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US Steel Imports At Multi Year Lows
With many pundits extolling the imminent inventory pick up and the ensuing exponential growth of US GDP, it probably makes sense to observe demand for primary raw materials for durable goods. Or, rather, the lack thereof. July US Steel imports were at the second lowest reading in over three years, at 0.9 million tonnes, well over 50% below the average monthly import total of 2.5 million tonnes. One would presume an inventory pick up would be preceded by a pick up in steel imports. Alas, the facts do not back up that assumption.
Source: Census Bureau
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That would be true if the manufacturing was done in the United States...it's not. My favorite has been from a Caterpillar Generator. The Generator that was installed 3 years ago said "Made in the USA". The replacement that was just purchased this year said "Assembled in Mexico", which translates to "Parts Manufactured in China".
Hey dingleberry, it's a statistic. It measures US imports relative to earlier and in this case only 3 years earlier. The shift of production has happened over decades. It is not the reason for a plummet in the last year. Think before you waste pixels.
That's not exactly true. I've been managing manufacturing plants in Mexico for 15 years. 60 to 90 percent of the spend on raw materials goes to the US. 10 to 20 percent is spent in Mexico, and the remainder around the world. If you look at the flow of funds, for every USD$1.00 imported from Mexico, USD$0.70 goes back to the US in goods and services.
CAPTCHA:
(d/dt sin(0))-tan(_____) equals zero (answer in degrees)
I guess 45 was the right answer.
Reinforced concrete for construction projects is very heavy, and is therefore mostly made either near or right at the construction site. Both ways, of course, mean "jobs in the USAA". Reinforced concrete is concrete with steel bars in it. When steel imports decrease, that implies that construction will also decrease.
Real things that are directly measurable are the guiding light for me.
The Official measures are over cooked propaganda tools. Yes, The official numbers are used to justify market moves, but in reality are not good measures of reality.
Thanks for a reality check.
all the crushed clunkers are displacing steel imports.
The collapse of steel imports screams of big trouble for the remnants of US industry.
Like a fool, I would have thought the "Stimulus" would kick this up more. Seems to demonstrate ineffectiveness.
A lot of the stimulus hasn't been spent yet.
They are waiting for the Nov 2010 congressional elections.
Now if you can find stats for asphalt production - they might be up. Filling potholes paves the way to recovery!
You know, I know a number of local political thugs for whom "It's all about concrete." I know what you're talking about, but the situation is so serious this time that actually that road stuff isn't happening, at any rate in California. What's happening instead is that the "shovel ready" money is going to plug holes in state and local budgets.
Which actually makes perfedt sense. Infrastructure and maintenance programs are funded to meet demand. But demand has fallen off a cliff.
I don't know if they're reporting this elsewhere, but business has basically stopped in California. Deferred spending has been done and we're just waiting for a new bout of layoffs.
The real disaster, of course, is that incomes are dropping. There are no dramatic stories (that's the endgame) but day by day in millions of jobs, wages are being slashed, hours cut back.
You'll see it in the revised revenue projections for California. I won't even relay the whisper number: it's terrifying.
Tell us, man! You're among friends here.
good point
good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions
RAILSTON Index - shipments of crushed stone on US railways. Down 16.7% y/y and up 6.3% w/w. Would post a chart if I knew how. Clearly demand has been shifted down but is stable.
Other indicies worth tracking:
RAILCOAL
RAILPETR
RAILMETL
RAILNMET
RAILCHEM
RAILLUMB
RAILPULP
RAILGRAN
RAILVEHC (this is the most humorous chart of them all)
Just to play devil's advocate, what has domestic steel production been doing in the meantime? Has that offset any of the import drop?
With all the layoffs the U.S. plants have done, are you kidding. If you go back and read Layoff Daily, you will see that such giants as Arceloral Mittal, Nucor and U.S. Steel have had massive layoffs and plant closures earlier this year.
Here in Oklahoma Girardeau Steel is closing its Sand Springs plant and laying off 300 people, sometime in September. Notices already went out.
No I do not think US plants are making up for the lack of imports. I used to work at Trinity Industries building railcars. We used to get up to 15 rail flatcars a week of plate steel for rolling tank cars,and that is just the Oklahoma City plant, which was small potatoes compared to Long View, TX. But late last year and early this year Trinity closed 13 of 15 plants in OK, MO and TX, and one large plant in Cartersville, GA. That alone contributed to a HUGE reduction in demand for steel. Trinity Industries just about does not exist anymore.
They also closed two wind turbine facilities, one in OK and another in MO. Where is all that new fangled energy production when companies like Trinity are closing their facilities. Another competitor to Trinity closed a wind turbine facility near Tulsa a few months ago. So much for "green" energy!
Nah, we are just royally phucked. Get used to it.
from steelo.org:
In the week ending August 22, 2009, domestic raw steel production was 1,304,000 net tons while the capability utilization rate was 54.7 percent. Production was 2,158,000 tons in the week ending August 22, 2008, while the capability utilization then was 90.4 percent. The current week production represents a 39.6 percent decrease from the same period in the previous year. Production for the week ending August 22, 2009 is up 1.5 percent from the previous week ending August 15, 2009 when production was 1,285,000 tons and the rate of capability utilization was 53.9 percent.
Adjusted year-to-date production through August 22, 2009 was 36,555,000 tons, at a capability utilization rate of 45.8 percent. That is a 49.3 percent decrease from the 72,021,000 tons during the same period last year, when the capability utilization rate was 90.3 percent.
Broken down by districts, here's production for the week ending August 22, 2009 in thousands of net tons: Northeast Coast: 109; Pittsburgh/Youngstown: 87; Lake Erie: 12; Detroit: 52; Indiana/Chicago: 378; Midwest: 145; Southern: 453 and Western: 68.
(Estimate based on reports from companies representing about 50% of the Industry's Raw Steel Capability + includes revisions for previous months)
the site has other detailed information...some
free, some not so free...
Thanks.
We're SO BONED ...
Saw this last week, worth a full read for the details:
http://www.reuters.com/article/marketsNews/idAFN2053545520090820?rpc=44
Come now... Yobammy has your back!
I'm in Sault Ste Marie, Michigan for a visit. Today I saw a large ship, the Burns Harbor, pass thru the locks to Lake Superior, on it's way to Duluth most likely to get a load of ore for the mills in Gary, Indiana. Not much going on here, a sight to behold. The Iron Range in the U.P. to Minnesota had geared up for a boom a while ago, not sure how that's going, but believe it or not, we still have a steel industry in this country. Maybe we don't need the imports, that would be a shocker.
Ha it's a TRAP. Everything is made with Invisibillium. It's the new building material for a brave new world. It's stronger than steel, lighter than alluminum, conducts electricity, creates electricity and infinitely malleable. But there's a downside. If you stop believing in it for a second it disappears and you get rained on road rash or fall out of the airplane.
Globally the Baltic Dry Index is down 45% from June. Just another leading indicator pointing downhill.
Yeah, and with a good fraction of ships being scrapped in Indian breakers, there will be a bunch of Indian steel floating around.
And as everyone knows, collapsing demand always leads to inflation.
/sarcasm
Ironically yes. Think of it as a physics kinetic energy problem. The price is the mass and the demand is the velocity. Prices go up during collapsing demand because you can't get around the overhead rules of producing.
So in your analogy price is static until we get a nuclear fission reaction...are you saying we need nuclear war for deflation to occur?! Doesn't seem very true to life.
Given that you're probably not saying that there are so many ways to argue here so I'll just pick a few quick ones.
First off, the easiest one: if you ever take a look at the supply and demand curves you will see that an increase in demand, that is a right (outward) shift in demand increased both quantity and price and vice versa for a contraction of demand, or a left (inside) shift.
Secondly: using the stock market analogy since we all love the stock market, less bids(demand) lead to lower prices.
Thirdly the costs of production you mention go down the less you produce due to less demand.
Fourthly, just take a look at any historical examples of diminishing or collapsing demand; prices go down.
You may see prices for beer go up, but that is solely due to the fact that it is a highly inelastic market.
cheers
Money=energy you can't produce or process anything that doesn't follow those rules. You can't sell steel for a buck a ton if it costs you 120 bucks worth of energy and 120 bucks worth of human effort.
Supply and demand doesn't exist outside of the MARGIN curve. Collapsing demand doesn't involve MARGINS because it is liquidating inventories and structures without any respect or reguard for margin because that business is DONE. This of course doesn't work with farmers. Who must produce more of a good than people need. It always has to work on abundance. Which is why farmers should become more dictatorial over what they charge and work in an unionized fashion before they ened up having thier farms mortgaged to the hilt and they work soley as slaves. Oh wait too late.
Your argument ignores the fourth point of my reply: in an environment where a ton of e would cost a dollar, the energy used to produce it and the labor costs would add up to being lower that a dollar. I have no idea what you're talking about in the second paragraph but it involves margins, and you should note that margins do get squeezed in a deflationary environment, as they are now.
http://en.wikipedia.org/wiki/Supply_and_demand
Until the money multiplier goes (convincingly) above 1 all price increases are ephemeral.
http://research.stlouisfed.org/fred2/series/MULT
Just look at the recent credit crunch. When consumer demand collapsed last year as the savings rate skyrocketed you saw stores offer bigger discounts and lower prices. Lets review: demand lower, prices lower. I don't know what else to tell you...you can argue that prices go up when demand goes down but that is just not how it works.
let's change the focus for a minute. an informal survey showed credit card rates going into the teens for high credit ratings. *why borrow if u don't need to?
credit is getting tougher for the consumer.
*what rate would it cost if u did need to keep borrowing?
try 35.99%.
I paid out my balance each and every month for the phucking past 20 years, living like a caveman. The bastard just informed me the rate would be 20.99% a week or so ago. Well, guess what, I don't mind at all. At any percentage with zero balance, my math says it is still zero.
Get ready for the royal screwing if you carry the balance. Got balance? Got Prep H?
Look, talk to your loved ones now and advise them this year you want all of them not to send you Christmas gift and you will do the same, so we can all royally screwing back. Yeah, 20.99%, eat my dust.
They must be having hard time trying to make the report look better than expected, but I'm sure they'll find a way. It's looking like everything will be better than expected until the next election.
good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions
as much as i respect td for his great pieces, this one lacks thought.
imports are low because demand is better elsewhere so why ship to the us when chinese steel prices are the same price before the shipping costs and tariffs. HRC is being taxed an additional 90% from China... so why bother. Furthermore, us steel industry utilization has been ticking up for weeks and we are seeing plant restarts across the world, not just in the us. so yes while anemic growth is our future, we are still a ways from normalizing as the operating environment in q1/q2 were simply too depressed.
This could only be true if there was a global shortage of steel. But with global capacity utilisation rates around the 50s this seems unlikely.
Steel makers aren't rationing out shipments to the highest bidder, leaving the poor old US short of steel as it can't afford to pay as much as the Chinese.
The other reason it could happen is if tarrifs raised the price of imported steel beyond what the market is willing to pay and therefore switched to domestic steel, but US steel production isn't rising to indicate that
actually it is rising, check your facts. inventory to production ratios are the lowest since the data has been collected.
At least it's got a pulse:
http://docs.google.com/present/view?id=dcf8x2vq_312fdqqzfgh
Sibel Edmonds depositions were released about 48 hours ago. "Deep Corruption Beneath the Surface". I am watching them now I will do a story depending on how juicy they are.
http://video.brownpublishing.com/video/newsdemocrat/sibel/
Cool, good find.
Think of some of the possible news headlines which could have legitimately been made with Sibel's testimony: FBI WHISTLEBLOWER ACCUSES NUMBER TWO AT STATE OF SELLING NUCLEAR SECRETS or BISEXUAL CONGRESSWOMAN BLACKMAILED BY NATO ALLY Surely, if the corporate media is in the business of selling stuff, then such catchy headlines are just any editor's wet dream, no?
http://vineyardsaker.blogspot.com/2009/08/googling-sibel-edmonds.html
Today I will interview a local township trustee. It is not a certitude to America but a slice of it for our dispositional reality. It is not improving was are last dialog and we had to laugh at our leaderships wisdom and avarice. Indicators like data are fragile but they are just that, indications. The information conveyed on ZH is another crucial and essential link in this effort to citizens. Correct information where, or if errored base on reason and principle can be positive when remediable people pay attention and add value. It is still crucial to find a best course and hopefully the citizen can find candidates based on fact in these troubled times we have witnessed for decades. I will give up when they shovel dirt in my face but I refuse to dig the hole. Fight back or die in your hole. Vote for a man or woman based on the dead letter since this is the day. ZH fight for your rights where ever you are. The only fool I seen was the man in the mirror this morning and yes the grass roots are the solution. We all know what has happened so fix it. Yea I have my Global Corporate day job also and there just as disconnected and scared as hell also now. If they say they are not there lying and a slave to a dead economist. Deficits do matter since I feel more are to be cut but i will see tomorrow and we know where this going. Thanks all for the posts.
Please... for the sake of the children... don't drink and post.
When capacity utilisation rates in the US steel industry are so low (54.9% at last count), it is hardly surprising that steel imports are falling.
The domestic industry can meet any improvement in demand just by bringing capacity back on stream, which has been happening since April. Current weekly production run rates (to 22 August) are 35% ahead of where they were in early April, so any improvement in demand driven by customer restocking is being satisfied by domestic production.
This trend has probably been exaggerated by the US government's focus on supporting the domestic economy, which was the whole reason behind the fiscal stimulus package.
As you can see the fall in steel imports has actualy slowed - this is probably mimicing the deceleration of inventories. And this is what counts for GDP - not an outright rise in inventories but a slowing in their fall.
TD, you are missing the small green shoot at the end of the chart...its moving up..
we now need to sustain it...and grow it into a full blown tree..
I am in this business. There isn't any activity.
Trade basically came to a screeching halt 10 months ago. World has massive overcapacity.
Earliest will pick up in USA is 2011-2012 if we muddle through which is doubtful.
wasn't prior week at 576k? So 576k revised to 580k with little mention in the media, and then we get a 570k initial read on this weeks claims...
good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions