(By Pat Maillett, HarMac Rebar & Steel)
The definition of Volatility in chemistry means, the speed with which a substance changes from solid to liquid, as shown below in an electric steel furnace. This Volatility certainly fits the last eighteen months within the steel industry. One year ago steel Scrap prices dropped nine times during the 12 month period of 2015.
The beginning of 2016 was a reversal of the 2015 scenario, as of the end of June 2016 scrap has increased five out of six months year to date. These types of valley’s and peaks make it very difficult for anyone to be able to sense what pricing may do in a given period of time. These changes in the past eighteen months confirm and solidify the reasoning to not hold pricing for an extended period of time.
Construction Job Losses
Washington, D.C. June 3, 2016 the U.S. construction industry lost 15,000 net jobs in May according to an analysis of today’s U.S. Bureau of Labor Statistics report by Associated Builders and Contractors. This represents the industry’s worst month since December 2013, when payrolls also shrank by 15,000 jobs. This now makes for two consecutive months of job losses for the first time in four years. Many developers believe it is quite likely that job growth will pick up during the months to come. Volatility exists within almost every sector of the Construction industry, from jobs created as well as lost, materials increasing and decreasing, all lend to creating volatility.
Currently the sentiment on scrap pricing will remain flat for the near future. Turkish scrap buyers have shifted over to purchases from the European Community verses the United States. Chinese Billet prices slipped this week once again on June 21st there is speculation that domestic scrap sales will have to keep pace with the movement of Chinese billet. The speculation of what July may bring will have to be decided mostly by global pressures being created within the scrap buying community.
U.S. Raw Steel Production
In the week ending June 18, 2016 mills produced 1,750,000 net tons down 1.6 percent from the previous week. Mills have produced 42,305,000 tons so far this year. Currently total production year to date is only trailing last year’s production by 0.6 percent. This substantial increase compared to a year ago which was down 7.7 percent to the previous year shows a respectable increase in production.
As always we will attempt to keep our customers up to date on the latest developments within the steel industry. If we can assist in attempting to explain the current steel industry, give our HarMac office a call at 207-935-3531