Presented by All Metals & Forge Group
The MetalsWatch! newsletter was first published in print in 1988 for All Metals & Forge Group. Its primary focus was to be informative to the metalworking industries in the United States. Its original circulation was 2500 organizations. Today, MetalsOutlook™ (formerly MetalsWatch!) has a global circulation of 85,000 companies from a very diverse group of industries, including Aerospace, Defense, Oil, Chemical, Automotive, Medical, Electronics, Heavy Industry, Shipbuilding, amongst many others.

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Metals Outlook™ – June 2014

II. North American Perspective
III. U.S. Forging Industry
IV. Manufacturing Talk Radio – Live from ISM 2014
V. Euro-Zone
VI. Asia Outlook
VII. South America
VIII. Economic Trends Across The Globe
IX. A Final Word

Publisher’s Statement

It appears, from everything we read, that economic conditions continue to improve in the overall metals industry, although some manufacturers and machine shops are not feeling it yet. We even had listeners to Manufacturing Talk Radio, the live Internet show we sponsor each week on Tuesdays at 1:00 PM EST, call and ask us where we were getting all this rosy information, because they are still in the doldrums.

There is no doubt that this economic recovery has been modestly improving in fits and starts month by month, without a significant boom kicking off any particular quarter or year. Caution continues to be the modus operandi and no one is overextending themselves by adding raw materials, employees or other costs and expenses, except as needed for the short term. This is consistent with our own activity at All Metals & Forge Group in purchases of billet, inventory on the floor, or employees on staff. We continue to see general improvement without any rapid upward demand in the short term. So, slow and steady seems to be winning the day.

Car production is booming as consumers replace their vehicles with an average age of over 11 years old, the longest in over 5 decades. Consumers are slowly cleaning up their household balance sheets, reducing credit card debt and home equity loans.

Manufacturing in Europe is also in a fits-and-starts recovery as countries and consumers clean up their balance sheets, although that recovery lags the U.S. by over a year. If 2014 turns into a much better year for the U.S., 2015 should be a much better year for Europe if countries can manage their debt.

Asia GDP continues strong, with China slower than previous years but still producing a GDP nearly 4 times that of the U.S. Japan is slowly recovering from nearly 20+ years in the doldrums, although some sectors are still struggling mightily.

Inflation, largely touted by the federal government as low, has greatly impacted food and gas year over year for several years now, and Obamacare will take another bite out of the family budget, slowing household spending in a slow economic recovery. So, we are preparing for an improving 2014, and long term forecasts indicate that 2014 could be the start of a multi-year run of growing economic activity.

We hope you enjoy this issue of Metals Outlook as All Metals & Forge Group presents a look at manufacturing around the world.

Lewis A Weiss
Comments to Publisher:


The US economy added 297,000 jobs in May, on the heels of April’s addition of 288,000 jobs. Gallup reports that daily consumer spending in May was $98, up $10 from April and up $8 from a year ago.

The PMI figure from the Institute of Supply Management increased in May to 55.4 percent from April’s 54.9 percent reading, representing manufacturing expansion for the 12th consecutive month.

Dun and Bradstreet’s US Business Health Index strengthened by 7.3 percent year-on-year in May, the highest since the index began in December 2010. The D and B Small Business Index is stabilizing.

The Bureau of Economic Analysis reports new orders for durable goods in April were up 0.8 percent at $239.9 billion. Capital goods – machinery and equipment – fell 1 percent.

The Bureau further reports a revised US GDP figure for the first quarter, stating that it didn’t grow at an annual rate of 0.1 percent, rather it dropped by 1.0 percent. The 0.1 percent figure came from an ‘advance’ estimate, the latter figure from a ‘second’ estimate.

Gallup’s Job Creation Index hit a new high of +27 in May, with 40 percent of workers saying their company is hiring and expanding its workforce and 13 percent saying their company is letting workers go and shrinking its workforce.

World crude steel production for the 65 reporting countries for April 2014 was up 1.7 percent on April 2013’s figure at 137 Mt. Capacity utilization in April 2014, at 78.7 percent, was 1.2 percent less than in April 2013, and down 0.3 percent on March 2014.
US crude steel production, for April 2014, at 7.0 Mt is down 1.6 percent year-on-year.

Following are May’s auto sales for the ‘Big 8’ US auto producers:

Company May 2014 May 2013 Change
General Motors 269,931 252,894 6.7%
Ford 248,342 246,019 0.9%
Toyota 229,699 207,952 10.5%
Chrysler 190,587 166,596 14.4%
Honda 145,001 140,013 3.6%
Hyundai/Kia 127,134 120,685 5.3%
Nissan 129,552 114,557 13.2%
Volkswagen 49,976 51,241 -2.5%
INDUSTRY 1,547,771 1,442,551 7.3%

The Seasonally Adjusted Annualized Rate now stands at over 16.1 million units.

II. North American Perspective

North-America The Institute of Supply Management PMI figure registered 55.4 percent in May, up 0.5 percentage points from the April figure, indicating expansion in manufacturing for the 12th consecutive month.
Comments from respondents are mostly positive, with Fabricated Metals Products respondents citing a high demand for steel bars for automotive applications, with attendant tight supply and increasing prices. Transportation Equipment respondents say aviation is improving and that the outlook is optimistic. Chemical Products people say volumes are picking up in some sectors but that margins are very thin. In the Petroleum and Coal Products sector improving gas prices are positively impacting drilling plans while Machinery respondents say business is slightly up as anticipated and holding.

The following 5 components of the ISM’s PMI, New Orders, Production, Employment, Supplier Deliveries and Inventories are equally weighted and used to calculate the PMI number. A monthly PMI over 50.0 indicates an expanding economy; a number over 60.0 indicates strong manufacturing output, although overheating may occur.
1.    The ISM New Orders Index for May, at 56.9 percent was up 1.8 percentage points from April’s 55.1 percent, representing growth in new orders for the 12th consecutive month. Fourteen industries reported growth in May, including Machinery, Paper products, Primary Metals, Fabricated Metal Products, Chemical Products, Transportation Equipment and Petroleum and Coal Products. The only industry reporting a decline in May was Computer and Electronic Products.

2. The ISM Production Index showed an increase of 5.3 percentage points to 61.0 percent in May. The May reading means an increase in production for the third consecutive month. Growth was noted in 15 industries, including Primary Metals, Paper Products, Chemical Products, Petroleum and Coal Products, Transportation Equipment and Fabricated Metal Products. The only industry showing a decline in May was Textile Mills.

3. The ISM Employment Index for May, at 52.8 percent, represents a decrease of 1.9 percentage points from the April figure of 54.7 percent, and an increase in employment for the 11th consecutive month.  Growth in employment in May was reported in 11 industries, including Fabricated Metal Products, Petroleum and Coal products, Primary Metals, Transportation Equipment and Machinery. Paper products and Chemical Products showed a decrease in May.

4. The ISM Supplier Deliveries Index – to manufacturing organizations – slowed in May at a slower rate relative to April as the Supplier Deliveries Index registered 53.2 percent, or 2.7 percentage points lower than April’s 55.9 percent reading. A reading below 50 percent represents faster deliveries, above 50 percent means slower deliveries. Slower supplier deliveries were noted in seven industries in April, including Fabricated Metal Products, Machinery and Chemical Products. The only industry reporting faster supplier deliveries in May is Textile Mills. Ten industries reported no change compared to April.

5. The ISM Inventories Index, at 53.0 percent for May, is the same as for April, indicating growing inventories for the fourth consecutive month. Six industries reported higher inventories in May, including Paper Products and Chemical Products. Five industries, including Petroleum and Coal Products and Primary Metals reported lower inventories in May. Seven industries reported no change in May compared to April.

The following 5 components of the ISM’s PMI, Customer Inventories, Prices, Backlog of Orders, Exports and Imports are not used to calculate the PMI number but are tracked for trends in the marketplace

1. The ISM Customers’ Inventories Index, registered 46.5 percent in May, an increase of 4.5 percent on April’s figure, meaning customer inventories are still too low. The Customers’ Inventories Index has been at or below 50 percent for 62 consecutive months – a reading less than 50 percent means customer inventories are too low. Four industries showed too high inventories in May, including Fabricated Metal Products and Primary Metals. Eight industries showed too low inventories in May, including Paper Products, Transportation Equipment, Machinery and Chemical Products.

2. The ISM Prices Index registered 60.0 percent in May, a 3.5 percent increase on the April reading of 56.5 percent. In May 31 percent of respondents reported paying higher prices, 11 percent lower prices and 58 percent the same prices as in April. Eleven industries reported paying higher prices in May, including Fabricated Metal products, Petroleum and Coal Products, Primary Metals, Machinery and Transportation Equipment. Two industries reported paying lower prices in May, namely Paper Products and Chemical Products.

3. The ISM Backlog of Orders Index was at 55.5 percent in April, down 2 percentage points on March’s 57.5 percent reading. This represents the third consecutive month of growth in order backlogs. Of the 88 percent of respondents reporting, 26 percent reported greater backlogs, 15 percent reduced backlogs and 59 percent reported no change from March. Eleven industries reported increased order backlogs in April, including Transportation Equipment, Primary Metals, Fabricated Metal Products, Machinery and Paper Products.

4. The ISM New Export Orders Index at 56.5 percent for May is 0.5 percentage points lower than April’s 57.0 percent reading. The month’s reading represents growth in exports for the 18th consecutive month. Twelve industries reported an increase in New Export Orders, including Machinery, Chemical Products, Petroleum and Coal products, Paper Products and Fabricated Metal Products. Three industries reported a decrease in New Export Orders in May, including Primary Metals.

5. The ISM Imports Index is at 54.5 percent in May, 3.5 percentage points lower than April’s 58.0 percent reading. This represents the 16th consecutive month of growth in imports. Ten industries reported an increase in imports, including Machinery, Petroleum and Coal Products, Fabricated Metal Products, Transportation Equipment and Chemical Products. Three industries reported a decrease in imports in May, including Primary Metals.

III. U.S. Forging Industry

round-bar-1 Hollow steel crankshafts, forged aluminum connecting rods and aluminum and magnesium transmission components are all helping to cut the weight on a special new version of Ford’s new Mondeo (‘Fusion’ in the US market.) This story actually heralds from Australia where Ford has committed significant funds for R & D. Working with the US Department of Energy and private firm Cosma, Ford has cut the Mondeo’s weight by almost 25 percent, in fact by 380kg.
The Lightweight Concept benefits from super-light materials including carbon-fiber, special plastics and chemically-strengthened glass. There are aluminum brake rotors behind carbon-fiber wheels. All this was undertaken with a view to considering future potential production applications.

IV. Manufacturing Talk Radio – Now a Weekly Live Radio Show

Manufacturing Talk Radio upped its game in June of 2014, becoming a weekly live radio show broadcast to the manufacturing industry globally each Tuesday at 1:00 p.m. EST.  The last four shows included guests from a variety of sectors that interface with manufacturing.

Dr. Steven Melnyk, professor of Operations Management for the Department of Marketing and Supply Chain Management at MSU, spoke about the challenges in education to keep up with the rapid changes in manufacturing.  Harry Moser, Executive Director of Reshoring Initiative, discussed jobs coming back to America from overseas. Ray Bacon, Executive Director of the Nevada Manufacturing Association, explained what has been happening to manufacturing in Nevada and California.

Brad Holcomb, chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee, and Tony Nieves, chair of the Institute for Supply Management® (ISM®) Non-Manufacturing Business Survey Committee, provide insight into the latest Purchasing Manager’s Index number and their respective Report on Business® that continues to reflect a strengthening and growing economy.  We encourage readers to browse both reports issued by ISM because they are intriguingly interwoven.

Most recently, Lew Weiss, President of All Metals & Forge Group, discussed open die forgings, seamless rolled rings and long term agreements to help metal purchasers control increasing metal prices.  He also discussed the origin of Manufacturing Talk Radio, and some of the current economic news in the U.S., Europe and Asia.

More and more people are tuning in to with thousands of live listeners hearing it live or downloading it each week.  Next week, Manufacturing Talk Radio will be broadcasting live at Caesar’s Palace in Atlantic City, New Jersey from the New Jersey Broadcasters Association annual conference.

V. Euro-Zone

eurozone Markit’s Eurozone Composite Purchasing Managers’ Index (PMI) saw a decrease in May to 52.2 from April’s figure of 53.4, the lowest reading seen for six months. Only Spain and the Netherlands showed a rise in momentum, with France dropping below 50. This does however represent the 11th consecutive month of manufacturing recovery.



Some PMI figures by country are:
Netherlands 53.6 2-month high Greece 51.0 2-month low
Italy 53.2 2-month low Austria 50.9 10-month low
Spain 52.9 49-month high France 49.6 4-month low
Germany 52.3 7-month low

Exports from the Eurozone increased for the eleventh successive month, with gains in all countries except France.
Employment was up for the fifth successive month in May, with job creation signaled by manufacturers in Germany, Italy, Spain, the Netherlands, Austria and Greece, although the Netherlands was the only nation to signal a stronger pace of increase. France reported further job cuts.
For the month of April 2014, Germany produced 3.7 Mt of crude steel, up3.9 percent on April 2013; Italy 2.0 Mt, down 4.0 percent on April 2013; France 1.4 Mt, up 16.0 percent on April 2013; Spain 1.2 Mt, down3.1 percent on April 2013.
French car sales inched up 0.1 percent in May, Spain’s increased 17 percent due to what is known as a scrappage subsidy.
The UK PMI was at 57.0 percent for May, down slightly from April’s 57.3 percent reading. The UK is in fact enjoying relatively good economic times these days, with production and employment on the up. The big problem is the ridiculous price of houses, with the market heating up the way it did before 2008.
It’s possible that if the authorities find evidence of shale gas under your house in the UK, then you’ll need to let them start fracking. This risks disturbance of the British way of life, but might reduce the energy bills.

VI. Asia Outlook

30 Meter Horse Head Sculptures Near Completion...FALKIRK, SCOTLA
Crude steel production in China in April was 68.8 Mt, up 2.1 percent on April 2013; Japan’s was 8.9 Mt, down 2.5 percent on April 2013, with South Korea up 10.8 percent at 6.1 Mt.
China’s manufacturing PMI according to Reuters, went to 50.8 in May, but according to HSBC it went to 49.7. There are even differing takes on what this means to China’s economy. The bottom line however is that things are really OK in the Middle Kingdom, with new orders and manufacturing on the up.
Auto sales in China for April 2014 rose 8.8 percent year-on-year to just over 2 million units. The first four months saw sales of 7.93 million units, up 9.1 percent. GM and Ford are both enjoying good sales in China, with April 2014 numbers of almost 280,000 and 98,000 units respectively.
China’s president Xi Jinping and Russia’s president Vladimir Putin recently signed what is estimated to be a $400 billion deal whereby Gazprom, a state-owned Russian firm, will supply CNPC, a state-owned Chinese one, with natural gas for thirty years, starting sometime in the next few years. This makes sense for both parties, as China needs oodles of energy, clean energy at that, and Russia needs to convince the West that it has more customers for its gas than just Europe. It’s estimated that CNPC will make over $ 1 billion a year profit selling Russian gas in China.

Meanwhile, in Japan, the manufacturing PMI rose slightly from April’s 49.4 percent to 49.9 in May. This points to welcome signs of stabilizing after the large drop from March to April. . Auto sales were down year-on-year in May by 1.2 percent to 363,370 units.
India’s manufacturing PMI in May increased very slightly from April’s 51.3 percent to 51.4 percent. India recently voted in a new Prime Minister, Narendra Modi, thought by many economists to be a man who will cut through India’s corruption-ridden red tape to put the country on a sound economic footing. This one will be well worth watching.

VII. South America

Brazil’s crude steel production in April, at 2.8 MT, was down 5.1 percent year-on-year.
The seasonally adjusted HSBC Brazil PMI fell to 48.8 percent in May from April’s 49.3 percent reading. This is a ten-month low Firms are reporting the biggest contraction in output since October 2011.
The World Cup will be taking over the country until sometime in mid-July, perhaps even longer if Brazil wins it.


VIII. Economic Trends Across The Globe

earthTHE ECONOMIST, magazine, in its latest weekly report on world economies, highlights changes in Gross Domestic Product (GDP), Industrial Production, Consumer Prices and Unemployment Rates for what it considers the world’s major economies. These data are not necessarily good to the present day, but are mostly applicable to at latest the past two months, and show definite trends in the world economy. The figures are qualified as being the latest available, and with reference to a given quarter or month.

The figures for GDP represent change on the previous quarter, at an annual rate. The industrial production figures represent year-on-year changes, as do the consumer prices increases. The unemployment figures, %, are for the month as noted.

Gross domestic product Industrial Production Consumer Prices Unemployment % increase
United States + 0.1 + 3.5 Apr + 2.0 Apr 6.3 Apr
Canada + 2.9 + 3.6 Feb + 2.0 Apr 6.9 Apr
China + 5.7 + 8.7 Apr + 1.8 Apr 4.1 Q4
Japan + 5.9 + 7.4 Mar + 1.6 Mar 3.6 Mar
Britain + 3.3 + 2.3 Mar + 1.8 Apr 6.8 Feb
Euro area + 0.8 – 0.1 Mar + 0.7 Apr 11.8 Mar
France + 0.1 – 0.8 Mar + 0.7 Apr 10.4 Mar
Germany + 3.3 + 3.0 Mar + 1.3 Apr 6.7 May
Spain + 1.6 + 8.0 Mar + 0.4 Apr 25.3 Mar
India + 3.2 – 0.5 Mar + 8.6 Apr 9.9 2012
Brazil + 2.8 – 1.0 Mar + 6.3 Apr 4.9 Apr
Argentina – 0.7 – 5.9 Mar 7.1 Q1
Mexico + 1.1 + 0.7 Feb + 3.4 4.9 Apr

The DUN AND BRADSTREET US Business Economic Health Tracker looks good again in May for US business, with 297,000 non-farm jobs added to the payroll, with strong gains in business services and trade-transportation-utilities. The Small Business Index is stabilizing. The US Business Health Index increased by 7.3 percent year-on-year in May, to its highest recorded level since the index was introduced in December 2010.

IX. A Final Word


Things continue to look good for the US economy but Europe is shaking a little, though still on track for recovery. The worry here is France.
China is coming around again, as it really had to, and will continue to enjoy its role as the world’s number two economy. June 4 marks the 25th anniversary of the Tiananmen Square massacre, an event that has been air brushed from Chinese history.
India, with a new Prime Minister – voted in by a 66 percent turnout of 814 million eligible voters – is a potential major player over the next decade.
South America – particularly Brazil – needs a spark from somewhere to get its manufacturing sector going again. In the meantime there’s the world cup.
The final word is optimism: it has to be.


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