Industrial Insight

Copper prices continue to decline

March 28, 2017
Leave a Comment


Posted in Uncategorized

Oil prices remain lower

March 28, 2017
Leave a Comment


Posted in Uncategorized

Steel production fell again this last week, the future outlook is uncertain.

March 28, 2017
Leave a Comment


Posted in Uncategorized

First increase in mining investment since 2012

March 21, 2017
Leave a Comment


Posted in Uncategorized

Chemical activity increased

March 21, 2017
Leave a Comment


Posted in Uncategorized

Copper prices continued to drop

March 21, 2017
Leave a Comment


Posted in Uncategorized

Oil prices dropped sharply

March 21, 2017
Leave a Comment


Posted in Uncategorized

Steel production dropped last week

March 21, 2017
Leave a Comment


Posted in Uncategorized

Steel

March 17, 2017
Leave a Comment

Raw Steels MMI Inches Up, But Can The Price Hikes Stick?

by Raul de Frutos on MARCH 3, 2017
Style:Market AnalysisCategory:Ferrous Metals, Metal Pricing, MetalMiner IndX, Premium, Supply & Demand

Steel prices have been on a tear since November. However, prices came under pressure in early February.

After having lost some ground over the past month, U.S. steel companies now seem to be pushing for another round of price hikes. But, can U.S. steel prices rise from current levels?

Production Rises

In February, new findings by Greenpeace East Asia and Chinese consultancy Custeel stated that despite China’s high-profile efforts to tackle overcapacity, China’s operating steel capacity increased in 2016. The report suggests that 73% of the announced cuts in capacity were already idle — in other words the plants were not operating. Only 23 million metric tons of cut capacity involved shutting down production plants that were operating. For 2016, China saw a net increase of 37 mmt of operating capacity.

Raw Steels MMI

According to the data released by the World Steel Association, China’s January steel production rose 7.4% to 67 mmt while global steel production rose 7% from a year ago.

These numbers give us reason to doubt that China can deliver this year in terms of capacity caps. Given the country’s pollution issues, China is now under pressure to demonstrate progress on capacity cuts, but financial and legal incentives to keep marginal firms running will cause regulators to struggle to enforce capacity cuts. Can the steel price rally continue just on promises of supply cuts?

Will Demand Growth Support Prices?

Despite resilient output, investors have focused on China’s increased appetite for steel. Thanks to the country’s stimulus measures, demand for metals rose there. As a result, Chinese steel exports have fallen double digits for five consecutive months.

China exported 7.4 mmt of steel products in January, down 23.8% from the same period last year. In addition, January steel exports were at their lowest level since June 2014.

Iron Ore Prices Surge

Steelmakers are using the argument of rising iron ore, coal and other raw material prices to press steel buyers to pay more for their steel products. Iron ore is currently trading in the ballpark of $90 per dry mt, the highest since mid-August 2014. After an 85% rise in 2016, the price of iron ore has improved by more than 16% so far this year and has more than doubled in value since hitting near-decade lows at the end of 2015.

What This Means For Metal Buyers

It might not be prudent to draw a conclusion based on January’s steel data alone. But given current trends, China may need to intensify its efforts to curtail excess steel capacity. Demand growth alone might not be a strong argument for U.S. mills to continue to hike prices at the pace the did over the past few months.


Posted in Uncategorized

Construction

March 17, 2017
Leave a Comment

Construction MMI Flat as US Spending Falters in January

by Jeff Yoders on MARCH 7, 2017
Style:Market AnalysisCategory:Ferrous Metals, Metal Prices, Premium

U.S. construction spending unexpectedly fell in January as the biggest drop in public outlays since 2002 offset gains in investment in private projects, pointing to moderate economic growth in the first quarter.

The Commerce Department said on Wednesday that construction spending declined 1% to $1.18 trillion. Construction spending in December was revised to show a 0.1% increase rather than the previously reported 0.2% decline.

Economists polled by Reuters had forecast construction spending gaining 0.6% in January rather than the loss that was booked.

Construction MMI

Our Construction MMI held steady this month despite the falling spending. The component metals of the sub-index still have bulls behind them, despite the flat performance. Steel construction materials such as rebar and h-beams are still posting big gains but scrap and others saw a loss.

It’s almost as if construction products are still in demand, particularly in China’s construction sector, even as U.S. construction experiences a pullback.

In January, public construction spending in the U.S. tumbled 5%, the largest drop since March 2002. That followed a 1.4% decline in December. Public construction spending has now decreased for three straight months.

Outlays on state and local government construction projects dropped 4.8%, also the biggest drop since March 2002. This could be an ominous sign for construction spending this year, provided, of course, that a major infrastructure plan, such as the $1 trillion plan President Trump continues to promise, doesn’t pass quickly enough to boost construction prices. The longer that it takes to pass an infrastructure plan, the less likely it is to boost contractors’ bottom lines this year.

That boost is needed for our aging infrastructure, too. Spending on state and local government construction projects has now dropped for three straight months. Federal government construction spending plummeted 7.4% in January, the largest decline since May 2014. The drop snapped three consecutive months of gains.

Spending on private construction projects actually rose 0.2% in January, but could not make up for the loses in government projects.


Posted in Uncategorized
Next Page »

About author

I'm the executive vice president for a steel casting trade association, the Steel Founders' Society of America. I've got a crazy wife, five crazy children, three crazy people that married into the family, and two crazy fun little grandsons.

Search

Navigation

Categories:

Links:

Archives:

Feeds