Steel production feel last week to the lower end of the range that has been characteristic of past 6 months. The year over year change is up sharply because last year was the low point of production. This slowdown in steel production is a troubling sign that may suggest a slowing market.
Published: Wednesday, 23 Oct 2013 | 11:25 PM ET
A gloomy quarterly earnings report from Caterpillar – the world’s largest equipment maker – should be treated as a warning sign for the global mining industry, analysts told CNBC.
Caterpillar, widely considered an economic bellwether for the mining industry, posted lower-than-expected quarterly profits Wednesday and cut its full-year forecast for the third time this year.
The monthly Raw Steels MMI® held steady at 82, fully 18 points below the January 2012 reading of 100.
Although the LME steel billet price rose slightly, the underlying dynamics of the steel market suggest current price rises for flat rolled products have more to do with domestic supply disruptions from AK Steel and US Steel Corp., as well as fourth quarter automotive demand, than any structural or systemic improvement in steel demand.
Steel Price Forecast 2014
"It remains unclear as to whether Q4 2014 will follow previous years’ trends of rising prices into Q1," said Lisa Reisman, managing editor of MetalMiner. "The global dynamics suggest otherwise." Nonetheless, manufacturers have reported rising steel price quotes. Whether the price rises will stick remains unclear.
The steel longs market, meanwhile, has faced some price pressure as construction numbers have led to a mixed bag – in particular the rate of growth for non-residential construction starts has begun to decline. More analysis on the construction sector and related metals markets here.
And, China continues to produce massive volumes of steel and substantially more tonnage than the Chinese market requires, leading to global oversupply.
MetalMiner now provides steel price forecasting – check it out.
Key Drivers of the Steel Price Index
The price of Chinese slab closed the month after dropping 4.3 percent. Korean steel scrap prices dropped by 2.2 percent this month.
US shredded scrap closed the month after dropping 1.9 percent. The price of Korean pig iron held jumped 3.5 percent last month.
The 3-month price of the US HRC futures contract closed the month up 0.3 percent at $630.00 per short ton.
Chinese billet traded slightly higher last month. Prices for Chinese coking coal bumped up only a tiny bit this past month. The China price of 58% iron ore fines from India budged upward only marginally. Get exact pricing on MetalMiner IndXSM!
The Raw Steels MMI® collects and weights 13 global steel and raw material price points to provide a unique view into global steel price trends over a 30-day period. For more information on the Raw Steels MMI®, please drop us a note at: info (at) agmetalminer (dot)
The monthly Stainless MMI®, tracking global stainless steel, nickel and ferroalloy prices, continues to act as the poorest performing of the major industrial metal indexes tracked by MetalMiner. October’s index fell by two points, to 79. Weak nickel prices continue to hamper this complex.
"I wish we had a different story to tell for stainless steel," said Lisa Reisman, managing director MetalMiner. "Even if stainless demand notches up a bit in major markets such as China, the
MMI®September812013NovemberTBD© MetalMinerTM. All rights reserved.Index ValueJan 2012 Baseline = 100 110100809070October79Down 2.5%NovDecJanFebMarAprOct2012Oct2013JulAugSepJunMay
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US and Europe, the market remains in an oversupply situation, both for stainless as well as nickel."
The International Nickel Study Group (INSG) forecast just last Thursday that nickel producers face a global surplus of 140,000 metric tons this year due to disappointing demand and new production projects, as reported by Reuters.
Global demand from the rest of the world, excluding China and India (where usage was still on the high side), has been middling at best.
The only price risk to the upside that we can see involves the Indonesian export ban of nickel ore scheduled to go into effect in January 2014. If that ban actually limits exports, we could see some nickel price support and it could come swiftly. MetalMiner now forecasts nickel prices – check it out.
However, we don’t anticipate any major changes in the demand equation to support stainless prices in the near term.
Key Price Drivers of Stainless/Nickel Index
The Allegheny Ludlum 304 stainless surcharge finished the month after dropping 1.5 percent. The Allegheny Ludlum 316 stainless surcharge fell a slight 1.2 percent over the past month.
Chinese primary nickel prices fell 5.9 percent after rising the previous month. On the LME, the 3-month price of nickel dropped 6.4 percent over the past month to $13,930 per metric ton.
The Chinese ferro-chrome price was up only mere pennies.
Chinese 304 stainless steel scrap was up marginally for US-based buyers. Prices for Chinese 316 stainless steel scrap increased marginally as well. Chinese 304 stainless coil ticked up a tiny bit. Chinese 316 stainless coil also ticked up a bit.
Steel production fell slightly remaining stable in production levels or slightly down trending. The low point in the past two years was almost exactly a year ago so we show an improvement of over 5% year over year and we are only slightly higher than 2011 levels where the market had begun to fall.
October 15, 2013
By George Perry
In what came to be known as Okun’s Law, he estimated that a one percentage point higher unemployment rate was associated with three percent less GDP. Thus if unemployment was 2 points above its full employment level, GDP would be 6 percent below its potential level-defined as the level of GDP at full employment.
So how big is the gap between actual and potential GDP in today’s economy? The math could not be simpler. The 4.6 percent unemployment rate in the two years preceding the Great Recession are a reasonable estimate of full employment. Unemployment in the second quarter of this year was 3 points higher than that, so the output gap was about 6 percent of GDP, or roughly $800 billion.
Steel production last week was slightly down from a week ago. While it is up significantly from a year ago, it is clear that production of steel mill products is stable at a reduced level compared to two years ago.
The other day I was reorganizing some books on a shelf and I came across one which I had not thought of for a long time. It was the one which I used when I had formal “Management By Objective” training. This technique has been relabeled and repackaged numerous times since the technique was originally organized but its value has remained over many years. What came to mind was the need to remain focused on your organization’s objectives. You set your own operating area objectives, both daily and long term, in the perspective of what your company is trying to achieve. Basically, are your values and actions in line with your organizations?
I am not trying to retread old ideas. The fact is though that an individual makes many decisions through a normal day. Some small, some with long reach. Your work actions should be within the mission statement of your organization. Do you know what that statement is and can you articulate it? Have you established core values and communicated what is important to you? The touchy feely society around us embraces free ranging. You do not have to follow that path. Set objectives in all aspects of your life and work toward them.
Key elements of management by objective are: Set a measurable and achievable objective, set a time table for achieving the objective and measure progress (on paper), share your objective and progress with other individuals (people really like to help each other).