May 2011 – Industry Update
As manufacturing remains a cornerstone of the economic recession, primary metal needs continue to increase. The jump in pricing from November 2010 to April 2011, while likely unsustainable, has seemed to generate stronger revenues for major companies in the industry.
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.