Steel Sense

[by Pat Maillett, HarMac Steel & Rebar]

 

Positive Indicators

There are just a couple of work days remaining in the first quarter, the sentiment within the steel industry is that the tide may finally have turned, as we are seeing many positive signs for 2017. Leading market indicators that we have not seen for many years!

It has been said that the U.S. manufacturing base is on the verge of a renaissance thanks to the business friendly policies of our new Trump administration. Predictions have been made by a top steel executive that we may very well be on the verge of a new American industrial resurgence. Macroeconomic indicators such as consumer confidence, employment levels and inflation are getting pretty solid and most steel end markets in North America are “headed in the right direction”.

Some of the positive indicators mentioned above were noted by the President’s message to Congress stating that, our infrastructure at home has so badly crumbled. The President went on to say that the crumbling infrastructure will be replaced with new roads, bridges, tunnels, airports and railways gleaming across our land. The time has come for a new program of national rebuilding. In order for that to happen the President will be asking congress to approve legislation that produces a $1 trillion investment in the infrastructure of the United States.  This will be financed through both public and private capital. And will create millions of new jobs. In addition to infrastructure work, pipeline projects such as Keystone XL and Dakota Access have been fast tracked by the administration. Providers of steel line pipe are optimistic that demand will improve as a result of Trump’s emphasis on energy infrastructure and his pledge to reduce regulatory burdens on drilling.

More positive news for the steel industry is the favorable ruling by the U.S. Commerce Department on imported steel.  The agency has levied preliminary anti-dumping duties of 5.29% – 7.07% on Turkish rebar imports. This will enable the domestic producers to supply additional long steel products with an improved margin.

Scrap

Since our last report scrap has climbed 34% from November to January, then in February scrap dropped  8%. Mills published increase letters to cover their substantial increases in raw material. There is speculation with all of the positive indicators within the steel industry that scrap as well as steel pricing will begin to climb upwards. Supply and demand will come into play especially with the lack of imported materials, allowing the mills profitable growth. As we have been saying for many years or at least since 2003 when basically the steel industry was redefined and restructured, volatility is a concern and we must continue to try to plan for the unexpected.

U.S. Raw Steel Production

More positive indicators for raw steel production; for the week ending February 25  raw steel production was up 0.2 percent from the previous week. Mills have produced 13,836,000 tons thus far this year, up nearly 5 percent from the same period last year. This is the first time in three years that the first quarter has outperformed the previous year. The past two years steel production lagged behind the previous years. Let’s hope the momentum continues and the steel industry has a great season.

As always we will attempt to keep our customers up to date on the latest developments within the steel industry, call our HarMac office for assistance. 207-935-3531

Leave a Reply

Your email address will not be published. Required fields are marked *