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Major Industry White Papers

Looking ahead to metals in 2015

"2015" is a comprehensive outlook at the metals and metalworking industry into the near future. Clearly, a recovery is underway and events may be happening sooner than originally predicted when this analysis was written in late 2010.

Looking ahead to metals in 2010

Commodity metals prices have increased significantly in recent years. This has boosted the economies of resource-rich nations but has added to the import bill in such consuming regions as North America, Europe and Asia. Metals have a strong business-cycle component; so, as economic growth has boosted world metals demand, prices have risen by 180% in the 2002-2006 timeframe; 200% from the cyclical low-pricing year of 2001.

Weekly Steel Reports

Steel Weekly May 19, 2009

Price trends for steel products were largely flat WoW, while ferrous scrap prices were higher both domestically and for exports. U.S. domestic heavy melt scrap increased to $185 per ton (+$13) and busheling scrap increased to $192 per ton (+$19).

Steel Weekly May 11, 2009

U.S. domestic and imported hot rolled coil prices fell further last week to $410 (-$12 WoW) and $375 (-$15 WoW), respectively. Rebar prices were stable for both domestic and imports over the prior week.

Steel Weekly April 13, 2009

Incremental data points gathered in the past week re-affirm our cautious outlook on U.S. domestic steel industry fundamentals.

Steel Weekly April 13, 2009

Incremental data points gathered in the past week re-affirm our cautious outlook on U.S. domestic steel industry fundamentals.

Steel Weekly April 6, 2009

Last week’s data points and discussions with industry participants suggest that there will likely be another step down in ferrous scrap and finished steel pricing in April. Steel and scrap volumes, by contrast, are showing signs of stabilization.

Steel Weekly March 30, 2009

Our latest scrap-yard polling data is enclosed. From contact feedback, we conclude that domestic ferrous business conditions have deteriorated sequentially with April scrap pricing down from March.

Steel Weekly March 23, 2009

Our case for RS’ pending 1Q09 results as being less than the consensus expectations are enclosed, due to projections of continued margin pressure from falling metal prices, weak service center shipments and worsening inventory turnover.

Steel Weekly March 16, 2009

In accordance with latest guidance, we are cutting STLD’s 1Q09 estimate from $0.19 to -$0.42/share, and lowering our FY09 estimate from $1.43 to $0.09.

Steel Weekly March 3, 2009

Our biweekly scrap yard poll is enclosed. We find a material change in sentiment from our respondents, with current outlook more pessimistic than just two weeks ago.

Steel Weekly February 23, 2009

A 4Q08 earnings preview for BUY rated GTI, whose conference call is scheduled for tomorrow, is enclosed.

Steel Weekly February 9, 2009

A 4Q08 earnings preview for RS is enclosed. We are cutting our 4Q08 and FY09 EPS estimates to $0.99 (-$0.39) and $2.13 (-$3.55), respectively.

Steel Weekly February 2, 2009

Based on current scrap costs and historical metal spreads, rebar sells at a premium to hot rolled, implying a producer rich in long product mix will outperform one with spot flat rolled exposure in the current environment.

Steel Weekly February 9, 2009

A 4Q08 earnings preview for RS is enclosed. We are cutting our 4Q08 and FY09 EPS estimates to $0.99 (-$0.39) and $2.13 (-$3.55), respectively.

Steel Weekly February 2, 2009

Based on current scrap costs and historical metal spreads, rebar sells at a premium to hot rolled, implying a producer rich in long product mix will outperform one with spot flat rolled exposure in the current environment.

Steel Weekly January 26, 2009

A through December roll-forward of service center inventory dollar values implies that service center de-stocking will likely continue in the new year. Based upon the more negative spreads between spot price and inventory values, we expect more aggressive liquidation on flat than long products, especially plate.

Steel Weekly January 20, 2009

We estimate GTI’s upside is greater than its downside risk at current share pricing. The stock trades at a significant discount to its historical normalized earnings, as well as the S&P500, despite a higher future earnings forecast, a stronger balance sheet, and improved operating configuration.

Steel Weekly January 16, 2009

Our respondents reported an 18% sequential decline in demand in December (22% lower YoY), citing weak order activity from construction, manufacturing, industrial and automotive related end-users.

Steel Weekly January 12, 2009

Based on January steel and scrap pricing, there is no longer a plate price premium to hot band and, predicated on metal spreads, no foundation for a flat rolled price increase.

Steel Weekly January 05, 2009

In light of the most recent significant run up in SCHN stock price, a review is provided before their Thursday conference call. Although appreciative of the December sequential improvement in domestic and international ferrous scrap prices, feedback on tepid business activity by our scrap survey respondents and SCHN’s earnings sensitivity to a modest realization increase lead us to believe the stock may be overbought..

.Steel Weekly December 15, 2008

Our outlook for WOR’s 2Q09 earnings call is discussed in detail. Our current $0.39/share estimate is overly optimistic, given trends in MSCI shipments and downside risk to our assumed Metal Framing volumes.

Steel Weekly December 8, 2008

An investigation of debt levels of the companies in our steel coverage universe (less GTI) is enclosed. We find current debt covenants less than restrictive, 2009 debt maturities modest, and NUE, ZEUS, and SCHN probably the most conservatively positioned of our covered companies from a financial leverage standpoint.

Steel Weekly November 24, 2008

With highly favorable pricing and improved sequential costs, X’s 4Q08 tubular contribution should be stellar with our 2009 outlook less optimistic.

Steel Weekly November 10, 2008

Detailed discussions on last week’s long product price decreases as well as the current state of the international rebar market are enclosed.

Steel Weekly November 3, 2008

A formidable November scrap purchase by Turkish scrap buyers was reported last week. However, without strengthening of Asian markets, SCHN shares lack a catalyst.

Steel Weekly October 27, 2008

Per the enclosed analysis, based on historical data, we believe the decline in long product pricing will be less than that for flat products in the current steel sell-off.

Steel Weekly October 20, 2008

With NUE’s latest pricing revisions on beam and plate pricing, effective November 1, we estimate 4Q08 volumes of each would have to drop sequentially 28% and 38%, respectively, for segment contribution to be less than the 2008 year-to-date quarterly average.

Steel Weekly October 13, 2008

Long product metal margins maintained strong in October in a sequentially significantly weaker demand environment. For now, pricing discipline has been maintained.

Steel Weekly October 06, 2008

October’s scrap price depreciation, and its impact on steel finished product pricing, is estimated in the enclosed.

Steel Weekly September 22, 2008

Our in-line with consensus earnings expectations for WOR’s 1Q09, for which results are to be released later today, are discussed.

Steel Weekly September 15, 2008

Very favorable for SCHN, a scrap pricing bottom has been reached with expectations of stronger October export volumes.

Steel Weekly September 8, 2008

Based upon our statistical analysis, we find a decline in spot hot rolled coil pricing to $850/short ton likely, given the recent sell off in scrap.

Steel Weekly September 2, 2008

Our outlook for September scrap price trends, as well as its effect on steel product realizations

Steel Weekly August 25, 2008

A sharp divergence currently exists between actual analyst estimates and those forecast using the S&P. We believe more credibility is in the former.

Steel Weekly August 18, 2008

September domestic long product pricing adjustments seen favorable for margins.

Steel Weekly August 11, 2008

Indian iron ore exports are down 20% in August, mostly due to their recently adjusted export tax, while higher 2009 met coal costs should result in a sales premium for highest grade iron ore next year.

Steel Weekly August 4, 2008

Lesser scrap exports are driving obsolete grades price downward, increasing the differential between prime and non prime grades.

Steel Weekly July 28, 2008

NUE sets September HRC price at $1,160 per ton, up $40.

Steel Weekly July 21, 2008

Despite the recent modest correction in Asian import scrap price, we maintain a bullish longer-term outlook and favorable opinion on SCHN.

Steel Weekly July 14, 2008

Flat rolled pricing has more forward momentum.

Steel Weekly July 07, 2008

A detailed discussion of why we maintain a favorable outlook on the domestic steel market is enclosed.

Steel Weekly July 02, 2008

A detailed discussion of why we maintain a favorable outlook on the domestic steel market is enclosed.

Steel Weekly June 30, 2008

Our insights from the recent AMM Steel Success Strategies conference are enclosed

Steel Weekly June 23, 2008

MT Acquires Bayou Steel (cheaply) at 6x TTM EBITDA.

Steel Weekly June 16, 2008

We reiterate GNA and NUE as our best ideas in the mini-mill space due to better pricing and lesser scrap cost trends in the long product, structural, and rebar market segments.

Steel Weekly June 9, 2008

Due to the broad disparity in wire rod and its pricing, we maintain strong conviction there is traction for considerable domestic rebar price increases.

Steel Weekly June 2, 2008

A reasonable bull case for higher 4Q08 spot hot rolled coil price, based upon upward trends in pig iron cost, is enclosed.

Steel Weekly May 19, 2008

We continue to find highly attractive metal spreads in the plate and structural spaces.

Steel Weekly May 5, 2008

With its $135/lt sequential increase, we find domestic auto bundle price out of synch with imported pig iron price.

Steel Weekly April 21, 2008

We find last week’s tubular price increases on seamless products more aggressive than those on ERW (welded) products.

Steel Weekly April 14, 2008

Based on metal spread analysis, we find the flat rolled spot price increases that were announced last week more aggressive than those for long products announced just days later.

Steel Weekly February 2008

Increased obsolete auto body export price and scrap space consolidation bode well for buy-rated SCHN.

August 13, 2008 Steel Distributor Survey Results

Distributors reported a continuation of weakening steel product demand, averaging -1% year over year.

February 15, 2008 Steel Distributor Survey Results

Our most recent Steel Distributor Survey suggests demand fundamentals for steel products have not improved in November, averaging -2.8% on a year-over-year basis. Prices per ton for hot rolled coil of $535 remained stable sequentially as did prices for plate, structural, and merchant products.

February 7, 2008 Steel Distributor Survey Results

Our most recent Steel Distributor Survey suggests demand fundamentals for steel products have not improved in November, averaging -2.8% on a year-over-year basis. Prices per ton for hot rolled coil of $535 remained stable sequentially as did prices for plate, structural, and merchant products.

Metals Reports

Metals Reports 3Q 2007

We have completed our 3Q07 stainless steel survey and have concluded that demand fundamentals have not improved. The weakness in service center purchasing that became apparent in last quarter’s survey has continued into 3Q07. Demand conditions are again weak due to end user purchasing delays and increasing reports of overall end market softness.

Metals Reports 2Q 2007

We spoke to twenty stainless steel flat rolled service centers in North America in order to gain insight into end-market demand, spot pricing, inventory levels, imports, lead times, and outlook for 3Q07. We believe our survey portrays an accurate analysis of current stainless steel industry conditions since approximately half of mill shipments move through a distribution channel before reaching the ultimate end-user.

Metals Reports 1Q 2007

Demand growth for stainless steel continues to be strong, driven by strength in aerospace, manufacturing, and fabrication end markets which offset further weakness in residential construction and appliance market. Average year over year growth in end market activity is averaging 3.9% in 1Q07 and is moderating from 6.5% growth in 2H06 due to tougher comparables in last year’s quarter.

Titanium Surveys
(formerly aerospace reports)

1Q09 Titanium Supply Channel Survey

In our 1Q09 Titanium Supply Channel Survey, we spoke with a diversified group of industry contacts in distribution, fabrication, manufacturing, recycling, and trading, gathering data on material prices, demand, inventory levels, lead times, and their outlook on near-term market conditions.

3Q08 Titanium Survey

Overall titanium demand growth averaged -5% year-over-year in 3Q08, as reported by our contacts. Further weakness in the commercial aerospace market more than offset strength in energy and industrial markets where demand fundamentals improved.

2Q08 Titanium Supply Channel Survey

The overall demand for titanium products fell 0.6% year over year, driven by further weakness in commercial aerospace market demand related to the push-outs in Boeing's 787 program and Airbus’s A380.

Aerospace Reports

Aerospace Metals 1Q 2008

In our 1Q08 Aerospace Metals Supply Channel Survey, we spoke with a diversified group of industry contacts in titanium and nickel-based alloy distribution, fabrication, manufacturing, recycling, and trading, gathering data on material prices, demand, inventory levels, lead times, and their outlook on near-term market conditions.

Aerospace Metals 4Q 2007

In our 4Q07 Aerospace Metals Supply Channel Survey, we spoke with a diversified group of industry contacts in titanium and nickel based alloy distribution, fabrication, manufacturing, recycling, and trading, gathering data on material prices, demand, inventory levels, lead times, and their outlook on near term market conditions.

Aerospace Metals 3Q 2007

Demand growth for titanium products slowed in 3Q07, primarily as the result of lower demand from commercial aerospace, for which shipments were reported down 16% over last year’s comparable quarter.

Aerospace Metals 2Q 2007

Demand growth from key titanium end markets remains strong but continues to stabilize. Overall demand for titanium products averaged 2.9% in May (vs. 7% in February and 10% in December).

Aerospace Metals 1Q 2007

Our survey results for 1Q07 indicate that the overall market for titanium products continues to be strong in 1Q07 driven primarily by continued strength in key commercial aerospace programs including Boeing’s 737/777/787 and Airbus A319/A320.

Aerospace Metals 4Q 2006

Titanium demand, although still very strong, is leveling out: Year over year demand growth reported by our contacts averaged 10% in the fourth quarter down from 15% in September and 37% in the same quarter last year.

Demand growth for stainless steel continues to be strong, driven by strength in aerospace, manufacturing, and fabrication end markets which offset further weakness in residential construction and appliance market. Average year over year growth in end market activity is averaging 3.9% in 1Q07 and is moderating from 6.5% growth in 2H06 due to tougher comparables in last year's quarter.

Steel Surveys

February 2009 Steel Distributor Survey: March 5, 2009

Our contacts report a 9% sequential decrease in demand in February, 36% lower than the prior year.

January 2009 Steel Distributor Survey: February 6, 2009

Our contacts report a 0.5% sequential increase in demand in January, 33% lower than the prior year, noting continued weakness across all end markets.

November Steel Distributor Survey

Our contacts reported a sequential decline in steel product demand of 19.3% in November, and a year-over-year decline of 22.2%.

October Steel Distributor Survey

Contacts report demand declined both sequentially (-6.9%) and on a year-over-year basis (-9.6%) in October.

September Steel Distributor Survey

Distributors reported negative demand growth for steel products on both a year over year (-1.9%) and a sequential basis (-2.5%).

August's Steel Distributor Survey Results

August’s Steel Distributor survey identified short-term weakness in domestic steel markets.

Steel Distributor Survey Results

Distributors reported sequential and year-over-year declines in shipments, which were reduced by further weakness in automotive and residential construction-related end markets.

May 2008 Steel Distributor Survey Results

Distributors reported lower overall demand in May (-2.4% sequentially and -1.2% year over year) but noted strength in agricultural, energy, and commercial construction related end markets.

April 2008 Steel Distributor Survey Results

Our most recent Steel Distributor Survey suggests demand fundamentals for steel products have not improved in November, averaging -2.8% on a year-over-year basis. Prices per ton for hot rolled coil of $535 remained stable sequentially as did prices for plate, structural, and merchant products.

March 2008 Steel Distributor Survey Results

Our most recent Steel Distributor Survey suggests demand fundamentals for steel products have not improved in November, averaging -2.8% on a year-over-year basis. Prices per ton for hot rolled coil of $535 remained stable sequentially as did prices for plate, structural, and merchant products.

December 2007 Steel Distributor Survey Results

Our most recent Steel Distributor Survey suggests demand fundamentals for steel products have not improved in November, averaging -2.8% on a year-over-year basis. Prices per ton for hot rolled coil of $535 remained stable sequentially as did prices for plate, structural, and merchant products.

November 2007 Steel Distributor Survey Results

After completing our 4Q07 stainless steel distributor survey, our near term outlook for the domestic market remains relatively pessimistic. Overall end market demand fundamentals have not significantly improved and shipments at the distributor level were reported to be weak.

October 2007 Steel Distributor Survey

From our survey data, we find prices for HRC fell to $535 (-$5) per ton as some of last month’s $20 per ton increase has been given back. Prices for plate and long products remain stable. Metal margins increased sequentially on all products, mostly due to declining ($9/ton) scrap prices.

Steel Survey November 2007

Our most recent Steel Distributor Survey reveals that overall demand for steel products in December remain weak, averaging -6.3% over the similar month last year. Lower demand levels were due to continued slowness in key steel end markets as well as typical seasonal factors.

Steel Survey October 2007

From our survey data, we find material ($20/ton) price increases on hot rolled and structural products, due primarily to increased scrap costs.

Steel Survey August 2007

We contacted 50 steel product distributors across the U.S. to gain insight on domestic steel industry fundamentals including demand, pricing, inventories, import levels, and their 3 – 6 month outlook.

Steel Survey July 2007

Y/y overall steel product demand growth averaged -4.9% in July (vs. -5.8% in June and -4.4% in May). Flat rolled markets, namely automotive, manufacturing, and residential construction, remained sources of weakness. In addition, flat rolled demand in the South from oil & gas and tanker markets moderated somewhat for the first time in 2007. Long product markets fared better due to continued strength in non-residential and infrastructure spending.

Steel Survey June 2007

Overall steel product demand averaged -5.8% on a year-over-year basis in June (vs. -4.4% in May and 0.5% in April). We continue to see poor performance from the flat rolled markets, partially offset by stronger bar and structural product demand.

Steel Survey May 2007

Overall steel product demand continued to be less than impressive in April as distributors waited for the surge in 2Q end user demand that never happened. Reported demand growth on a year over year basis was 0.5% compared to 0.8% in March and 1% in February.

April 2007 Steel Distributor Survey Results

Overall end market activity in March continues to be lackluster, averaging 0.8% growth over the same quarter last year compared to 1% in February and .4% in January. On a sequential basis, demand activity was unchanged with 68% percent of respondents reporting flat growth over February.

Steel Survey February 2007

Purchasing activity inched along last month as our contacts are reporting end market activity growth of 1% over February of last year compared to 0.4% in January and -1% in December.

Steel Survey January 2007

Purchasing activity got off a slow, but positive, start in January as continued weakness in automotive and residential construction partially offset sequential gains reported in manufacturing, fabrication, and second tier distribution segments in regions other than the Mid West and Auto Belt.

Steel Survey December 2006

For the month of December, year over year order activity growth averaged -1.2% with continued weakness in the Auto Belt and Southeastern regions being somewhat offset by stronger markets in the Deep South and western markets.

Steel Survey November 2006

Based on our latest steel distributor survey, overall service center order activity in the month of November fell 1.4% on a year over year basis compared to 2.2% growth in October. On a sequential basis, 76% of our respondents reported flat growth, and 24% had a decrease in order activity.