46 while matching EPS from a year ago.

Guidance was qualitative and included a decrease in 2Q revenue compared with 1Q because of a seasonal drop in the energy tubular products business. The metals service center and steel distributors divisions should show increases, although yoy growth won’t be as high as in 1Q, the company said. Steel prices are expected to be stable, as in 1Q, with no clear direction going forward.

Russel said the demand outlook is stable, with the US showing more growth than Canada. Imports have been increasing over the past month, however, with Turkish industrial tubing coming in on the East Coast along with Russian plate and Chinese line pipe.

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

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The spot reference price for 62% Fe iron ore cfr North China fell to $144.10 on Friday, May 4, down 0.9% from $145.40 last week, and the third straight weekly decline.  The price is slightly above the recent low of $143.80, recorded on April 26, 2012.

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

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Gibraltar Industries (ROCK) reported adjusted EPS of $0.09 in 1Q, below the Street’s $0.18 and $0.11 in the year-ago period.

Guidance for 2012 is for mid-single-digit growth across the company’s market base, which includes a minor exposure to a struggling European region and the weak West Coast residential market. Organic revenue growth is expected to be 4-5% for the company’s core businesses, while incremental revenue from acquisitions is expected to add $30m-$35m to the top line.  The company is expecting full-year 2012 gross margins of 20-20.5%. Gross margins should be around 30% on the incremental organic revenue.

One important point ROCK made during the call was that some states are starting new infrastructure projects, despite the lack of a long-term federal transportation bill, as they can no longer wait due to the condition of their roads, bridges, etc.

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

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Vale’s 1Q 2012 adjusted EBITDA came in at $4.965B, significantly below the Street’s forecast of $7.519B and 4Q’s 7.396B as abnormal rainfall in Brazil hurt iron ore shipments and costs, iron ore price premiums declined 8.9% from 4Q and the company saw a one-off effect from the significant reduction of one-month lagged quarterly iron ore contracts.

Guidance was for Vale to meet its planned iron ore volumes for the year despite a slow start as March iron ore shipments rebounded sharply; March levels were higher than the combined January/February total.  Vale expects the global iron ore market to remain tight due to strong demand from China as well as no major projects coming online in the near term.

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

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A.M. Castle (CAS) reported a 1Q loss of $(0.19)/share, which adjusted to a profit of $0.29/share after adjustments, beating the Street’s $0.24/share and well above 4Q’s adjusted $0.05/share.

Guidance was for 2012 sales for the company’s legacy businesses and Tube Supply to each grow 10% from 2011 levels, with consolidated gross margins comparable to 1Q’s 27.3%.  CAS acknowledged that it was more cautious in its outlook than a few months ago, and overall expectations on the high-side have “dampened a bit.”

After starting the year off “quite robustly,” management said that over the past six weeks business has softened, which the company attributed to a build-up of inventories throughout the supply chain in most markets, as CAS has not seen any signs of decreased customer activity.

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

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