U.S. factories gained even further momentum in May, and many American companies say that business is growing. Faster activity is generating some cost pressure on U.S. manufacturers, due to increased markets prices in certain products.
Aluminum – Prices remained stable in this product during May. A recent report by JP Morgan has predicted that the global Aluminum market will be in a deficit situation this year. It is expected that the deficit will be approximately 170,000 metric tons. If this occurs, it will be the first time in six years that the market has experienced this type of market occurrence. Aluminum producers around the world are looking at idling facilities to save costs, which in turn will impact supply and increase prices.
Carbon Steel – Prices remained stable in Hot Rolled steel, but declined in Cold Rolled steel. In the Flat Rolled (Sheet Products), the market supply is very tight and mill deliveries are beyond 8 weeks. The mill discipline on pricing and volume continues to be iron-clad, but it could be impacted by the July imports. U.S. Steel Corp. has announced that it would temporarily close plants in Texas and Pennsylvania and blamed illegally-priced imports, raising the volume on trade disputes with China and South Korea. The steelmaker said Monday it would indefinitely idle plants in Bellville, Texas, and McKeesport, PA that make steel pipe and tube for the oil and gas industries affecting 260 workers. In April, Ipsco (another large North American producer of welded and seamless pipe) reduced hours at plants in Iowa, Arkansas and idled a Kentucky mill, citing what it said were unfairly priced imports. They are now considering further production cutbacks.
Stainless – Prices of Stainless Steel increased further in May. Nickel accounts for half the cost of stainless steel, mills impose surcharges to cover any increase in the expense. Nickel surged 41 percent this year after Indonesia, the largest supplier to China, banned ore exports to spur investment in domestic smelters.Buyers of stainless steel will step up purchases to avoid higher surcharges, which will be reflected in rising orders for the world’s mills over the next few months.
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