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Steel prices expected to fall further in 2009


Steel buyers aren’t showing much enthusiasm for early 2009, according to a poll by Purchasing magazine, since incoming customer orders are down, manufacturing operations are depressed and prices on all raw materials have been collapsing. Though more optimistic than in November, buyers are entering the New Year with little enthusiasm about first-quarter demand or flat-rolled product–even with expectations of lower transaction prices than the December averages of $634 for hot-rolled sheet, $736 for cold-rolled sheet and $757 for hot-dip galvanized.

Reason: “The U.S. economy remains firmly locked in a deep recession that will be difficult to emerge from in the months ahead,” which will keep steel demand depressed, says Scott Anderson, the senior economist at Wells Fargo Economics in Minneapolis. “Consumer confidence is getting totally swamped by a rapidly deteriorating labor market and plunging housing and stock market wealth,” which will keep sales of steel-bearing products depressed.

Analyst John Anton at IHS Global Insight’s offices in Washington says that “fear has descended onto the steel market, with prices seizing for many products.” He believes the demand side is weak in preparation of a long recession and that has been stronger than the fourth quarter supply-side reduction in production to less than 50% of capacity.

Mills have cut production but buyers have reduced purchasing more

“There is some credence to the fears on the demand side,” says Anton, noting that “the downturn will be severe and there will be little recovery in North American sheet end-markets of housing, appliances and automotive, which are at the lowest levels in decades.” Anton says this end-use weakness will persist through 2009.

In December, the purchase price average for benchmark hot-rolled sheet in coil was 47% below the cyclical peak of $1,068 in July while cold-rolled sheet in coil dropped by 42%. And there was December price slippage also evident for coated sheet, plate products, rods, light structurals and most bar grades. Stainless steel prices also dipped at year’s end. And the slide isn’t over yet.

In fact, according to sheet steel buyers polled in December, early delivered prices for January averaged $525 for hot-rolled and $628 for cold-rolled. The survey also shows that only 16% of the steel buyers plan to increase purchasing even at reduced prices, though that’s higher than the 12% reporting plans to increase buying in November. “There aren’t that many orders out there, especially at this time of year,” a Midwest service center source tells the American Metal Market subscription newspaper. “The holidays are always slow, but with everything that has happened (related to the global credit crisis), things are even slower.”

Source:  Tom Stundza-

US Steel Producer Nucor Reports Record Results

Entering the fourth quarter, the global economy has been negatively impacted by the crisis in the financial markets. What started out as a seasonal slowdown  (due to temporary global market disruptions such as the six-month China Olympics effect and the Middle Eastern religious holidays)

has now been overwhelmed by a worldwide financial crisis that is unique in both size and scope in our lifetime. The business environment has obviously become significantly more challenging for everyone including Nucor. There is little forward visibility on either the economy or our industry, even for the fourth quarter. These conditions are such that financial projections are not practical. Therefore, we will not be providing numerical or qualitative guidance at this time. We will give an update of our business at the normal time midway between our quarterly earnings releases.

What we can say is that 2008 will be another record year for Nucor and today our competitive position is stronger than ever, both here and globally. If recent initiatives by the world’s governments to stabilize financial markets are successful, then businesses should see significantly improved access to credit and resulting improved business conditions beginning early in 2009. We are still strong believers in the long-term strength of the global infrastructure build and the associated bull market for steel. It is this global growth in steel demand that will help drive Nucor’s growth and profitability.

Headquartered in Charlotte, N.C., Nucor makes more steel in America than any other company. Nucor and affiliates are manufacturers of steel products, with operating facilities primarily in the U.S. and Canada. Products produced include: carbon and alloy steel — in bars, beams, sheet and plate; steel joists and joist girders; steel deck; fabricated concrete reinforcing steel; cold finished steel; steel fasteners; metal building systems; light gauge steel framing; steel grating and expanded metal; and wire and wire mesh. Nucor also brokers ferrous and nonferrous metals, pig iron and HBI/DRI; supplies ferro-alloys; and processes ferrous and nonferrous scrap. Nucor is North America’s largest recycler.

Certain statements contained in this news release are “forward-looking statements” that involve risks and uncertainties. Factors that might cause the Company’s actual results to differ materially from those anticipated in forward-looking statements include, but are not limited to: (1) the sensitivity of the results of our operations to prevailing steel prices and the changes in the supply and cost of raw materials, including scrap steel; (2) market demand for steel products; (3) energy costs and availability; (4) competitive pressure on sales and pricing, including pressure from imports and substitute materials; and (5) capital investments and their impact on our performance. These and other factors are outlined in Nucor’s regulatory filings with the Securities and Exchange Commission, including those in Nucor’s December 31, 2007 Annual Report on Form 10-K. The forward-looking statements contained in this news release speak only as of this date, and Nucor does not assume any obligation to update them.

SOURCE Nucor Corporation – excerpt courtesy of Google Financial

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US scrap prices start to rebound in November

US scrap prices, which have decreased significantly since August, seem to have finally bottomed out this month.

Many scrap dealers believed that the scrap transactions that took place in the beginning of November were settled at prices that were too low, and with an up-tick in export activities also observed in the first days of November, US shredded scrap prices started to rebound.

Busheling and HMS I scrap prices have not moved considerably since the beginning of the month, but a few scrap dealers in the Midwest report that their domestic shredded scrap prices now range from $210 to $220 /lt. This price reflects an increase of $85 /lt since the beginning of November.

However, the export market has started to slow again as scrap demand is generally still very low due to the weak finished product markets.

But despite the recent slowdown in export activity and continued weakness in the finished product markets around the world, market sources expect that scrap prices will be higher in December than in early November. December is a short month in terms of scrap transactions, with many companies closed for the holidays; however, since the scrap inventories for the integrated mills are low, they will need to make purchases during the month in question in order to make sure they have enough inventory to last them through the winter.

In December, both domestic busheling and shredded prices are expected to move up by $80 to $90 /lt while HMS I may increase by $40 to $50 /lt from the prices in the beginning of November. At the beginning of November, US East Coast busheling scrap prices were ranging from $140 to $150 /lt. Shredded scrap was sold for $125 to $135 /lt and HMS I prices ranged from $100 to $110 /lt.

On the export side, scrap prices have already shown a considerable up-tick since the beginning of November. The most recent export deal concluded for HMS I/II 80:20 is $278 /mt CFR Turkey, while prices were concluded at $160 /mt to $170 /mt CFR Turkey at the beginning of the month.

US rebar market awaits pricing after scrap market tumble

With the worldwide financial crisis showing no signs of abating and the US headed into what many analysts predict will be a long recession, there is not a great deal of hope that the global steel markets will see a speedy recovery. However, the outcome of the historic US presidential election underway Tuesday will certainly have at least some effect on the direction of the US economy and, directly or indirectly, on the steel markets. As a major rebar distributor in the US told SteelOrbis this week, “The presidential election will definitely have an impact on the market, but how much of an impact is unclear.”

With US shredded scrap prices falling below Nucor’s $162/nt scrap surcharge baseline, the domestic rebar leader has a tricky decision to make about how they want to handle their next pricing move.

Nucor’s raw material surcharge (RMS) for long products, first instituted several years ago to reflect the then-rising scrap costs, has a Program Baseline of $162/nt, which was the price of shredded scrap when the surcharge was first put into place.

The RMS, which is usually adjusted on a monthly basis when scrap prices are rising or adjusted more frequently when scrap prices are dropping, is based on the difference between current scrap prices and the program baseline. Although scrap prices have risen and fallen numerous times in recent years, they have remained well above the $162/nt ($179/mt or $8.10 cwt.) baseline – until now. In the last month, shredded scrap has lost almost half of its value, tumbling down to the current level of $125/long ton.

An announcement from Nucor is expected in the coming days, and since there is no precedent for this situation, it is not clear yet what the industry leader will do. Rather than applying a negative surcharge, however, (based on the current formula, the RMS would be minus $37/nt) it is more likely that Nucor will eliminate the RMS, at least for the time being, and lower its base prices instead. Scrap surcharges, once put in place to help producers recover their high raw material costs, are now doing the companies more harm than good as scrap prices have plummeted. If the company does indeed get rid of the RMS, for the first time in a long time the base price will be the same as the transaction price.

Currently, domestic rebar mills are offering at a range of $37.50 cwt. to $38.00 cwt. ($827 /mt to $838 /mt or $750 /nt to $760 /nt) ex-mill. Based on the additional $75/long ton that scrap prices have fallen this month, Nucor and other domestic rebar producers are expected to lower transaction prices (whether it be by lowering base prices or applying a negative RMS) by a total of $75/nt ($83 /mt or $3.75 cwt.), bringing most offers down to around $34.00 cwt. ($750 /mt or $680 /nt) ex-mill.

On the import side, offers are still substantially lower-priced than the offers from domestic mills. Import offers from Turkey have dropped by about $2.00 cwt. in the last week to a range of $27.00 cwt. to $28.00 cwt. ($595 /mt to $617 /mt or $540 /nt to $560 /nt) duty-paid, FOB loaded truck, in US Gulf ports. Although there are some indications that scrap prices in Turkey are finally bottoming out, the pricing trend is still down due to the weak demand. Import offers from Mexico are slightly above the Turkish price, with most offers ranging from $29.00 cwt. to $30.00 cwt. ($639 /mt to $661 /mt or $580 /nt to $600 /nt), delivered to Houston.

Courtesy: SteelOrbis

US mill margins ‘historically huge’ as scrap prices languish

US mill margins ‘historically huge’ as scrap prices languish

Dramatic falls in US scrap prices but continuing high operating margins amongst steelmakers have defused the assertion made just few months ago by the American Scrap Coalition that high US steel prices were caused by high US scrap prices, Blake Kelley of Sims Metal Management told the Bureau of International Recycling (BIR) convention in Düsseldorf last week.

Kelley drew attention to how currently published rolled steel prices of many US mills, and much reduced scrap prices “still allow historically huge operating margins,” citing one published example of a $660/gross ton difference between a just reduced rebar price and scrap purchase costs. He noted that such a margin “presupposes that the true steel sale price is as published, and also suggests any earlier made unfilled scrap purchase contracts were cancelled.”

Courtesy: Steel Business Briefing

Top Lift Truck Manufacturers

I thought regular readers of this blog might enjoy this article.  MMH has recently performed a customer satisfaction survey of lift trucks.  They compiled the results into several categories such as overall satisfaction, product quality, value, etc.  The results were recently tabulated and briefly listed on their site.  The full report will be available in November.

New MHE Worldwide Market Report Released

Just  quick heads up –

The new world material handling equipment market report has been released and is now available.  The good news is that it’s predicting a growth in demand of 5% or more by 2012.

From the report:

The world market for material handling equipment and systems is projected to increase more than five percent per year through 2012 and exceed $120 billion (including price increases). Generally healthy economic conditions will support gains in global material handling demand, especially in rapidly developing areas such as China and India, where rising manufacturing output and fixed investment will fuel growth. The advanced nations of North America, Western Europe and the Asia/Pacific region (i.e., Australia and Japan) comprise relatively mature markets for material handling. A healthy economic outlook coupled with a pickup in fixed investment will support material handling demand in the US, while expanding manufacturing output will support gains in Japan and Western Europe.

DJ Products – Ergonomic Material Handling

I’d like to take a minute to introduce readers of this blog to a friend of mine in the blogosphere and a fellow Minnesota material handling company.  DJ Products is a Minnesota based ergonomic material handling products company whose line of motorized carts is well known in many industries.  They offer a full line of push carts, a power mover, a tugger, a trailer mover and other ergonomic powered carts to fit a variety of needs within a number of specialized industries.

Their products range from pulling and pushing industrial carts, hospitality & hospital carts and shopping carts all the way to pulling, pushing and moving cars, trucks & trailers.  Needless to say, these carts have some serious power.

In addition to their product line, Jeff authors an industry material handling and ergonomics blog that is full of great tips, industry specific information, case studies and more.  I can highly recommend this blog as an excellent resource for material handling and logistics information.

So do yourself a favor and add this one to your reading list.  You wont regret it.

Link: DJ Products Homepage
Link: DJ Products Blog

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