Archive for: ‘January 2012’

Metals USA (MUSA) – Profitability and Demand Trending Higher in 1Q – Thoughts from the 4Q Conference Call

January 31, 2012 Posted by Steel Market Intelligence

New Report Preview – Steel Distribution

Metals USA reported 4Q earnings of $0.37/share, which adjusted to $0.33/share after non-recurring items, in line with the Street’s $0.32.

Guidance was qualitative with the company pointing to a more profitable 1Q compared to 4Q, and an “incrementally” more profitable 2Q versus 1Q.  Management said the “typical seasonality of the business is back” which is expected to lead to better demand in 1Q, although MUSA noted that the lagging impact of the company’s contract pricing mechanisms will hurt 1Q results but help in 2Q.

We’d note that the “typical seasonality” was actually never gone, but while demand has been fairly normal seasonally, it’s been supply – import/export balance and restarts – that has had as much impact on volume and pricing as end-demand at current ongoing low operating rates.

For a free trial subscription, contact info@steelmarketintelligence.com.

Read full article |Leave a comment
Tags: , , ,
Categories: Steel Distribution

Timken (TKR) – Stronger 2012 Expected; Capacity Constrained on Steel Side – Thoughts from the 4Q Conference Call

January 31, 2012 Posted by Steel Market Intelligence

New Report Preview – Machinery Steel

The Timken Company (TKR) reported 4Q earnings from continuing operations of $1.11/share, which adjusted to $1.15/share excluding one-time items, ahead of company guidance of $0.97-1.07 and the Street’s $1.06/share.  The beat was due to a lower-than-expected tax rate as well as a richer product mix.

Guidance for 2012 was for EPS of $4.90-5.20/share, up from $4.59/share in 2011 with overall sales up 5-8% from 2011.  The company is expecting a 10-15% uptick in Aerospace and Defense sales, an 8-13% increase in Process Industries sales, a 5-10% gain in Steel sales and flat Mobile Industries sales.

Management noted that the growth in Steel sales would be driven by improved pricing and a richer product mix as the company is currently capacity constrained (for SBQ and seamless mechanical tubing), with orders on allocation.

For a free trial subscription, contact info@steelmarketintelligence.com.

Read full article |Leave a comment
Tags: , ,
Categories: Machinery Steel

December Steel Imports Post Surprising Drop; Full Year Rises 19%

January 31, 2012 Posted by Steel Market Intelligence

New Report Preview  - Steel Market

December preliminary steel imports posted a surprising monthly decline, falling 5.3% to 2.0 million tons (mt) from October’s 2.11 mt, the lowest level since February and some 32.6% below the peak in May.  December licenses had suggested an increase of as much as 9% driven by a 50%-plus surge in semi-finished steel; however, actual semi-finished imports rose just 5.3%.  We suspect that some tonnage meant for December arrival was actually received in November as actual imports in November were 4% higher than licenses had suggested.

The monthly decline was driven by lower imports of cut-to-length plate (down 26.7%), OCTG (down 17.1%) and sheet (down 12.8%). However, based on current licenses, these declines are likely to be short-lived as tonnage for these products look set to increase in January, with significant increases possible for cut-to-length plate and OCTG.

In addition to slightly higher imports of semis, tonnage for rebar and wire rod jumped some 48.9% and 48.8%, respectively. Rebar licenses for January are showing an even further uptick, which could lift rebar imports to the highest level in nearly four years – which helps explain domestic steelmakers recent decision to hike domestic rebar prices less than other long products.

For a free trial subscription, contact info@steelmarketintelligence.com.

Read full article |Leave a comment
Tags: , , , , ,
Categories: Steel Market

Advance/Decliner Index Hitting Another High

January 26, 2012 Posted by Steel Market Intelligence

New Report Preview – Steel Market

Our Advance/Decliner Index jumped to 89% this week from 83% last week as pricing finally began to strengthen in China.  Our China Index rose from 33% to a 5-month high of 55%, as Chinese steelmakers raised export prices which will likely support higher pricing elsewhere.

Our Ex-China Index stayed high, rising nominally from 91% to 92%. Broad-based pricing gains continue to be driven by rising scrap prices and the anticipation of seasonally stronger 1Q demand, in our view.  In the US, Severstal “officially” announced another sheet hike – $30/ton – that will lift hot-rolled list prices to $770/ton – compared with actual prices of $720-750/ton currently.

For a free trial subscription, contact info@steelmarketintelligence.com.

Read full article |1 Comment
Tags: , , , , ,
Categories: Steel Market

Nucor Raises Most Long Product Prices by $30; Rebar by $15

January 26, 2012 Posted by Steel Market Intelligence

New Report Preview – Steel Market

According to American Metal Market (AMM), Nucor is raising February transaction prices by the full $30/ton increase in the scrap surcharge for merchant bar (up 4%), wire rod (up 4%) and beams (up 4%), but is reducing base prices for rebar by $15/ton, resulting in a $15/ton increase (up 2%) in transaction prices, undercutting Gerdau’s recently announced $30/ton hike.  AMM cites Nucor’s John Ferriola as saying the smaller hike for rebar was due to an increase in imports, most notably from Turkey.

Nucor raised January prices for beams by $20/ton, rebar and merchants by $30/ton and wire rod by $40/ton.

For a free trial subscription, contact info@steelmarketintelligence.com.

Read full article |Leave a comment
Tags: , , ,
Categories: Steel Market

December Distributor Inventories Rise; Shipments Seasonally Weak

January 26, 2012 Posted by Steel Market Intelligence

New Report Preview – Steel Market

December MSCI shipments declined 14.6%, nominally better than the normal seasonal drop of 15.7%, as we saw stronger-than-usual shipments for pipe (down 8.4% compared with a normal decline of 10.7%), flat-rolled (down 16.6% versus a normal drop of 18.3%) and bar (down 10.6% compared with a typical decline of 12.3%), while plate shipments were weaker than the norm, down 13.4% versus the normal seasonal drop of 11%, as rising imports gained share.

Total inventories rose 3.2% to 7.95 million tons in December, mainly driven by a 4.9% uptick in flat-rolled tonnage as steel buyers purchased sheet ahead of anticipated price increases.  Inventories of plate and pipe increased 3.2% and 1.3%, respectively, while tonnage of bar and beams fell a healthy 2.9% and 1.8%.  Total December inventories were nearly 50% higher than the August 2009 low of 5.3 million tons, although December average daily shipments were some 38% above the December 2009 low.  Inventories for flat-rolled, plate, bar and pipe are substantially above post-recession lows – even more so for flat-rolled and plate – while beam inventories are just 2.2% above the lowest level on record seen in October 2010.

For a free trial subscription, contact info@steelmarketintelligence.com.

Read full article |1 Comment
Tags: , , , , , ,
Categories: Steel Market

ABI Index Above 50 for Second Straight Month

January 26, 2012 Posted by Steel Market Intelligence

New Report Preview – Steel Market

The American Institute of Architects’ ABI Index – a leading economic indicator of non-residential construction activity 9-12 months into the future – remained unchanged from November at 52.0 in December, the highest level in a year and the first time the ABI Index has seen consecutive readings over 50 since February and March of 2011.  The reading above 50 means the number of architects reporting “rising billings” outpaced the number reporting “declining billings.”

At 64.0 in December, the new inquiries index was the third highest since January 2007, despite falling from 65.0 in November. While we are typically a bit cautious about putting too much weight on the new inquiries index because it does not account for rebidding, we would note that the new inquiries index has been much higher the past two months than during the first 10 months of the year when it ranged from 52.6 to 58.7 and the significantly higher readings have in fact coincided with higher overall ABI readings.

For a free trial subscription, contact info@steelmarketintelligence.com.

Read full article |Leave a comment
Tags: , , , , ,
Categories: Steel Market

Nucor (NUE) – Announces New Capital Plan for SBQ Expansion

January 26, 2012 Posted by Steel Market Intelligence

New Report Preview – Steel Market

As expected, Nucor announced today a new $290m expansion plan that will lift the company’s SBQ and wire rod capacity by a combined 1 million tons by the end of 2013.

The new capacity will be high value-add and high-margin and will leverage unutilized commodity grade capacity and is consistent with the company’s theme of increased organic growth.

We’re very excited to see Nucor doing this expansion. It’s exactly the company’s sweet spot – Nucor’s roots are in organic growth. The company is leveraging their current platform to expand and add value in their existing operations. These kinds of expenditures are extraordinarily high return and Nucor has been doing a great job of using the current weak environment to expand their value-added footprint.

For a free trial subscription, contact info@steelmarketintelligence.com.

Read full article |Leave a comment
Tags: , , ,
Categories: Steel Market

December Chinese Steel Production Rises but Posts Downward Trend

January 26, 2012 Posted by Steel Market Intelligence

New Report Preview

Final December Chinese steel production rose 1.2% to 1.683 million tonnes per day (mtpd) – in line with the normal seasonal uptick – from November’s 11-month low of 1.663 mtpd, and was some 1.8% higher than the China Iron & Steel Association (CISA)’s estimated December production of 1.654 mtpd.  While the increase was the first since June, December output was still some 15.8% below peak levels posted during that month.  December production also annualized at just 614.1 mt, significantly less than full-year 2011 production of 683.3 mt and even full-year 2010 production of 626.7 mt.

Despite the overall increase, we would point out that CISA’s “production flash” reports for December showed that production declined in each successive 10-day period, so by late December, output of 1.626 mtpd was at the lowest level since October 2010.

For a free trial subscription, contact info@steelmarketintelligence.com.

Read full article |Leave a comment
Tags: , , ,
Categories: Uncategorized

ABI Index Above 50 for Second Straight Month

January 18, 2012 Posted by Steel Market Intelligence

New Report Preview

The American Institute of Architects’ ABI Index – a leading economic indicator of nonresidential construction activity 9-12 months into the future – remained unchanged from November at 52.0 in December, the highest level in a year and the first time the ABI Index has seen consecutive readings over 50 since February and March of 2011. The reading above 50 means the number of architects reporting “rising billings” outpaced the number reporting “declining billings.”

At 64.0 in December, the new inquiries index was the third highest since January 2007, despite falling from 65.0 in November. While we are typically a bit cautious about putting too
much weight on the new inquiries index because it does not account for rebidding, we would note that the new inquiries index has been much higher the past two months than during the
first 10 months of the year when it ranged from 52.6 to 58.7 and the significantly higher readings have in fact coincided with higher overall ABI readings.

For a free trial subscription, contact info@steelmarketintelligence.com.

Read full article |1 Comment
Tags: , , ,
Categories: Uncategorized