SJF's Material Handling Blog
The Korean government’s public procurement service (PPS) is aiming to buy its second parcel of 40,000 tonnes of US scrap for the country’s first steel scrap stockpile. This and the inaugural consignment are to arrive in Korea around mid-December.
Courtesy: Steel Business Briefing
Scrap surcharges used by Nucor and other American steelmakers to determine monthly steel transaction prices are heading down.
Due to a $25 per long ton decline in a benchmark shredded scrap price (from $260 to $235), surcharges on rebar, merchant bar, wide flange beams, light structural’s and plate will likely decline by $25 a short ton for December deliveries.
September US scrap prices for various grades have risen anywhere from $15-$24/long ton over the previous month, according to a ferrous scrap price index compiled by Pittsburgh-based Management Science Associates (MSA).
MSA’s RMDAS (Raw Material Data Aggregation Service) shows prices are up in all US regions, across the board, for prompt industrial composite, No 1 heavy melting (HMS) and shredded No 2 scrap.
Tokyo Steel Manufacturing has decided to slash scrap buying prices for all grades at all works by ¥1,000/tonne ($11/t) effective from 25 September arrivals. Japan’s largest independent mini mill announced the cut to its buying prices on Thursday, the first day that Japan returned to work after a string of national holidays.
Prior to the start of the break last Saturday, mini mills had raised prices to ensure they had sufficient stocks when they increased production over the holidays.
This article from Material Handling Management Online describes some of the features and benefits of Ridg-U-Rak’s Drive in Rack Style.
Ridg-U-Rak’s drive-in storage rack systems store product on continuous rails. Lift trucks directly enter the rack structure to place and retrieve pallets.
Dwindling inventories, new orders bring life back to idled mills
By Emily Glazer, MarketWatch
SAN FRANCISCO (MarketWatch) – The U.S. steel industry, hard-pressed by a recession that wreaked havoc in its main markets and forced thousands of layoffs, can now point to several indicators supporting the contention that it’s through the worst of the downturn.
After months of sluggish demand and swelling inventories, prices and demand are again on the rise, production indexes are up and some mills are firing up idled blast furnaces.
And while Census Bureau data through May shows steel imports are still lower than they were a year ago, more recent industry data points to an uptick in demand.
The Institute of Supply Management’s June production index hit 52.5%, up 6.5 percentage points from May. This is the first time the index has topped 50% in nine months. A reading above 50% indicates the manufacturing industry is expanding, said David Phelps, president of the American Institute for International Steel, Inc.
Market Vectors Steel exchange-traded fund has jumped more than 40% since the beginning of 2009, compared with a small loss over the same period by the Standard & Poor’s 500 Index .
The rebound follows a nine-month “purge” of inventories that forced steel producers to severely curtail output while a weakened market drew down excess supplies, said Michelle Applebaum, a former Salomon Brothers managing director who runs her own research firm in Highland Park, Ill.
Yet once supply and demand balance out, it’s a “green shoot” for the performance of the steel industry, with higher output leading to cheaper production cost by volume, Applebaum said. Nevertheless, she cautioned against drawing direct parallels between the performance of the steel industry and the U.S. economy.
“The outlook for the remainder of the year remains uncertain, but is improving, as demand is strengthening for some of our steel products and recycled metals,” said Keith Busse, Steel Dynamics chairman and chief executive officer, in a June statement. “We now expect to be profitable in the third and fourth quarters of 2009 assuming only a modest increase in production volume.”
Still, Phelps said he questions how strong the improvement will be.
“When prices are going up, people rush to be the first in line to order more steel in a good market and generally in a rising market people overbuy,” Phelps said. “So that when the market turns down and steel is still cyclical, the impact is magnified by the fact that all the sudden demand is down and their inventories are way too high….It’s one of those things that you’ll have to sit back and wait and see.”
And the overseas market has also weakened. Global steel production fell 24% in the first four months of 2009 compared with the same 2008 period. While China leads the market, its January-April steel output is still down 3.9%, German production is down 53.1%, Japan’s is down 43.6% and U.S. output is off 53.4%.
“It’s a global commodity [currently] determined by China,” Applebaum said.
The summer months do show some promise. Some analysts said they expect the industry’s operating rate to rise to 60% from 40% currently to match improved demand. Keybanc Analyst Marc Parr said if there is demand recovery, then the number will continue to increase as remaining inventories are drawn down.
This is reigniting the industry, literally.
Some mills — including U.S. Steel’s Granite City, Ill., facility — are firing up furnaces, bringing back hundreds of jobs.
Nucor Corp.’s Chairman Dan DiMicco said in a June statement that orders had improved in recent weeks. “We believe this period of economic and steel industry distress will present unusually attractive growth opportunities for Nucor,” he said.
In the June ISM survey, 57% of respondents said they expect receipts to increase over the next three months, compared with 21% in May. The number of respondents expecting additional incoming orders during the next three months increased to 43% from 29%.
“The hope is that the infrastructure spending and consumer spending, which looks like it’s starting to pick up, will help sustain the prices and see a return to health by the end of the year,” Phelps said.
While stock performance in June was mixed — 21 stocks topped the S&P 500 while 20 came in lower — there were some stellar performers: Metalico Inc.’s shares increased 85%, and there were more than 30% gains for Barzel Industries , AK Steel and Olympic Steel Inc .
Though analysts hold different views of where to look for improvement, consumer markets are unanimously seen as the most disadvantaged due to their exposure to the ailing automotive and residential housing sectors.
“With the auto sector you’re squeezing that back into the balloon right now and it’s going to pop out,” Phelps said. “Where and when, that’s the question.”
As for the construction industry, Parr said it has not yet bottomed out.
“The normalization of mill orders and underlying demand is a more important factor in the near term as will be the ability of U.S. producers to move pricing to be more in line with global markets,” he said.
Provided couressty of Marketwatch.com
Monday, 29 Jun 2009
Industry leaders said that global steel producers are cautiously increasing production, albeit from extremely low levels, as signs emerge of modestly improving demand and recovering investor confidence.
Mr LN Mittal CEO of ArcelorMittal SA, while speaking to participants at American Metal Market’s Steel Survival Strategies conference in New York City, said that he has been seeing green shoots of stronger demand. He added that “Chinese steel demand is now forecast to show growth this year compared with a previously expected decline. The de stocking period has led to historically low levels of inventory, for example here in the United States, where inventories are at their lowest since 1983.”
After Mr Mittal’s remarks, Mr John P Surma head of United States Steel Corporation indicated the likelihood that at least one blast furnace will be restarted at the company’s mill in Granite City. He said that “Market conditions have improved a bit lately.”
Mr Surma said cited General Motors Corporation’s move to discontinue several unprofitable brands, Chrysler LLC reportedly being near an end of its bankruptcy process, labor concessions for both companies and an expected uptick in sales from the recently passed cash for clunkers bill. He said that “We’re encouraged that there is some stability is returning to the domestic auto industry. We’re very excited about what’s happening with GM.”
Both Mr Mittal and Mr Surma also noted their companies’ recent success in raising funds. Mr Surma said that US Steel’s public offering of common stock and senior convertible notes raised nearly USD 1.5 billion. He added that “Maybe the capital markets are sensing that the worst is behind us.”
(Sourced from Associated Press)
As Appears on Forbes.com
NEW YORK, June 9 (Reuters) – Shares of some major U.S. steel companies rose on Tuesday and analysts attributed it to rising prices for the flat-rolled steel products made by those manufacturers.
In afternoon trading on the New York Stock Exchange, AK Steel Holdings’ stock was 8.7 percent higher at $18.93, while U.S. Steel Corp rose 5.7 percent to $37.08.
Other steel company stocks were almost flat, although Steel Dynamics was up 3.7 percent on the Nasdaq. The Dow Jones Iron and Steel Index was 3.7 percent higher.
Analyst Michelle Applebaum of Steel Market Intelligence in Chicago said her latest indicator of global flat-rolled steel prices showed they were at their highest level since last June.
‘They (AK Steel and U.S. Steel) are the biggest flat-rolled players and flat-rolled prices globally are on the way up.’
Applebaum’s Advance/Decliner Index, which tracks the ratio between price increases and decreases, was at 77 percent last week. A reading above 50 percent means there are more increases than decreases and generally bodes well for pricing trends, she said.
Steel prices had been falling since last September, as the economic downturn dried up demand for steel and most manufacturers cut production by more than half.
(Reporting by Steve James, editing by Matthew Lewis) Keywords: STEEL/SHARES
(email@example.com; +1 646-223-6013; Reuters Messaging: firstname.lastname@example.org)