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Bucking the trend for most of the month of April, import licenses for the full month declined 5.3% to 2.78 million tonnes (mt) from March’s 2.95 mt, according to the Steel Import Monitoring and Analysis (SIMA) licensing program.

But the decline is a bit misleading, as semi-finished steel import licenses declined 22.8%, after rising five straight months and doubling levels seen in October 2011. Semi shipments are “lumpy” so a one-month drop is not meaningful. What matters more is that finished steel imports look set to hit another post-recession high, up some 52% from the bottom in December. The uptick in finished steel licenses is being driven by a 32.6% increase in sheet tonnage, the highest level since May 2007, while imports of hot-rolled bars are set to rise some 23.7% to the highest level since October 2008.

Chinese import licenses jumped 42.3% in April to the highest level since March 2009 (just before the OCTG trade case).

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

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Timken (TKR) reported record 1Q earnings from continuing operations of $1.58/share, which adjusted to $1.61/share excluding a one-time expense related to the new labor agreement, well ahead of the Street’s $1.25/share, and sharply higher than 4Q’s adjusted $1.11/share.

Guidance for 2012 was revised up to $5.40-5.70/share (excluding one-time benefits of $0.70/share) from $4.90-5.20/share in late January.  The company revised overall 2012 sales growth to 7-10% from 5-8% in late January, due to upward revisions for the Mobile Industries and Process Industries segments.

The company is seeing strengthening demand from the energy, mining and rail markets as well as the global industrial aftermarket.  TKR is seeing increased sales from recent acquisitions and is seeing the signs of recovery in the company’s aerospace business.

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

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Canam (CAM) reported a 1Q loss of C$(0.03)/share, ahead of the Street’s forecast of a loss of C$(0.07)/share and well ahead of last year’s adjusted loss of C$(0.33)/share.  CAM saw a 38% jump in yoy sales in 1Q driven by increased volumes from their joist and deck business and at FabSouth, which is a structural steel fabricator in the US.

Guidance was limited but management said that 1Q continued to reflect the slow, upward trend in construction that began last fall.  Echoing similar sentiments from industry leader Nucor, CAM is also cautiously optimistic about the prospects for the joist and deck business as well as the multi-residential market.

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

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The World Steel Association (WSA) lowered its 2012 global steel forecast some 3.5% from the previous early 4Q forecast due to a combination of 1.7% weaker actual consumption for 2011, a 4% decline in the Euro-zone consumption forecast and a 4.8% decline in the Chinese consumption forecast.

The WSA identified two main reasons for the forecast cut, citing the negative global impact from the Euro-zone debt crisis and the continuing slowdown in Chinese steel demand.  While WSA expects a recovery in second half demand, the association warned of some downside risk from a worsening of the European problems, the impact of high oil prices or geopolitical tension in oil producing regions and the possibility of a hard landing in China.

The WSA is forecasting steel demand growth in all regions for 2013, with overall growth of 4.5%.

Our full report provides our thoughts on the World Steel Association’s steel consumption forecast for 2012 and 2013 well as the implications for steel equities.

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