metals-outlook

Presented by All Metals & Forge Group
The MetalsWatch! newsletter was first published in print in 1988 for All Metals & Forge Group. Its primary focus was to be informative to the metalworking industries in the United States. Its original circulation was 2500 organizations. Today, MetalsOutlook™ (formerly MetalsWatch!) has a global circulation of 85,000 companies from a very diverse group of industries, including Aerospace, Defense, Oil, Chemical, Automotive, Medical, Electronics, Heavy Industry, Shipbuilding.

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Metals Outlook™ – April / May 2014

Cover Story: US ON THE UP, EUROPE STEADYING, CHINA AND JAPAN ON A SLIGHT SLIDE AND VIETNAM DOING ITS BIT
II. North American Perspective
III. U.S. Forging Industry
IV. Manufacturing Talk Radio – Live from ISM 2014
V. Euro-Zone
VI. Asia Outlook
VII. South America
VIII. Economic Trends Across The Globe
IX. A Final Word

Publisher’s Statement

Just back from the ISM 99th Annual International Supply Management Conference & Educational Exhibit in Las Vegas where All Metals & Forge Group sponsored the appearance of Manufacturing Talk Radio on the exhibit floor.  Executive Producer and show host Tim Grady and I interviewed guests including Linda Rigano, Executive Director, Media Relations, Tom Greco, Vice President and Kirstin Carty, Audience Outreach Manager of ThomasNet and M.L. Peck, Vice President of ISM, Brad Holcomb, Committee Chair of the ISM Report on Business® and Tom Derry, CEO of ISM, plus more than 20 other speakers, exhibitors or attendees from the crowd of over 2,200.  The live broadcast of Manufacturing Talk Radio continues to grow its audience.  Including downloads of the live show from mfgtalkradio.com, mfgshow.podbean.com or iTunes.com, the show has had over 40,000 listeners.

I encourage you to download and listen to the show that was broadcast on Monday, May 5 where Linda Rigano, Executive Director, Media Relations of ThomasNet and M.L. Peck, Vice President of ISM announced their co-sponsored 30 Under 30 Rising Supply Chain Stars recognition and awards program to generate awareness of this new generation by celebrating the accomplishments of the young, bright, passionate millennials who are in supply chain management and procurement today who demonstrate leadership, initiative and innovativeness. Nominations of these Rising Stars can be made by colleagues, friends, family members, and even the nominees themselves.  Later in that show, Tom Greco, Vice President and Kirstin Carty, Audience Outreach Manager of ThomasNet.com announced the relaunch of ThomasNet.com with a surprising twist – the true marriage of high-tech, high-touch in a website. Listen carefully – there is a strategic lesson to be learned from this exciting high-tech, high-touch combination.

On Tuesday, May 6, Brad Holcomb, Committee Chair of the ISM Report on Business® and Tom Derry, CEO of ISM, talked about the 99th annual conference.  Brad Holcomb did an update of ISM’s 2014 forecast for business, presenting an overview of all the indicators pointing up with some exceeding the original December 2013 outlook, and Tom Derry summarized the messages being shared and learned at the show.  It is worth another attentive listen.  In the coming weeks, the show will air many of the other interviews conducted at this exciting annual conference.

We hope you enjoy this issue of Metals Outlook as All Metals & Forge Group presents a look at manufacturing around the world.

Lewis A Weiss
Publisher
Comments to Publisher: publisher@steelforge.com

Cover Story: US ON THE UP, EUROPE STEADYING, CHINA AND JAPAN ON A SLIGHT SLIDE AND VIETNAM DOING ITS BIT

The news just broke that the US economy added 288,000 jobs in April and that the unemployment rate, at 6.3 percent, is at its lowest level in six years. All indicators are up this month, from manufacturing production, through car sales, construction spending, and steel output.

The PMI figure from the Institute of Supply Management rose to 54.9 percent in April from March’s 53.7 reading, representing manufacturing expansion for the eleventh consecutive month.

Dun and Bradstreet’s US Business Health Index strengthened by 8.6 percent year-on-year in April, the highest since the index began in December 2010. The D and B Small Business Index is also strengthening.

The Bureau of Economic Analysis reports new orders for durable goods in March were up 2.6 percent at $234.8 billion, excluding transportation new orders were up 2.0 percent, overall shipments up 1.1 percent, capital goods up 1.7 percent, unfilled orders up 0.6 percent and inventories up 0.5 percent. New orders for manufactured goods were up 1.1 percent to $493.9 billion, shipments up 0.3 percent to $494.9 billion, unfilled orders up 0.6 percent to $1,069.3 billion and inventories up 0.1 percent to $643.1 billion.

The Bureau further reports construction spending in March 2014 was $942.5 billion at a seasonally adjusted annual rate, up 0.2 percent from February 2014, and up 8.4 percent from March 2013.

The real GDP grew at an annual rate of 0.1 percent in the first quarter of 2014.

World crude steel production for the 65 reporting countries for March 2014 was up 2.7 percent on March 2013’s figure at 141 Mt. Capacity utilization in March 2014, at 79 percent, was 0.4 percent less than in March 2013, but up 1.4 percent on February 2014.
US crude steel production, For March 2014, at 7.4 Mt is up 0.9 percent year-on-year.
Following are April’s auto sales for the ‘Big 8’ US auto producers:

Company April 2014 April 2013 Change
General Motors 254,076 237,646 6.9%
Ford 211,126 212,584 – 0.7%
Toyota 199,660 176,160 13.3%
Chrysler 178,652 156,698 14%
Honda 132,456 130,999 1.1%
Hyundai/Kia 120,884 112,440 7.5%
Nissan 103,934 87,847 18.3%
Volkswagen 30,831 33,644 -8.4%

The overall total sales for the month of April, at 1.39 million units, are 8 percent up from the year-ago figure. The Seasonally Adjusted Annualized Rate now stands at 15.98 million units.

II. North American Perspective

North-AmericaThe Institute of Supply Management PMI figure registered 54.9 percent in April, up 1.2 percentage points from the March figure, indicating expansion in manufacturing for the 11th consecutive month.
Of the eighteen manufacturing industries, seventeen are reporting growth in April, including Primary Metals, Transportation Equipment, Fabricated Metal Products, Machinery, Chemical Products, Paper Products and Petroleum and Coal Products. Nonmetallic Mineral Products was the only industry reporting contraction in April.
Fabricated Metals Products respondents say winter weather slowed order intake but not enquiries, and they felt a pent-up demand waiting for better weather. Chemical Products people say export orders are picking up but that margins are very thin. There is concern here about effect of a Chinese slowdown. Transportation Equipment respondents say business and hiring are up, but that skilled trades are in short supply. A Machinery respondent reported business in Spring 2014 some 3 to 4 percent up on Spring 2013 (a 600,000 short fall in US alone).
The following 5 components of the ISM’s PMI, New Orders, Production, Employment, Supplier Deliveries and Inventories are equally weighted and used to calculate the PMI number. A monthly PMI over 50.0 indicates an expanding economy; a number over 60.0 indicates strong manufacturing output, although overheating may occur.
1.    The ISM New Orders Index for April, at 55.1 percent was the same as for March, representing    growth in new orders for the 11th consecutive month. Thirteen industries reported growth in April, including Transportation Equipment, Fabricated Metal Products, Primary Metals, Chemical Products and Paper Products. The only industry reporting a decline in April was Nonmetallic Mineral Products.

2. The ISM Production Index showed a small decrease of 0.2 percentage points to 55.7 percent in April. This follows the sharp increase of 7.7 percentage points from February to March. The April reading means an increase in production for the second consecutive month. Growth was noted in 15 industries, including Primary Metals, Paper Products, Transportation Equipment, Fabricated Metal Products, Machinery, Petroleum and Coal Products and Chemical Products. The only industry showing a decline was Nonmetallic Mineral Products.

3. The ISM Employment Index for April, at 54.7 percent, represents an increase of 3.6 percentage points from the March figure of 51.1 percent, and an increase in employment for the 10th consecutive month.  Growth in employment in April was reported in 15 industries, including Primary Metals, Transportation Equipment, Machinery, Petroleum and Coal Products, Chemical products, Fabricated Metal Products and Paper Products.

4. The ISM Supplier Deliveries Index – to manufacturing organizations – slowed in April at a faster rate relative to March as the Supplier Deliveries Index registered 55.9 percent, or 1.9  percentage points higher than March’s 54.0 percent reading. A reading below 50 percent represents faster deliveries, above 50 percent means slower deliveries. Slower supplier deliveries were noted in 14 industries in April, including Fabricated Metal Products, Petroleum and Coal Products, Primary Metals, Machinery, Chemical Products and Transportation Equipment. The only industry reporting a decrease in supplier deliveries in April is Paper Products.

5. The ISM Inventories Index, at 53.0 percent for April is 0.5 percentage points higher than    March’s 52.5 percent figure. This means inventories are growing for the third consecutive month.  Nine industries reported higher inventories in April, including Transportation Equipment, Fabricated Metal Products and Machinery. Seven industries, including Petroleum and Coal Products, Primary Metals, Paper Products and Chemical Products reported lower inventories.

The following 5 components of the ISM’s PMI, Customer Inventories, Prices, Backlog of Orders, Exports and Imports are not used to calculate the PMI number but are tracked for trends in the marketplace

1. The ISM Customers’ Inventories Index, registered 42.0 percent in April, the same figure as in March, meaning customer inventories are still too low, in fact at their lowest since May 2011 when it was at 39.5 percent. The Customers’ Inventories Index has been at or below 50 percent for 61 consecutive months – a reading less than 50 percent means customer inventories are too low. Eight industries showed too low inventories in April, including Fabricated Metal Products, Transportation Equipment and Machinery. Too high inventories were noted in Chemical Products in April.

2. The ISM Prices Index registered 56.5 percent in April, a 3.5 percent decrease on March’s reading of 59 percent. In April 25 percent of respondents reported paying higher prices, 12 percent lower prices and 63 percent the same prices as in March. Twelve industries reported paying higher prices in April, including Primary Metals, Fabricated Metal products, Chemical Products, Petroleum and Coal Products, and Machinery. Three industries reported paying lower prices in April, including Transportation Equipment,

3. The ISM Backlog of Orders Index was at 55.5 percent in April, down 2 percentage points on March’s 57.5 percent reading. This represents the third consecutive month of growth in order backlogs. Of the 88 percent of respondents reporting, 26 percent reported greater backlogs, 15 percent reduced backlogs and 59 percent reported no change from March. Eleven industries reported increased order backlogs in April, including Transportation Equipment, Primary Metals, Fabricated Metal Products, Machinery and Paper Products.

4. The ISM New Export Orders Index at 57.0 percent is 1.5 percentage points higher than March’s 55.5 percent reading. The month’s reading represents growth in exports for the 17th consecutive month. Twelve industries reported an increase in New Export Orders, including Primary Metals, Petroleum and Coal Products, Chemical Products, Fabricated Metal Products, Machinery and Transportation Equipment.

5. The ISM Imports Index is at 58.0 percent in April, 3.5 percentage points higher than March’s 54.5 percent reading. This represents the 15th consecutive month of growth in imports. Eleven industries reported an increase in imports, including Primary Metals, Transportation Equipment, Machinery, Chemical Products and Fabricated Metal Products. Seven industries reported no change in imports.

III. U.S. Forging Industry

round-bar-1Alcoa Wheel and Transportation Products has developed a new forged aluminum product it calls ‘ the world’s lightest heavy duty truck wheel.’ It weighs 40 lbs and the Ultra ONE™ is 47 percent lighter than similar size steel wheels. This will help commercial trucks reduce their weight in order to increase payload and maintain fuel efficiency.
The new alloy – MagnaForce – patent pending – is some 17 percent stronger than Alcoa’s 6061 alloy, the industry standard. It saves up to 1400 lbs per rig, allowing more goods to be carried while still meeting emission regulations. Alcoa reports that TMC Transportation, the largest privately owned flatbed  trucking company in the US, is converting its fleet to Ultra ONE™ wheels this year.

IV. Manufacturing Talk Radio – Interview with Brad Holcomb of ISM

mfgtalkradio1steelforge

Manufacturing Talk Radio Audience Grows to over 40,000 Listeners

Launched late last year, Manufacturing Talk Radio (mfgtalkradio.com), The Global Voice of Manufacturing, has had over 40,000 listeners either tune in to MFGTALKRADIO.COM on Tuesday’s at 1:00 pm EST, or download the podcast from Podbean.com or iTunes, to listen to Executive Producer and show host Tim Grady, and perennial show sponsor All Metals & Forge Group, with Lew Weiss, president of the forging manufacturer, broadcast live.  Last week, the show broadcasted live from exhibit hall of the Las Vegas Hotel and Casino at the ISM 99th Annual International Supply Management Conference & Educational Exhibit in Las Vegas.

Guests including Linda Rigano, Executive Director, Media Relations, Tom Greco, Vice President and Kirstin Carty, Audience Outreach Manager of ThomasNet and M.L. Peck, Vice President of ISM, Brad Holcomb, Committee Chair of the ISM Report on Business® and Tom Derry, CEO of ISM, plus more than 20 other speakers, exhibitors or attendees from the crowd of over 2,200 spoke from their subject expertise on a wide range of topics regarding supply chain management and procurement.  Keynote speakers T. Boone Pickens, oil and gas entrepreneur, and Mark Zandi, Chief Economist at Moody’s Analytics, along with executives from ISM.  Although Mr. Pickens and Mr. Zandi were not interviewed by Manufacturing Talk Radio, both have an open invitation to appear on the show.

Several exciting announcements were made at the show, which are discussed in the Publisher’s Statement of this newsletter and are summarized again here.  On Monday, May 5, Linda Rigano, Executive Director, Media Relations of ThomasNet, and M.L. Peck, Vice President of ISM, announced their co-sponsored 30 Under 30 Rising Supply Chain Stars recognition and awards program to generate awareness of this new generation by celebrating the accomplishments of the young, bright, passionate millennials who are in supply chain management and procurement today who demonstrate leadership, initiative and innovativeness. Nominations of these Rising Stars can be made by colleagues, friends, family members, and even the nominees themselves.  Later in that show, Tom Greco, Vice President and Kirstin Carty, Audience Outreach Manager of ThomasNet.com announced the relaunch of ThomasNet.com with a surprising twist – the true marriage of high-tech, high-touch in a website. Listen carefully – there is a strategic lesson to be learned from this exciting high-tech, high-touch combination.

On Tuesday, May 6, Brad Holcomb, Committee Chair of the ISM Report on Business® and Tom Derry, CEO of ISM, talked about the 99th annual conference.  Brad Holcomb did an update of ISM’s 2014 forecast for business, presenting an overview of all the indicators pointing up with some exceeding the original December 2013 outlook, and Tom Derry summarized the messages being shared and learned at the show.  It is worth another attentive listen.  In the coming weeks, the show will air many of the other interviews conducted at this exciting annual conference.

mfg-radioIf you happened to be in Times Square on Friday, May 2 and looked at the Reuter’s news sign that stretches up 10 or 12 stories, you might have seen the Manufacturing Talk Radio logo and tag line, “The Voice of Manufacturing – Globally!”.  In the coming months, the show will broadcast from other live events covering breaking news and developing trends in manufacturing.  Stay tuned on Tuesday’s at 1:00 PM EST to mfgtalkradio.com for the live show, or download it from mfgshow.podbean.com, iTunes.com, or at http://www.steelforge.com/mfg-talk-radio/ to play on you desktop, laptop or smartphone.

 

V. Euro-Zone

eurozoneMarkit’s Eurozone Composite Purchasing Managers’ Index (PMI) saw a further slight, but probably significant, increase to 53.4 percent in April from 53.0 percent in March, representing the tenth consecutive month of manufacturing recovery.

 

 

Some PMI figures by country are:
Ireland        56.1    38-month high              Germany          54.1    2-month high
Italy            54.0    36-month high              Netherlands     53.4     9-month low
Spain          52.7    2-month low                 Austria             51.4    2-month low
France        51.2    2-month low                 Greece            51.1     2-month high

The UK PMI was at 57.3 percent for April, up from March’s 55.8 percent figure.
Crude steel production in the European Union for the first quarter of 2014, at 43.8 Mt, was up 6.7 percent on the first quarter of 2013.
For the month of March 2014, Germany produced 4.0 Mt, up 6.1 percent on March 2013; Italy 2.4 Mt, up 8.0 percent on March 2013; France 1.4 Mt, up 4.1 percent on March 2013; Spain 1.3 Mt, up 4.1 percent on March 2013.
There was a 7 percent increase in new car sales in Western Europe in the first quarter of 2014. April saw a 5.8 percent increase in car sales in France due largely to Renault’s sales being up 18.4 percent. The PSA Peugeot Citroen company’s sales increased by 5.1 percent. The European car market looks to be on the rebound.

VI. Asia Outlook

30 Meter Horse Head Sculptures Near Completion...FALKIRK, SCOTLACrude steel production in Asia in the first quarter of 2014, at 274 Mt, was up 2.6 percent on the first quarter of 2013. China produced 70.3 Mt in March 2014, up 2.2 percent on March 2013, Japan 9.7 Mt up 2.9 percent on March 2013 and South Korea 6.1 Mt, up 8.0 percent on March 2013.
China’s manufacturing PMI picked up 0.3 percentage points to go to 48.3 percent in April from March’s 48.0 percent. This figure has been below 50 since January this year.
Overseas shipments from Asia’s top four exporters – China, Japan, South Korea and Taiwan – dropped 2 percent in the first quarter of 2014, with both China and Japan down 3 percent each year-on-year. India’s factory expansion just keeps going forward.
Vietnam, who we might term one of the newcomers, saw a 12 percent year-on-year increase in exports.
Auto sales in China for the first quarter were up 9.5 percent to 4.6 million units. US and European vehicle manufacturers are lining up to invest huge amounts in the Chinese automotive industry.

Meanwhile, in Japan, the manufacturing PMI fell from March’s 53.9 percent to 49.4 percent in April. Auto sales were recently down 5.5 percent to 345,226 units, the lowest since December 2012. These figures are doubtless due to the increase in consumption tax, the first for 17 years, from 5 to 8 percent.
India’s manufacturing PMI in April is the same as March’s 51.3 percent. Its export orders suffered the biggest drop in two years, but domestic business seems to be going well.

VII. South America

Montserrat-300x220South America’s crude steel production in March was virtually unchanged year-on-year. Brazil produced 2.9 Mt in March, effectively the same tonnage it produced in March 2013. Brazil’s finished steel imports from China increased 95 percent year-on-year in the first quarter of 2014.
The seasonally adjusted HSBC Brazil PMI fell to 49.3 in April from March’s 50.6 percent. New orders in Brazil dropped again from 50.7 percent in March to 48.7 percent in April, the lowest figure since last July.
High labor costs, poor infrastructure and a large tax burden weigh heavily on Brazil’s manufacturers. Its industrial production is expected to expand by just 1.4 percent this year.

THE GLOBAL MANUFACTURING PMI INCREASED TO 53.4, A THREE-MONTH HIGH.

VIII. Economic Trends Across The Globe

earthTHE ECONOMIST,  magazine, in its latest weekly report on world economies, highlights changes in Gross Domestic Product (GDP), Industrial Production, Consumer Prices and Unemployment Rates for what it considers the world’s major economies. These data are not necessarily good to the present day, but are mostly applicable to at latest the past two months, and show definite trends in the world economy. The figures are qualified as being the latest available, and with reference to a given quarter or month.

The figures for GDP represent change on the previous quarter, at an annual rate.

Gross domestic product Industrial Production Consumer Prices Unemployment % increase
United States + 2.8 (2014) + 3.8 Mar + 1.7 (2014) 6.7 Mar
Canada + 2.3 (2014) + 3.4 Jan 6.9 Mar 6.9 Mar
China + 7.3 (2014) + 8.8 Mar + 2.8 (2014) 4.1 Q4
Japan + 1.2 (2014) + 7.0 Feb + 2.6 (2014) 3.6 Feb
Britain + 2.9 (2014) + 2.7 Feb + 1.9 (2014) 6.9 Jan
Euro area + 1.1 (2014) + 1.7 Feb + 0.5 Mar 11.9 Feb
France + 0.8 (2014) – 0.8 Feb + 0.6 Mar 10.4 Feb
Germany + 1.8 (2014) + 4.8 Feb + 1.0 Mar 6.7 Mar
Spain + 0.8 (2014) + 3.2 Feb -0.1 Mar 25.6 Feb
India + 6.0 (2014) -1.9 Feb + 8.3 Mar 9.9 2012
Brazil + 1.8 (2014) + 5.0 Feb + 6.2 Mar 5.0 Mar
Argentina – 0.7 (2014) – 0.5 Feb 6.4 Q4
Mexico + 3.0 (2014) + 0.7 Feb + 3.8 Mar 5.3 Mar

The DUN AND BRADSTREET US Business Economic Health Tracker looks good again in April  for US business, with 288,000 non-farm jobs added to the payroll. Manufacturing, construction, retail, business services and trade, transportation and utilities indices are on the up, with real estate showing a decline from March.  The Small Business Index is showing definite signs of strengthening. The US Business Health Index rose to 53.7 percent in April, representing an 8.6 percent year-on-year increase in this index, and its highest reading since the index was introduced in December 2010.

IX. A Final Word

look-aheadThings continue to look good for the US economy. There is a definite strengthening in Europe, where a slow but steady recovery is underway. It would be even better were France to emulate Germany.
We have no control over certain outside forces and it remains to be seen what may happen in the Ukraine, and whether Angela Merkel can keep Vladimir Putin on her diplomatic leash. Germany does an awful lot of export business with Russia; there again Russia has a few cubic feet of natural gas under its feet. Fact is that Ukrainian steel demand has dropped by 20 percent of late, but this should not adversely affect the global market.
China is going through a slowdown that may well be self-inflicted.  The government seems to be aware that a lot of heavy industry in the country is contributing to its pollution problem, a problem that is becoming more and more political. Many of China’s richest inhabitants are leaving for Australia, the US and Canada, for what they describe as a pollution-free, stress-free lifestyle.
There are signs that steel demand and prices are up, but there is excess capacity, and even though there will be closures in the coming years, there will also be investment in new capacity.
Consensus seems to be that there is a significant global recovery underway, but that it may be ‘fragile.’ We need to wait and see again.

 

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