Jim Olsztynski 2014-08-28 06:42:17
Your Steel Scrap is Someone Else’s Treasure ASA Materials Market Digest is published monthly by the American Supply Association.The following information is for July 2014. According to the World Steel Association (WSA), the United Nations Commodity Trade Statistics Database shows that the volume of global scrap exports increased from 9.3 million tons in 1990 to 106 million tons in 2011. Figures from the Bureau of International Recycling show that total world steel scrap use increased 7.6 percent in 2011 to reach 570 million tons. The globalization of the ferrous scrap market, however, also places stresses on the system. The long lifespan of steel products means that the amount of steel available for recycling cannot keep up with the current world demand for new steel products. With steel, structures can last longer than 60 years, and cars often last longer than 12 years; steel products can be seen as scrap-in-inventory, meaning that the steel will not be ready for recycling until the long life of the product comes to an end. A positive aspect of steel is the ease of recycling when products finally do reach the end of their lives.The ability to recover and collect old steel products for subsequent recycling is greatly enhanced by the inherent magnetic properties of steel. Consequently, a large tonnage of steel becomes available for recycling every year. Figures from the U.S. Census Bureau and the U.S. International Trade Commission (ITC) demonstrate that the United States is the world’s largest exporter of ferrous scrap — exporting nearly 23 million tons of iron and steel scrap in 2011. Globally, China, Taiwan, South Korea, India, Canada and Turkey are the largest markets for exports of U.S. steel scrap in that same period. North America is also one of the largest consumers of its own steel scrap, recycling more than 70 percent of that scrap domestically, with mini-mills being the primary source of recycled steel. Mini-mills use electric arc furnaces, which melt scrap metal via the heat produced by an electric arc. Each year, more steel is recycled in North America than paper, aluminum, plastic and glass combined. Carbon Steel U. S. service center steel shipments in May 2014 increased by 2.6 percent from May 2013, according to the Metals Service Center Institute (MSCI). Steel product inventories increased 4.9 percent from May a year ago. At the current shipping rate, this represents 2.2 months of supply in inventory. World crude steel production jumped 2.2 percent in May compared with May 2013 for the 65 countries reporting to the World Steel Association (WSA). China’s crude steel production for May 2014 was up by 2.6 percent compared to May 2013. U.S. crude steel production increased 1.4 percent for the same month. The crude steel capacity utilization ratio for the 65 countries in May 2014 was 78.5 percent and was 0.7 percentage points lower than May 2013. Compared to April 2014, it was 0.2 percentage points lower. U. S. imports of steel jumped 7.4 percent in May over April, while finished steel imports rose 6.4 percent, based on preliminary data from the U.S. Census Bureau tracked by the American Iron and Steel Institute (AISI). Year-to-date (YTD), total and finished steel imports were up 31 percent and 24 percent, respectively, versus 2013.Finished steel import market share was an estimated 28 percent in May and is estimated at 27 percent YTD. Key finished steel products with a significant import increase in May compared to April included oil country goods (up 55 percent), standard pipe (up 22 percent) and line pipe (up 22 percent). U. S. steel exports also picked up, climbing 3.8 percent in April compared with the previous month, marking a six-month high, according to the latest U.S. Census Bureau data. Exports were also up 3.7 percent compared with April 2013. OCTG exports were up 38.3 percent compared with April 2013. However, an analysis by the American Institute for International Steel (AIIS) calculated a 6.3 percent drop in U.S. steel exports for the four months through April with harsh winter weather being partly to blame. Look for steel prices to rise in response to new EPA regulations intended to slash carbon emissions from power plants. Aimed primarily at coal-fired plants, the regulations, if upheld after court challenges, will almost certainly lead to higher natural gas and electricity costs that metals producers and their customers will attempt to pass on to end users. Industry analysts also warn that the regulations will make U.S. steel, already battered by low-cost foreign competition, even less competitive worldwide. Stainless Steel Three of the big four U.S. stainless steel producers announced price increases for July, although the biggest of all, North American Stainless (NAS), has yet to jump aboard and may not in hopes of keeping mill capacity high and capturing market share. If NAS stands pat on pricing, most analysts believe that the increases announced by Outokumpu Stainless USA, AK Steel and ATI, generally in the range of $200-300 per ton, have little chance of sticking. Rising global stainless steel prices have benefited from growing demand, and rising nickel prices peaked in mid-May on the LME at over $21,000/ton. That was up by more than 50 percent since the beginning of the year.More recently, nickel has fallen back and fluctuated between $18,000-19,000/ton, closing June 27 at $18,765.MEPS believes that pricing will continue to level out in the near term, in part due to summer holiday shutdowns in many parts of the world. Longer term, MEPS’ analysts think that the $18,000 mark represents a new floor for stainless prices compared with the much lower values seen over the last couple of years. A major driver of nickel and, thus, stainless prices has been Indonesia’s ban on nickel imports. Global production of molybdenum in 2013 reached a new high of 539.2 million lbs., up from the previous year’s record of 535.2 million lbs. Full-year figures from the International Molybdenum Association (IMOA) also show global molybdenum use at 537.7 million lbs., breaking the previous year’s record high of 522.5 million lbs. Tubular Product U. S. distributors’ carbon pipe and tubing shipments dropped 0.5 percent in May from April while inventories rose 1.7 percent, according to the Metals Service Center Institute (MSCI). Canadian distributors’ carbon pipe and tubing shipments rose 3.8 percent in the same month. OCTG producers are biting their nails awaiting the ruling scheduled for July 10 on the massive trade case accusing nine countries of dumping energy tubulars in the United States. In early June, domestic producers that filed the charges persuaded 153 members of Congress to request that the U.S. Commerce Department’s International Trade Administration (ITA) reverse its decision not to impose preliminary anti-dumping duties against South Korean OCTG, a decision that took many observers by surprise, since South Korea accounted for the largest imports by volume and exports 97 percent of its OCTG. Foreign mills have stepped up their OCTG shipments to the U.S. in advance of the ITA’s decision. U.S. OCTG imports rose 55.1 percent in April and 73.3 percent above the amount shipped in April 2013, according to preliminary U.S. Census Bureau data. Price differentials between foreign and domestic OCTG were said to be narrowing, however, as preliminary duties took hold against most of the nine countries named in the U.S. petition. Overshadowed by the impending trade ruling is the continuing glut of OCTG product stemming not only from imports but from companies expanding domestic production capacity in the United States. Overcapacity appears at least partly responsible for the announced closing in August of two U.S. Steel tubular manufacturing facilities in McKeesport, Pennsylvania, and Bellville, Texas. McKeesport produces ERW products with an annual capacity of 315,000 tons, while Bellville makes up to 100,000 tons of ERW line pipe and OCTG, according to U.S. Steel. TMK IPSCO also announced it will idle its 8-inch welded pipe mill in Wilder, Kentucky, along with its welded pipe operations in Blytheville, Arkansas, and Camanche, Iowa, citing the closures come with pressure from imports. Average domestic line pipe prices rose 1.6 percent in May to $1,975 per ton, according to Pipe Logix. Seamless prices rose an average 2 percent for the month to $2,610 per ton, while welded pipe went up an average 0. 9 percent to $1,340 per ton. Import prices also went up, rising 2 percent to $1,270 per ton, on average. Pipe Logix calculated the average for all products, domestic and import prices combined, to be $1,623 per ton in May, up 1.8 percent from the prior month. Dumping penalties have been imposed on welded stainless steel pipe produced by companies from Malaysia, Thailand and Vietnam. The U.S. International Trade Commission (ITC) made a negative “critical circumstances” determination on shipments from Malaysia that resulted in dumping margins of 167.11 percent for imports from three Malaysian companies. Thai companies got hit with margins ranging from 23.89 percent to 24 percent, while Vietnam’s product was assigned a 16.25 percent penalty. The ITC also voted to keep in place anti- dumping and countervailing duties on welded stainless steel pressure pipe from China as part of its 5-year sunset review process. June proved a volatile month for copper prices. The first trading day on June 2 marked the high mark on the COMEX, closing at $3.179. Then came a downhill plunge to as low as $3.017 on June 12 before rising again to close June 27 at $3.15. U. S. mine production of copper in 2013 increased by 4 percent to about 1.22 million tons and was valued at about $9 billion, according to the U.S. Geologic Survey (USGS). Arizona, Utah, New Mexico, Nevada and Montana — listed in descending order of production — accounted for more than 99 percent of domestic mine production; copper also was recovered in Idaho and Missouri. The USGS also produced a report assessing future copper market activity, which appears to be on course to increase in the near term. Favorable economic conditions include improved housing and automotive prospects and general economic growth. Global refined copper went into steep deficit in March after a slight 2,000-ton surplus in February, according preliminary data from the International Copper Study Group (ICSG). March’s 83,000-ton deficit contributed to a first-quarter global deficit of 205,000 tons, compared with a 206,000-ton surplus in the same period of 2013. World-refined copper consumption shot up 14. 1 percent from a year earlier, while production grew by only 5.4 percent in the first three months. Scrap The AMM Midwest Ferrous Scrap Index showed declines of 4.1 percent for shredded scrap in June, while busheling scrap settled on June 10 at $397.96 per ton, a mere 0.4 percent below the $398.15 number recorded for May. No. 1 heavy melt settled June 10 at $362.17 per gross ton, down 2.4 percent from $371.19 per ton in May.Observers noted that scrap prices were beginning to firm up as the month drew to a close. U. S. ferrous scrap exports jumped 36.6 percent in April compared with April 2013, after three consecutive months of year-on-year declines. Demand from Turkey, where our exports increased more than fivefold, provided the main impetus. Global steel scrap usage increased 1.8 percent in 2013, according to a report from the Bureau of International Recycling (BIR). U.S. ferrous scrap consumption was unchanged compared with 2012, while Chinese consumption increased 2 percent and Turkish usage fell by 6 percent. The United States was the world’s leading exporter of ferrous scrap despite a 13.6 percent drop in shipments compared to 2012. One analyst said global steel scrap prices may drop by $50 per ton in coming months. News of Note May sales rose 5.4 percent over May 2013, for ASA’s industrial PVF distributors. This follows April’s 6. 2 percent gain and established momentum for a good year after a sluggish start. For the calendar year through May, industrial PVF sales rose 1.9 percent compared with the first five months of last year. On a trailing twelve-month basis, ASA’s PVF distributors’ sales were up 1.3 percent on average, according to the association’s most recent Monthly Pulse Report. ASA’s PVF distributor inventories were up 6.2 percent in April compared with the same month in 2013. Construction activity hit a wall in May after rising through April. Construction contracts dropped 4.9 percent in value overall, according to McGraw Hill Construction.Nonresidential starts dipped 5 percent, due mainly to a steep drop in the manufacturing category.Residential building was down 7 percent compared to April. Overall construction spending for the first five months of the year was down 1 percent, led by a 13 percent decline in non-building construction. McGraw Hill Construction Chief Economist Robert Murray noted that construction activity in March and April picked up after a slow start to the year, presumably due to severe weather, and that manufacturing plant data is “often volatile.” Business conditions at architecture firms rebounded in May with an ABI score of 52.6 (any score over 50 indicates billings growth). While architecture firm billings have increased in eight of the last 12 months, particularly harsh conditions this past winter led to declining billings or only modest growth for several months. This month’s score indicates that work is finally picking back up at firms. In addition, for the second consecutive month, growth was reported in the value of design contracts in May, further indicating that there are new projects in the pipeline.The ABI is said to presage construction projects by about 9-12 months.
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