Steel Sense
Entering 3rd quarter of 2011 with Some Positive Indicators
Although the economic news continues to be frustrating, on a positive note, unemployment in the construction sector trended down for the month of June falling to 15.6% from May's 16.3%. June's unemployment rate was significantly better than the June 2010 level of 20.1%.
Some other positive indicators include:
Increase in Projects
In the past few months we experienced an increase in the number of projects going to bid. We expect this trend to continue at a moderate pace and bring much needed work to the construction industry.
Financing
Financing on projects seems to be more readily available in comparison to last year, although securing financial packages may be problematic for some owners. The lasting effect of the last financial crisis has forced banks and other lending institutions to be more conservative than they were 3-5 years ago.
Steel Production
Raw steel production in the US is up approximately 5% from the same period last year. Scrap steel, which continues to play a big part in transaction pricing at the mills, has fluctuated up a little and then back down generally mirroring the steel pricing trend. Overall demand appears to be increasing and as the demand picks up pricing will react accordingly.
Still Volatile
We must keep in mind that pricing can change in a very short period of time. Scrap pricing together with an increase in demand will likely result in prices moving in an upward direction. The outlook for future price volatility is a harsh reality; one we all have to contend with. Just a year ago, over a three month period, steel mill transaction prices increased $200.00 per ton. These are difficult times for the construction industry and long term pricing is still a very risky proposition.
As always, we will attempt to keep our customers up to date on the latest developments within the steel industry. If we can help in any way with regards to explaining what's currently going on in our industry, give our HarMac office a call: (207) 935-3531.
