The steel industry is inextricably linked to trends in the greater economy, and is in part affected by general trends. The general domestic economy continues its choppy road towards recovery, although it continues to be plagued by setbacks and lack of consumer confidence. While most economists are certain that the economy is gradually and steadily improving, consumer confidence in May 2011 registered the lowest reading in six months and continues to stay well below the typical reading that signals a healthy level of consumer confidence. Consumer spending, which accounts for a major portion of the general US economy, has been lower in part due to insecurities about labor and income prospects. At the same time, housing prices fell to their lowest levels since 2002 as the housing industry battles an oversupply of foreclosed homes and tighter credit lending. Even as the general economy improves, albeit slowly, the construction and housing industries weigh heavily on associated sectors.

The steel industry is also dealing with its specific challenges. On May 26, 2011, industry and congressional leaders met to discuss the state of the steel industry at a meeting of the Congressional Steel Caucus. Recurring positions taking by steel executives regarded a desire to see increased support for capital infrastructure spending as well as increased tariff protection against foreign steel. Executives seemed particularly challenged by what they termed “dumping” and “unfair competition” from government-subsidized companies, as well as purposefully undervalued foreign currency that promotes export to the US. In general, however, steel executives are expecting revenue to rise for the rest of 2011.

The steel executives’ prediction for 2011 is matched by the US Geological Survey Metal, Institute for Supply Management and the Boston Consulting Group’s newest reports. The US Geological Survey summary, published for May 20, 2011, signals continued growth, although data suggests that growth may happen at a slower rate than in the first part of 2011. The report signals that while geopolitical unrest in the Middle East and North Africa has affected global trade and markets, domestic manufacturing seems strong enough to sustain demand. This analysis is seconded by a new report from ISM, which forecasts increased manufacturing growth as well as possibly higher prices through the end of 2011. Additionally, a study recently came out that expects the next five years could constitute a “manufacturing renaissance” as rising costs of labor abroad cancel out the savings found in producing goods abroad. Such a revitalization of domestic manufacturing would poise the steel industry to see renewed growth and demand.

As the economy slowly but steadily heads towards recovery, Rolled Steel is working hard to monitor market conditions and evaluate inventory position and availability. We are looking forward to remaining your supplier of choice as the economy continues to recover.

~Kaitlyn Plummer

The general US economy continues a shaky but progressing recovery. Corporations are posting record profits and holding record sums of cash, but there are concerns about Federal monetary policy and continued weakness in the dollar that seem to be impeding corporate confidence. Ben Bernanke, the Fed Chairmen, gave the first-ever Federal Reserve press conference on April 27, 2011, underscoring the worries over inflation and monetary policy. The Fed has said that they are keeping a very close eye on the current near-zero interest rates and the impact on inflation.

Meanwhile, manufacturing remains a strong sector in the economic recovery. According to the Federal Reserve, manufacturing increased 0.7% since March 2011 and 6.6% since March 2010. The US Geological Survey’s Mineral Survey is also forecasting growth in metals and manufacturing. The current demand is seen as more sustainable, rather than a demand driven solely by depletion of inventory and supply shortages.

Major U.S. mills, have seen a positive first quarter and are looking forward to an improved second quarter. Both US Steel and AK Steel are predicting that the second quarter results will be, in large part, due to increased demand and strong pricing. There are several factors that determine, in part, the price of steel. Oil is once again on the rise, and is at a two-and-a-half year high as of April 29, 2011. The rise in transportation and production costs translates to higher costs for products overall.

Overall, the picture of the economy continues to be one of slow recovery but is consistently growing.  Despite concerns of monetary policy, inflation and confidence, the economy continues to grow. Manufacturing has risen, which in turn requires an increase in metals and materials demand. Metal demand is also being affected by strong pricing from the mill side.

Rolled Steel is carefully monitoring the economy and adjusting to shifts and changes as necessary. We continue to be your supplier of choice, and look forward to exceeding your needs.

Kaitlyn Plummer

Base pricing from the mills has been affected by a number of global issues. While capacity has increased significantly in recent months from 2009, steel manufacturers are reporting huge increases in the price of iron ore. Mining company Rio Tinto, the world’s third-largest producer of iron ore, reported record profits in 2010, and BHP Billiton, a multi-national mining corporation, expects the iron ore price to retain its high level for the next two years. In regards to stainless, nickel hit a 34-month high in February and is expecting to increase in response to rising demand and increasing global production. Oil is on the rise, in part as a response to political unrest in Libya and Egypt, translating to increased transportation costs of both raw steel products and finished coils. In addition, there is some concern that the mills will be unprepared to meet the rising demand following the first quarter, leading to increased inventory margins from buyers and depleted mill supplies.

In spite of concerns, nearly every major domestic producer is anticipating a return to or increase in profitability and the stock market recognizes the increasing strength of the industrial metal market. Foreign producers are similarly indicating increased worldwide usage, although the regulatory structures and the rising dollar may change their profitability forecasts. All manufacturers cite increased demand in the technology, agricultural and consumer industries. Despite rapidly increased pricing – base prices have jumped around 45% since November 2010 – the mills report that, through 4Q 2010, they are operating at greatly increased capacities over 2009 and will continue to meet demand. In February, the U.S. Institute for Supply Management reported that manufacturing growth hit its highest level since 2004, indicating strong future demand, and Reuters reported that privately-conducted surveys of smaller manufacturers and businesses reflect a growing confidence and a heightened hiring needs.

Rolled Steel is currently anticipating future needs and carefully maintaining a strong inventory position. We continue to expect to be able to meet your material needs now and in the future, and is working to keep customers appraised of price adjustments and inventory changes as applicable. We are looking forward to March 2011 and expect increasing demand to continue.

We’ve introduced a cleaner, more navigable site that we’re hoping you’ll love. It’s now easier to find critical information about Rolled Steel Products, like our product line and equipment. Take a look at our updated pictures that show off our production facility, and be sure to check out our excess prime list!

We’ll continue to make changes and updates to our website.  The blog will be updated with relevant industry news and company developments, and we’ve got a video tour of RSP in the works in addition to other exciting projects. We believe the website will enhance your experience and familiarity with Rolled Steel, and we welcome any questions or comments you have.

Thanks for stopping by the new site. Be sure to check back to see our updates!