Houston: We Don't Have a Problem??

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Macroeconomics

I had fully intended to write a post on steel price trends in China (they continue to slide) according to our own, MetalMiner IndX(SM). The price of HRC now at $473 ton (as of Wed) dropped significantly from the mid to lower $600’s since January. But the steel piece will have to wait because this story from the Houston Chronicle reads more like a story from Back to the Future: Federal Reserve Economic Report for Texas. I had to check the date three times to make sure it wasn’t a re-print from March 2008.

This quote captures the essence of the article, The Eleventh District economy continued to soften from January to late-February. Reports were uneven but suggested moderate economic growth. Contacts expressed a great deal of uncertainty about the outlook for growth, and some said they are preparing for the possibility of an economic downturn. That is a far cry from where the rest of the country sees the economy.

But wait, it gets even more interesting. The article goes onto say that costs particularly metals, shipping and energy have all increased.  Does that sound counter-intuitive? The article also cited some skilled labor shortages such as mechanics and engineers, particularly for the energy industry.  Undoubtedly, these price increases likely apply to certain sectors of the economy, in particular, energy. Our own interviews within the oil & gas and petrochemical industries suggest prices remain persistently high.

Next week, MetalMiner will publish its first industry whitepaper on metals cost trends and cost reduction strategies as they relate to the oil & gas and petrochemical industries.

–Lisa Reisman

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