slider-annualoutlook-blue2016Sourcing steel in 2016? You’ll want to know when to buy as it can be just as, if not more important, than how much you buy and where you buy it from.

When you source can make all the difference in shaving dollars and cents from your bottom line. But what about the risk? Is there more upside risk or downside risk for steel heading in 2016?

Our own Lisa Reisman recently spoke with a well-known consultant/advisor in the domestic steel industry about this very topic. He maintained that there is likely more upside risk in steel, but her stance reflected that of an industrial metal buying perspective: “Yeah? So what!”

Whether the risk is upside or downside is irrelevant unless we also see evidence of a shift in the market, which is not the case. We are firmly in a bear market and as it stands, we only care about what will make us change our buying behavior.

That’s not just for steel, however. If you’re sourcing copper, tin, lead, zinc, nickel or aluminum then take a second to download our complimentary 2016 Annual Metals Buying Outlook.


Typically steel buyers look at short-term steel cycles — inventory cycles. These are what drive short-term pricing trends. Let’s face it. Most buyers think in terms of what their next purchase will be or, maybe at this time of year, the next year’s requirements.

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However, from time-to-time, it’s worth sitting back and looking at the big picture; the long-term; over-the-horizon. It’s a useful thing to do. It provides some perspective.

The chart highlights global steel output since 1950. Very simply, we can look at 3 cycles.

  • 1950-73 – steady growth. Post-war investment in North American infrastructure; the development of the automobile; reconstruction in Europe and the emergence of Japan. All drove steel production and consumption higher.
  • 1973-98 – stagnation. The oil shock; light-weighting in cars, packaging, construction and increased efficiency. The end of investment in Europe and North America led to demand falling and only partially offset by the growth in emerging Asia.
  • 1998-2014 – the emergence of China. A country of 1.4bn people industrialised and moved from the country to the city; a development model specifically based on steel-intensive capital investment.

Global Crude Steel Production ( 000 metric tons)


Steel prices since 1950. Source: Steel-Insight.

….and now?

The first two cycles lasted 25 years; the last one has been 15 years.

Europe, North America and Japan (25% of global steel consumption) are mature consumers where steel consumption will perhaps grow 1% over the longer-term, and even that is under threat from aluminum in the automotive industry and lightweighting and efficiency elsewhere.

China (50%) has peaked. Construction is 70-80% of demand and that is a one-off use of steel. Once cities and roads are built, they don’t need to be renewed for a while. Steel consumption has peaked and could fall by 20% from here over the next decade.

Emerging economies (25%) were expanding, but in many cases, they were investing the super-profits of commodity gains from oil, metals and agriculture — from China. Without that bulwark, capital expenditure may plummet.

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That means we could be in for a long period of stagnation and decline — 15-20 years based on previous cycles. It will be marked by mill closures, job losses and low prices. Yet the last period of stagnation gave birth to the minimills and a whole new dynamic group of steelmakers. It is not all doom and gloom.

Steel-Insight is a steel industry price-forecasting publishing company, based in Toronto. James May, the firm’s managing director, has been a steel industry analyst for 15 years and advises some of the major global steel trading companies, steel producers and steel consumers on the outlook for steel pricing and industry trends. For more information, visit

In early October I received a phone call from a well-known consultant/advisor within the domestic steel industry. He wanted to know if we were urging our readers to begin to hedge steel (meaning immediately hedge, as opposed to creating a hedging program).

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My gut reaction to the question was to dodge it because I wanted to understand why he asked it. Our conversation went along the lines of this:

Him: Hi, Lisa. I heard you speak at the recent Steel Market Update event. I was just wondering if you were urging your readers to hedge steel.

lisa reisman

MetalMiner Executive Editor Lisa Reisman

Me: Why do you ask?

Him: I think there is a lot more steel price upside risk than downside risk.

Me: I don’t disagree with you, in that prices are on the low end of the range relatively speaking, but in answer to your question, no, we are not telling our readers to hedge right now.

Him: Why not?

Me: Because we don’t see signs of a market bottom. Prices would have to stop falling and begin rising, crossing certain levels before we’d suggest companies hedge.

Him: So you don’t see upside risk?

Me: We don’t try and time the absolute lowest point of the market and then lock-in. We try to identify when the trend has shifted (from bear to bull) and take cover, then buy forward or hedge. Until we see evidence of a trend shift — and the market still looks negative to us —we don’t pay much attention to upside/downside risk, per se. It’s not relative in driving industrial buying behavior.

Source: Adobe Stock/Yury Zap

Source: Adobe Stock/Yury Zap

Is This Analyst Wrong?

That’s probably somewhat of an irrelevant question. He can be both right and wrong. Right in that, yes, there is likely more upside risk (e.g. steel can likely go a lot higher vs. a lot lower) but from an industrial metal buying perspective — I give it the big SO WHAT? Read more

The Department of Commerce yesterday announced the initiation of anti-dumping and countervailing duty investigations of imports of circular welded, carbon-quality, steel pipe from Pakistan and anti-dumping investigations of imports of the same merchandise from Oman, the Philippines, the United Arab Emirates, and Vietnam.

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The investigations cover welded, carbon-quality steel pipe and tube, of circular cross-section, with an outside diameter not more than 16 inches, regardless of wall thickness, surface finish, end finish, or industry specification.

Welded carbon steel pipe

Welded carbon steel pipe from five nations could face US import duties. Source: Adobe Stock/Sasint.

The products are generally known as standard pipe, fence pipe and tube, sprinkler pipe, and structural pipe and are intended for the low-pressure conveyance of water, steam, natural gas, air and other liquids and gases in plumbing and heating systems, air conditioning units, and automatic sprinkler systems. The products may also be used for light load-bearing and mechanical applications, such as for fence tubing.

Anti-Dumping vs. Countervailing Duties

For the purpose of anti-dumping investigations, dumping occurs when a foreign company sells a product in the US at less than its fair value. For the purpose of countervailing duty investigations, countervailable subsidies are financial assistance from foreign governments that benefit the production of goods from foreign companies and are limited to specific enterprises or industries, or are contingent either upon export performance or upon the use of domestic goods over imported goods.

The petitioners for these investigations are Bull Moose Tube Company of Chesterfield, Mo.; EXLTUBE of N. Kansas City, Mo.; Wheatland Tube of Chicago; and Western Tube & Conduit of Long Beach, Calif. Many of the countries being investigated have also been accused of shipping Chinese goods from their ports to the US so as to conceal the origin of the shipments.

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The US International Trade Commission (ITC) is scheduled to make its preliminary injury determinations on or before December 14, 2015. If the ITC determines that there is a reasonable indication that imports of the pipe from Oman, Pakistan, the Philippines, the United Arab Emirates, and/or Vietnam materially injure — or threaten material injury to, the domestic industry — the investigations will continue and Commerce will be scheduled to make its preliminary countervailing duty determinations in January 2016 and its preliminary anti-dumping determinations in April 2016, unless the statutory deadlines are extended.

Please follow Jeff Yoders on Twitter @jyoders19.

Chinese steel prices hit record lows and caused at least one major closure Tuesday and aluminum delivery premiums leveled off in Europe.

Closures in the Chinese Steel Sector

Chinese steel prices hit record lows on Tuesday amid prolonged worries over shrinking demand in the world’s top consumer that market sources say has forced one of the country’s largest private producers to cease output.

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The shutdown by Tangshan Songting Iron & Steel, with an annual capacity of 5 million metric tons, would be one of the biggest in the sector’s years-long downturn as the world’s No.2 economy slows, traders and analysts said.

Aluminum Surcharges Fall in Europe

Surcharges for physical delivery of aluminum in Europe leveled off after recent gains and may come under pressure from additional supply if Chinese exports rebound and some inventories are liquidated.

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The surcharges, or premiums, which consumers pay on top of the London Metal Exchange (LME) cash price for immediate delivery of metal, have gradually climbed over the past couple of months amid tighter availability.

As part of the World Trade Organization, China is scheduled in December 2016 to achieve Market Economy Status, as opposed to its current Non-Market Economy status. This means, among other things, it will be much harder for US, Canadian or Mexican steel companies to bring anti-dumping actions against Chinese imports of steel and hundreds of other products. Some believe that status upgrade will be automatic, but not the NAFTA steel sector.

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“We don’t believe [Market Economy Status] happens automatically,” said Thomas J. Gibson, president and CEO of the American Iron & Steel Institute. “Under US law there are criteria, six, by which China’s status as a market economy should be judged. And we are just drawing the US government’s attention to that and asserting that China should not become a market economy. Our main focus was to impress upon our elected officials the urgency of the crisis. The focus was on the breadth of the problem.”

NAFTA United Against Chinese Market Economy Status

Gibson was speaking during a press conference and conference call that featured several North American steel industry executives speaking with one voice against China’s potential ascension to market economy status. It’s an issue that has united Canadian, US and Mexican steel producers and given the sometimes disparate North American Free Trade Agreement partners solidarity against what they see as a flood of particularly Chinese imports that has grown to 30% of the North America market for the first time ever.

Last week, AISI released a commissioned report concluding that treating China as a market economy in anti-dumping investigations would “severely damage the NAFTA steel industries and harm NAFTA economies.”

Six steel industry groups sponsored the report: AISI, the Steel Manufacturers Association, the Canadian Steel Producers Association, CANACERO (the Mexican Iron and Steel Producers’ Association), the Specialty Steel Industry of North America and the Committee on Pipe and Tube Imports.

Has the EU Already Decided for China?

Of course, the North American associations aren’t alone in this fight. European Union lawyers have already concluded that China should be formally designated a “market economy” at the end of next year. The EU would have been a powerful ally for North America.

The European Commission’s legal service circulated a confidential opinion within the institution this past summer, officials familiar with the opinion said. The confidential opinion is not binding, and the EU may still oppose China’s “graduation,” but it’s still a blow to the organizations proposing full review and not a standard graduation to market economy status for China.

The Problem With China: Overproduction

The main argument the US, Canadian and Mexican steel producers make would likely hold as much weight with the EU member nations as it does for NAFTA’s: That Beijing’s policies lead Chinese firms to pump out far more goods than China’s domestic market can consume. Or overseas markets, for that matter.

“There are almost 700 million metric tons of overcapacity globally,” said Nucor CEO John Ferriola in last week’s press conference. “That’s almost half China’s. We must allow basic market forces to influence China’s production.”

Ferriola said the case that he and his fellow steel executives made to their representatives in congress was that the ENFORCE Act, a bill stuck in congress after previous legislation was passed to address dumping, would do this. Ferriola called it a “major piece of unfinished business.”

ENFORCE would change customs enforcement and stop trans-shipments which the domestic producers say are being sent from China and other nations where their origins are concealed by relabeling and other shipping tricks. It also has a much more comprehensive definition of “material injury” than current anti-dumping laws.

The bigger issue, even if ENFORCE passes, however, would still be China achieving market economy status. The Canadian Steel Producers’ Association predicted that 400,000 to 600,000 NAFTA jobs will be lost if nothing is done about Chinese exports.

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“Our main focus was to impress upon our elected officials the urgency of the crisis. The focus was on the breadth of the problem,” Gibson said.

Shipments from US steel companies were down in September and the federal Highway Trust Fund reached its lowest level in several decades in July.

Steel Shipments Down in September

The American Iron and Steel Institute (AISI) reported that for the month of September, US steel mills shipped 7,120,663 net tons, a 4.7% decrease from the 7,470,120 net tons shipped in the previous month and a 15% decrease from the 8,372,929 net tons shipped in September 2014.

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Shipments on the year-to-date in 2015 are 66,162,973 net tons, a 10.7% decrease vs. 2014 shipments of 74,123,773 net tons for the first nine months of last year.

A comparison of September shipments to the previous month of August shows the following changes: cold-rolled sheet, down 7%, hot-dipped galvanized sheets and strip were down 8% and hot-rolled sheets were down 10%.

How Low Did The Highway Trust Fund Go?

According to the US Energy Information Administration, the Highway Trust Fund reached its lowest level in decades earlier this year, ending July at $6.1 billion dollars.

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A congressionally approved transfer of more than $8 billion boosted the fund’s balance to end the fiscal year (September 30) at $12 billion, but that is still the second-lowest year-end level since 1984.


Two major iron ore miners are under pressure after a dam burst in Brazil causing widespread disaster and at least three deaths. The British steel industry is urging the EU to enact dumping curbs against China.

Widespread Destruction After Mining Dams Break

More than two dozen people remain missing days after a deadly mining accident in Brazil involving two of the world’s largest mining groups, authorities in the country said on Sunday.

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Rescue services said three people were confirmed to have died when two dams burst and engulfed a small town in mining waste, and the whereabouts of another 28 people — including 13 mine workers — remained unknown.

Brazilian media reported on Sunday that what is being called the “mud tsunami” had hit areas more than 60 miles away from the dams.

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BHP Billiton said its chief executive Andrew Mackenzie would travel to Brazil this week as the Anglo-Australian miner confronts the aftermath of the accident along with Vale SA, its Brazilian joint-venture partner. BHP and Vale own 50% each of Samarco, the independently operated iron ore miner that controlled the project in Minas Gerais state where the accident occurred late on Thursday.

British Steelmakers Want Dumping Duties

British steelmakers called for business minister Sajid Javid to insist on immediate action against Chinese steel dumping when he meets European Union economy and industry ministers in Brussels today. Britain requested the emergency meeting after nearly 4,000 of its steel jobs were lost or put at risk in October — equivalent to about a fifth of the sector’s workforce — with steelmakers and unions pinning much of the blame on China.

This is the final post on steel construction and the restoration of Wrigley Field. See installments one, two and three if you missed them.

When the Chicago Cubs’ season opened in April new challenges arose for the restoration of Wrigley Field, the kind that come from installing steel during an active baseball season.


Steel supports and rebar being prepared for below-grade work at Wrigley Field’s new adjacent support building. Image: Jeff Yoders

Expediting of materials moved from Wrigley Field’s green lot moved to a south side steel yard. Steel erection on the new video scoreboard in the right field bleachers took place around game times.

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Work on the bleachers finished in June, and general contractor Pepper Construction is continuing work on a new plaza building adjacent to the park. Work on this new construction building will continue into phase two, and it will provide a spacious underground clubhouse for the players as well as office space and other amenities.

Concrete work is completed for the foundations and the first level basement of the new building. Steel is going up as excavation continues. The steel is completed up to the 6th floor now. Sheathing and building envelope work on the new building will continue through next season.


Structural steel that makes up the skeleton of the new Wrigley Field support building is being installed while simultaneous work goes on underground beneath it. Image: Jeff Yoders

“This has been so exciting for us,” said Kevin Heatter, project executive for Pepper. “Fans will see some really cool construction while seeing a baseball game. You won’t get that anywhere else. I tell the young kids in the trailer that what you will experience on this job, you will only see every 10 or 15 years if you’re lucky.

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“You will likely never see a project exactly like this again because of the historic nature of Wrigley Field. It’s a unique project in a unique location that requires some of the best minds in our industry to come together to develop creative ways to build it. That’s what makes it a lot of fun. It’s a challenge, sure, but boy it’s what gets you excited in the morning when you come in.”

President Barack Obama today rejected the proposed Keystone XL pipeline, ending the political fight over the Canada-to-Texas project that has gone on for much of his presidency.

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Secretary of State John Kerry concluded the controversial project is not in the country’s national security interest, and Obama announced from the White House that he agreed.

Pipeline in California's Mojave desert.

The Keystone XL pipeline was rejected by the Obama administration this morning.

“America is now a global leader when it comes to taking serious action to fight climate change, and frankly approving this project would have undercut that leadership,” Obama said. Read more