More of the Same
Since our last review in fourth quarter 2015 to current day, not much has changed as we near the end of the first quarter 2016. According to some steel economists there is More Pain Ahead for the U.S. Steel Industry.
Some of the contributing factors for this scenario are due to the following: Massive global overcapacity, weak demand, extremely high imports onto U.S. soil, low capacity utilization rates at U.S. steel mills, as well as a strong U.S. dollar. Weak demand from the energy, machinery, and equipment end markets as well contributed to lower steel consumption. With the increase of imports there are those that feel more trade cases will be filed to seek some financial relief for the U.S. steel manufacturers.
Some of the national construction agencies such as The Associated General Contractors of America feel that after construction employment gained in 44 states in 2015 that this is a sign firms are finding a way to expand headcount to meet rebounding demand for construction. Considering this, many contractors are optimistic about the 2016 construction season. The question all of us would like to answer is, with all the current market turmoil, will it drag down demand for construction this year?
For the last quarter of 2015 scrap maintained its gradual decline to help contribute to one of the worst scrap seasons in many years. Since January 2016 scrap has increased $50.00 per ton. The last time it increased $50.00 per ton in a 90 day period was back in 2013. There are those that feel scrap will stay flat for a certain period of time, however there are many circumstances that can turn it around such as Global demand, Local demand, import pressure, current inventory on the ground, the reasons can become many. The market steel prices seem to be at the bottom however in the past few days one of the major mills announced a $30.00 per ton increase. It will be interesting to see how it is accepted within the industry.
U.S. Raw Steel Production
In the week ending March 5, 2016 mills produced 1,673,000 tons down 1.1 percent from the previous week. Mills have produced 16,465,000 tons so far this year, down 5.8 percent from the same period last year.
As always we will attempt to keep our customers up to date on the latest developments within the steel industry. If we can help explain what’s currently going on in our industry, give our HarMac office a call: 207-935-3531