Metals & MFG Outlook Newsletter May 2015

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, Metals & Manufacturing Outlook™ (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. Feel free to read the most current issue below, or Click here to view the back issues in our Library at the bottom of the page. To Subscribe to Metals & Manufacturing Outlook™ and receive future issues, please enter your e-mail address and click on Subscribe at the bottom of the page.


Publisher’s Statement

Great Economy?  Wait a minute – Not So Fast.

We are looking for comments from our readers about the economy and how they are feeling about it.  We aren’t feeling warm and fuzzy – at all.

In the fall of 2014, prognosticators were proclaiming a 2015 GDP that would be in the three’s and might even hit a 4.0 or 4.1.  We weren’t so sure and we said so, especially on broadcasts of Manufacturing Talk Radio.  We thought the West Coast port nonsense was going to take a bite out of the economy.

By December, only a few people were paying attention.  By January, real pain was starting to set in, along with another blast of cold and snow in the Midwest and Northeast. By February, it was getting ugly, as we continued to drag the port slowdown through the mud, snow and ice.  By March, it looked like it might all get settled, but too late for Christmas, Valentine’s Day and Mardi Gras.  However, then the rank and file still needed to vote, which they did just this week (May 21st).

Although the rank and file approved the new agreement that pays three-year union members in Class A jobs over $150,000 annually and as much as $300,000 plus benefits and medical, U.S. companies, from large OEM’s to many small mom-and-pop agri-businesses loss hundreds of millions of dollars a week as goods for export spoiled on docks, and goods for import were stuck on ships bobbing around at sea during the dispute, while the federal government watched at a distance until a looming shutdown was imminent.  The full impact of this disgraceful debacle will be felt throughout 2015.

However, in April, the federal government came out with the first quarter GDP number; a dismal +0.2, which we contend is bogus. The number is really a negative number, but the government wants to soften the blow so they held back.  Can you guess what they cited as the reasons why: the Northeast snow and cold, and the West Coast port issues.  Folks, it’s been snowing each January in the Northeast for a few hundred years, so it’s not like it’s an “Oh, my gosh” thing.  Yes, they broke a few records, but do we now really believe that the U.S. GDP will finish 2015 in 3.0+ territory, or even 2.5 or better, now that we are 5 months into the year, the weather is great, and the economy isn’t! And, at the end of May, the 1st quarter GDP number will be revised, and everyone is already expecting something like -0.9.  Second quarter won’t be much better.  If it’s above 2.0 we’d be surprised.

We are now well into the second quarter, and no one is bragging. The forging and primary metals industry is slooowww.  New orders are down. Steel mill output from our survey of friends in the industry is down. That means products that use metal, such as light and heavy machinery, farm equipment, industrial equipment, oil field components and possibly even appliances, are in the same downturn.  Even distribution centers are running at below-normal inventory levels, and no one is in a rush to stock up.

So drop us a line – we mean it – let us know how your company is doing by sending a quick email to  While this won’t be a scientific survey, if we get enough responses, we will post them at for your review.  No names or companies will be mentioned; only industries and comments.

So, as you read this issue of Metals & Manufacturing Outlook, give us your reaction.  Do you have bragging rights, or would you like one of our Metals & Manufacturing Outlook crying towels to wipe the sweat from your brow?


Lewis A Weiss


North America USA The U.S. economy might be said to be ‘holding its own’ this month, its underlying strength still placing it up top. The UK manufacturing economy slipped back in April, just in time to throw another spanner in the election works. The Brits went to the polls on May 7 and in a surprising outcome, the Conservatives gain a majority in Parliament.

Canada’s oil-producing provinces seem to be pulling the country down somewhat, but people are still out there setting sales records for new light vehicles.  Nonetheless, things are slow.

Europe may be said to be coming out of the doldrums, thanks to all countries except France and Greece. There’s still work to be done to straighten out what can only be called a mess in the Eurozone.

The two major Asian economies, China and Japan, are floundering a little, for how long we don’t know, and the GDP numbers of China may be puffed a bit.  India is doing none too badly.

Brazil seems to be settling in for a bad period, with no light at the end of any tunnel for the moment. The country’s manufacturing sector is not functioning at all well, to put it mildly.  Petrobras, the government owned and operated oil conglomerate is in a real mess with a corruption scandal from the top down, along with the government itself, especially at the top.  Over 200 suppliers to Petrobras are being examined for paying commissions ( think ‘kickbacks’) to win work, and the recipients of those kickbacks are in the crosshairs of the investigation.

The US Commerce Department reported Monday, May 4, that U.S. factory orders were up in March after seven straight months of decline, pushed higher by commercial and defense aircraft orders.

  1. New orders for manufactured goods were up by 2.1 percent in March to $476.5 billion after a 0.1 percent decline in February. Compared to a year ago, factory orders were down 4.8 percent in March.
  2. Transport equipment orders were up 13.5 percent, led by a 103 percent jump in defense aircraft and a 30.6 percent increase in commercial aircraft.
  3. Durable goods orders were up 4.4 percent to $241.2 billion.

The PMI figure from the Institute of Supply Management was at 51.5 percent in April, the same figure as in March, representing manufacturing expansion for the 28th consecutive month and growth in the overall economy for the 71st consecutive month.

The Markit PMI for the US manufacturing sector was at 54.1 percent in April, down from March’s 55.3 percent figure. Markit stated that US manufacturing showed the slowest output growth thus far this year, whereas March had seen the sharpest rise in production since September 2014 with new orders increasing at the fastest pace for five months. Production expanded in April at the slowest rate since December, coincident with a fall in new orders. New export business fell for the first time in five months. Markit stresses, however, the underlying strength of U.S. business conditions, with both order backlogs and employment rising in April.

The Bureau of Economic Analysis came out with its ‘advance’ estimate, based on current available data, for the annual rate of Real GDP growth in the first quarter of 2015, placing it at 0.2 percent. The ‘second’ estimate, based on more complete data, will be issued on May 29 2015.

The Dun and Bradstreet Economic Health Index for April showed that 208,000 new non-farm jobs were added to U.S. payrolls in the month, a much lower figure than March’s 262,000 jobs. The business services segment continued to lead, while employment was weak in manufacturing and construction during April. Small business health showed a slight drop of 0.25 percent.

D and B stated that this reflects ”a hesitant economy that could still see modest gains heading into the summer months.”

World crude steel production for the 65 reporting countries for the month of March 2015 was 138Mt, down 2.7 percent from the March 2014 figure. The capacity utilization ratio, at 71.6 percent, was down 4.0 percent y-o-y, and down 1.8 percent on February 2015.

U.S. crude steel production, for March 2015 was 6.6Mt, down 12.7 percent y-o-y.  Keep an eye on this leading indicator in the months ahead.

Primary Global Aluminum Production in March 2015 was 4.765 million tons. Of this total, 2.563 million tons, or almost 54 percent, was produced in China. The Gulf Corporation Council (GCC) produced 432,000 tons, North America 387,000 tons and Western Europe 308,000 tons.

Here are the latest figures for US new car and light truck sales for the Big Eight for April 2015. These figures are from the New York Times, which reports that 1.45 million vehicles were sold in April 2015, up 4.6 percent on the same month last year. The SAAR is now running at 16.5 million vehicles. Sales are powered by a continued rise in sales of pickup trucks and crossover SUVs.  It is reported that April is the 20th consecutive month that trucks and SUVs outsold cars in the United States.

The ‘Big Eight’ April ’15 April ’14 YTD % change
General Motors 269056 254066 5.9
Ford 221652 210296 5.4
Toyota 203329 199734 1.8
FCA 189027 178664 5.8
Honda 130068 132452 -1.8
Nissan 109848 103924 5.7
Hyundai/Kia 121291 119747 1.2
Volkswagen 47175 46708 1
Total new cars and light trucks 1454951 1390513 4.6

General Motors announced $783.5 million in plant expansions in Michigan, the same day that GM Canada announced the end of production of the Chevrolet Camaro at its assembly plant in Oshawa, Ontario.


North America on blue planet Earth isolated on black background. Elements of this image furnished by NASA.

North America on blue planet Earth isolated on black background. Elements of this image furnished by NASA.

 The Institute of Supply Management PMI figure registered 51.5 percent in April, the same figure as March’s reading, representing expansion in manufacturing for the 28th  consecutive month and growth in the overall economy for the 71st consecutive month. Fifteen of the eighteen industries reported growth in April, in order,  Nonmetallic Mineral Products; Plastics & Rubber Products; Wood Products; Printing & Related Support Activities; Furniture & Related Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; Paper Products; Miscellaneous Manufacturing; Machinery; Transportation Equipment; Textile Mills; Electrical Equipment, Appliances & Components; Chemical Products; and Primary Metals. The two industries reporting contraction in April are: Apparel, Leather & Allied Products; and Computer & Electronic Products.

Some comments on the month from the manufacturing sector, notably from Machinery and Computer & Electronic Products, are still stressing the effects of the west coast port strike. Lower energy  prices are helping Food, Beverage & Tobacco Products. The Fabricated Metal Products sector is enjoying good times thanks to the continuing strength of the automotive industry, while Primary Metals respondents report that production and orders remain strong and steady. Transportation Equipment says that North American business is holding steady, but that global business is softening. Furniture and Related Products say they are having trouble finding both skilled and unskilled workers.

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 April, at 53.5 percent, was up by 1.7 percentage points from March’s 51.8 percent reading, representing growth in new orders for the 29th consecutive month. Eleven industries reported growth in new orders in April, in order, Wood Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Furniture & Related Products; Paper Products; Machinery; Fabricated Metal Products; Transportation Equipment; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; and Chemical Products. The three industries reporting a decrease in new orders in April are Computer & Electronic Products; Primary Metals; and Textile Mills.

2.The ISM Production Index, at 56.0 percent in April, was up by 2.2 percentage points on March’s 53.8 percent reading,  representing growth in production for the 32nd consecutive month. Growth was noted in thirteen industries, in order, Textile Mills; Plastics & Rubber Products; Nonmetallic Mineral Products; Paper Products; Printing & Related Support Activities; Fabricated Metal Products; Food, Beverage & Tobacco Products; Chemical Products; Transportation Equipment; Miscellaneous Manufacturing; Furniture & Related Products; Machinery; and Primary Metals. The two industries reporting a decrease in production in April are Petroleum & Coal Products; and Computer & Electronic Products.

3. The ISM Employment Index for April, at 48.3 percent, is down 1.7 percentage points from March’s reading of 50.0 percent. This is the lowest reading for employment since September 2009, when the employment reading was at 47.8 percent. Growth was reported in eleven industries, namely,    Printing & Related Support Activities; Nonmetallic Mineral Products; Furniture & Related Products; Petroleum & Coal Products; Plastics & Rubber Products; Miscellaneous Manufacturing; Machinery; Transportation Equipment; Food, Beverage & Tobacco Products; Fabricated Metal Products; and Primary Metals. The three industries reporting a decrease in employment in April are Textile Mills; Computer & Electronic Products; and Chemical Products.

4. The ISM Supplier Deliveries Index – to manufacturing organizations – slowed in April at a slower rate as the Supplier Deliveries Index registered 50.1 percent, or 0.4 percentage points lower than March’s 50.5 percent reading. A reading below 50 percent represents faster deliveries, above 50 percent means slower deliveries. Nine industries reported slower supplier deliveries in April, namely, in order Furniture & Related Products; Textile Mills; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Nonmetallic Mineral Products; Primary Metals; Paper Products; Chemical Products; and Plastics & Rubber Products. The three industries reporting faster supplier deliveries in April are Petroleum & Coal Products; Fabricated Metal Products; and Transportation Equipment. Six industries reported no change in supplier deliveries in April compared to March.

5. The ISM Inventories Index, at 49.5 percent for April, is 2.0 percentage points lower than the 51.5 percent reading for March.This indicates a contraction in raw materials inventories following three consecutive months of inventory growth. Seven industries reported higher inventories in April, namely Fabricated Metal Products; Plastics & Rubber Products; Petroleum & Coal Products; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Machinery. Seven industries reported lower inventories in April, namely Apparel, Leather & Allied Products; Furniture & Related Products; Computer & Electronic Products; Chemical Products; Primary Metals; Paper Products; and Textile Mills.

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 44.0 percent in April, 1.5 percentage points lower than March’s 45.5 reading, meaning that customers’ inventories are considered to be too low, and lower than March’s. Three manufacturing industries showed too high customers’ inventories in April, namely Petroleum & Coal Products; Fabricated Metal Products; and Food, Beverage & Tobacco Products. Nine industries reported too low customers’ inventories in April, namely, listed in order, Transportation Equipment; Primary Metals; Electrical Equipment, Appliances & Components; Textile Mills; Plastics & Rubber Products; Chemical Products; Paper Products; Machinery; and Furniture & Related Products.

2. The ISM Prices Index registered 40.5 percent in April, 1.5 percentage points higher than in March, indicating a decrease in raw material prices for the sixth consecutive month. In April, 7 percent of respondents reported paying higher prices, 26 percent reported paying lower prices and 67 percent reported paying the same prices as in March. The only  industry that reported paying higher prices in April was Plastics and Rubber Products. Thirteen industries reported paying lower prices, namely Wood Products; Electrical Equipment, Appliances & Components; Apparel, Leather & Allied Products; Textile Mills; Fabricated Metal Products; Furniture & Related Products; Machinery; Primary Metals; Paper Products; Chemical Products; Transportation Equipment; Food, Beverage & Tobacco Products; and Computer & Electronic Products.

Up in Price in April were:

Down in Price in April were:
Aluminum (5); Carbon Steel (4);  Nickel (4); Crude oil (4);     Plastic Resin (5); Scrap Steel (5); Stainless Steel (6); Steel (5);   Steel — Cold Rolled (2); and Steel  — Hot Rolled (6).

In Short Supply in April:

No commodities were in short supply in April

Note: The number of consecutive months the commodity is  listed is indicated after each item.

3. The ISM Backlog of Orders Index was at 49.5 percent in April, the same reading as March, representing a contraction in order backlogs for the second consecutive month. Of the 85 percent of respondents reporting, 25 percent reported greater backlogs, 26 percent reduced backlogs and 49 percent reported no change from March. Seven industries reported increased order backlogs in April, namely, in order, Wood Products; Furniture & Related Products; Machinery; Paper Products; Fabricated Metal Products; Transportation Equipment; and Primary Metals. The seven industries reporting a decrease in order backlogs in April, listed in order, are Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Petroleum & Coal Products; Miscellaneous Manufacturing; Computer & Electronic Products; Food, Beverage & Tobacco Products; and Chemical Products.

4. The ISM New Export Orders Index at 51.5 percent for April is 4.0 percentage points up on March’s 47.5 percent reading. The month’s reading represents growth in export orders following three consecutive months of contraction. Nine industries reported an increase in New Export Orders in April, namely, in order, Textile Mills; Furniture & Related Products; Paper Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Transportation Equipment; Machinery; Computer & Electronic Products; and Chemical Products. The five industries reporting a decrease in new export orders in April are Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Primary Metals; and Fabricated Metal Products.

5. The ISM Imports Index, at 54.0 percent in April, is 1.5 percentage points up on March’s 52.5 percent reading. This represents the 27th consecutive month of growth in imports. Eight industries reported an increase in imports in April, namely, in order, Machinery; Furniture & Related Products; Transportation Equipment; Miscellaneous Manufacturing; Fabricated Metal Products; Food, Beverage & Tobacco Products; Chemical Products; and Computer & Electronic Products. The three industries reporting a decrease in imports in April are: Primary Metals; Electrical Equipment,  Appliances & Components; and Plastics & Rubber Products. Six industries reported no change in imports in April compared to March.

CANADA’S RBC (Royal Bank of Canada) Manufacturing PMI  was at 49.0 percent in April, virtually unchanged from March’s 48.9 reading. This represents the third consecutive month below the 50 reading. Production, new orders and employment were all down in the month of April, and the latest reduction in overall new orders is the fastest seen since the survey began in October 2010. Much of the trouble can be put at the door of Alberta and British Columbia, since apart from the energy weakness other regions are enjoying an improvement over the previous month.

The better weather seems to have won out over the gloomy economic outlook and low oil prices – which could see people in oil-producing provinces losing their jobs – as Canadians bought 189,072 cars and light trucks in the month of April, a 5.7 percent jump on last year’s April figure, and in fact, a record for the month.

Canada’s crude steel output for March 2015 was 1.065Mt, up 3 percent y-o-y.

Mexico saw its manufacturing PMI for April at the same 53.8 percent level as March. The manufacturing sector brought in a good performance, but at a somewhat slower momentum than at the beginning of the year. The month saw the best increase in export sales for three years.  Mexico produced 1.625 Mt of crude steel in March 2015, a 5 percent y-o-y decrease.


forging-metalAutomotive forgings have evolved at an astonishing rate during the last three to four decades in terms of process control, design sophistication and automation. In 1985, it was common to hot- or warm-forge drivetrain components with ample stock to machine the majority of the forged surface after a heat treatment. The forging process combined a mix of operators and pick-and-place (assembly-line) automation. Quality levels were maintained through machining, sorting, inspection and rework to very impressive dimensional controls in the 100-1,000 ppm defect range.

In 2015, things are somewhat different. Now automated forging lines are designed to forge components with net or near-net shape with significantly less forging stock and minimal machining. Controlled cooling of micro-alloyed steels, not available in the 1980’s, allows attainment of required mechanical properties. Today’s technology is used to control tooling and equipment and to analyze and control stiffness and deflection, resulting in stock and tolerances at less than 10 percent of those experienced in the past.

Today automotive forging lines are a sum of the experience of the past and the technology of the present. Quality and cost effectiveness both benefit. Advances continue, with the ultimate goal of forging net-shape parts with holes and splines and threads. Who knows?


Manufacturing Talk Radio The live Internet radio broadcast and podcasts of Manufacturing Talk Radio are expanding, with more subject matter experts and industry thought leaders, including the addition of Dr. and Professor Adriana Sanford and the shows Senior International Correspondent for Corporate Compliance and Ethics.  Professor Sanford has just announced the publication of her new book with co-authors Bruce Zagaris and Brad Holcomb, entitled Business Ethics, a Guide to Surviving Business Storms, Challenges and Ethical Risks.  Dr. Sanford will be a regular contributor to the broadcast on comparative law between the U.S., Latin America, South America and Europe.

Brad Holcomb, Chair of the Manufacturing Report on Business® with the Institute for Supply Management presented the April report with a PMI of 51.5.  Some of the underlying indicators were somewhat weaker and reflected a soft March and early April.

On April 15th, Steve Justice, Director of Georgia’s Center of Innovation for Aerospace and  Amy Kohler Hudnall, Deputy Director joined the show to talk about the global aerospace industry and how entrepreneurial and educational partnerships are ensuring the Southeast remains a leader in aerospace.

On April 22nd, Greg Gorbach, Vice President of Information-Driven Manufacturing for the ARC Advisory Group, and two of the leading voices at General Electric, Jeremiah Stone, General Manager of Industrial Data Intelligence, and Jennifer Bennett, General Manager of Manufacturing Software, both with GE Intelligent Platforms, joined Manufacturing Talk Radio to discuss the technologies available now, the main elements inherent in any IoT (Internet of Things)system, and all the how’s and why’s that every small to mid-sized manufacturer needs to know to connect, monitor, optimize and then predict the performance of devices within their operations.

On April 29th, Sid Snitkin, Vice President and GM, Enterprise Advisory Services, ARC Advisory Group discussed “Cyber Security and Manufacturing” with Lew Weiss and Tim Grady.  This is ‘the’ topic for manufacturers around the world as more devices become connected in the Industrial Internet of Things, more data gets generated, and more potential fallibilities creep into digital interfaces that can allow hackers to shut down or overrun machinery, tamper with code or steal intellectual property.  Especially vulnerable are small and mid-sized manufacturers who are less likely to deem their information as appealing to nefarious outsiders.  And the new vulnerability are devices of employees, such as smart phones and tablets that would legitimately have access to systems but could be lost or easily stolen, creating an unfettered pathway in.

Visit to hear the podcasts of these shows or the live broadcasts in May, most of which are now stored as podcasts.


european economy Markit’s Eurozone Manufacturing Composite Purchasing Managers’ Index (PMI) for April, at 52.0, was very slightly down from March’s 52.2 reading. There was growth in most nations, but both France and Greece are still in contraction. Growth of the eurozone manufacturing sector was maintained in April, with the rate of expansion only slightly less than March’s 10-month high.

Manufacturing production rose for the 22nd consecutive month in April, with new orders rising for the fifth consecutive month. Ireland and Spain remained top performers, with Italy and the Netherlands also doing well. All four of these countries reported solid increases in new orders and production. Germany reported further expansion, but the overall improvement rate slowed slightly over the month. France and Greece continue in contraction, with production in France falling at the fastest pace in four months.

Job creation was registered for the eighth consecutive month, with the pace of increase the highest since August 2011. PMIs for the major economies are shown, with the previous month’s figures in parentheses.

PMI High/low
Ireland 55.8 (56.8) 3-month low
Spain 54.2 (54.3) 2-month low
Netherlands 54.0 (52.5) 3-month high
Italy 53.8 (53.3) 12-month high
Germany 52.1 (52.8) 2-month low
Austria 50.1 (47.7) 8-month high
France 48.0 (48.8) 2-month low
Greece 46.5 (48.9) 22-month low

Crude steel production in Germany in March 2015 was at 3.9Mt, down 4.4 percent y-o-y; in Italy 2.1Mt down 9.8 percent y-o-y; in France 1.4Mt, up 3.0 percent y-o-y and in Spain 1.3Mt, up 3.3 percent y-o-y.

Russia’s crude steel production for March was at  6.0Mt, the same as March 2014, Ukraine’s was 1.7Mt, down 36 percent y-o-y.

Western European new car registrations continue to show good gains, with Germany’s up 6.3 percent y-o-y in April to 291,395 units, France’s up 2.3 percent to 170,768 units, Italy’s up 24.7 percent to 148,807 units and Spain’s, with the government’s scrappage program at an end, up 3.2 percent to 82,715 units.

The UK saw its Markit PMI move down to 51.9 percent in April from March’s 54.4 figure. Manufacturing growth slowed during the month as the intermediate goods sector fell back into contraction. The PMI figure is a seven-month low. The consumer goods sector is the real positive in UK manufacturing, but there is a marked slowing in the rate of expansion of UK manufacturing. Production rose at the slowest pace since November 2014, and both new orders and export work decreased. Manufacturing employment, however, increased for the 24th consecutive month, again suggesting, in view of the month’s negatives, that productivity in UK manufacturing leaves something to be desired.

The JP Morgan Global Manufacturing PMI – a composite index produced by JP Morgan and Markit in association with ISM and IFPSM (International Federation of Purchasing and Supply Management) – was at 51.0 in April, down from March’s 51.8 figure, and a 21-month low. This reflects the fact that there was no outstanding performance by any economy in the month of April, with the possible exception of the US economy. Most others gave somewhat dismal results.


Asia OutlookCrude steel production in Asia for March 2015 was at 94.335Mt, with China producing 65.9Mt, down 1.2 percent y-o-y; Japan 9.3Mt down 4.5 percent y-o-y; India 7.95Mt, up 10 percent y-o-y and  South Korea 5.65Mt, down 11.8 percent y-o-y. Taiwan produced 1.965Mt in March, up 3.9 percent.

The HSBC China manufacturing PMI for April took a dip from March’s reading of 49.6 down to 48.9. Operating conditions in the manufacturing sector deteriorated further in April, with total new orders declining at the fastest pace for a year, while production levels stagnated. Domestic demand was down, and the increase in export orders was incremental only. Total new business was down for the second consecutive month and the rate of contraction since March is the strongest for a year.

In March 2015, passenger vehicle sales in China gained 12 percent, led by a demand for S.U.V.s and minivans. Sales of cars, S.U.V.s and multipurpose vehicles jumped to 1.78 million units, according to the China Passenger Car Association, which cited a 64 percent increase in sales of S.U.V.s, a 26 percent increase in minivan sales, and a 0.6 percent drop in sedan sales.

In Japan, the Markit manufacturing PMI is at 49.9 percent in April, slightly down from March’s 50.3 figure. There were drops in both production and new orders, and production contracted for the first time since July 2014. There were worsening operating conditions in Japanese manufacturing, and new export orders slowed to their weakest in the current ten-month sequence of expansion.

Japanese vehicle sales were at 695,411 units for March, down 11.2 percent from March 2014, but up 44.2 percent on February 2015. Sales for 2015 through March, at 1,578,880 units, are down 14.4 percent over the same period in 2014.

India’s manufacturing (HSBC) PMI dropped back from March’s 52.1 percent figure to 51.3 in April. Production and new orders have been rising for 18 months in India, but the rate slowed in April.

Employment was reported as down in April, which is not good news for the Indian government, which has promised, and needs, more manufacturing jobs. India’s Prime Minister Modi made a big push at Hannover’s Messe trade fair recently, inviting the world to come and Make it in India, the ‘it’ being just about anything that can be made. It is acknowledged, however, that India has to get its house, rather its infrastructure, in order, before the world will come knocking on its doors.


south-americaBrazil’s crude steel production for the month of March 2015 was 2.8Mt, a 7.4 percent y-o-y decrease.  The  manufacturing PMI in Brazil dropped slightly further from March’s 46.2 reading to 46.0 in April, a 43- month low,  marking the fastest downturn in manufacturing production for six years.

The contraction in the production of new orders speeded up over the month, suggesting that there is little hope of a recovery in the second quarter of the year. There have been more job losses than seen in four years.

Meanwhile, the Petrobras scandal, involving corruption at Brazil’s state-controlled energy giant, has come to a head with the disclosure of the fact that graft cost the company $2.1 billion. Together with write downs and further operating losses, the company has bled much red ink. The clean-up of the company will see many (political) heads roll and efforts to appease investors and possible future partners.


steel pipesWhere would we be without steel? We wouldn’t drive, and there’d be no public transport either. We’d have difficulty finding ways to cook and clean, and freeze our food. The list of uses for steel is endless. The bottom line is we’d have no place to live.

We’re not going to talk about Henry Bessemer and the way he revolutionized the steel business back in the mid-nineteenth century, nor about the Chinese and the Indians and what they did with iron and carbon way back when, nor about that once extremely dirty, smoky, foggy city in the north of England called Sheffield, that in the mid-nineteenth century could very legitimately be called the world center of steel.

In the year 1900, the world produced around 50 million tons of steel, and the U.S. produced about 37 percent of that total. Global production in 1950 was around 200 million tons, and this increased to around 700 million tons by 1975, representing an average annual growth rate of some 6 percent between those two dates. From 1975 up to the year 2000 the annual growth rate in the industry was around 1 percent, such that global steel production in the year 2000 was hovering around the 800 million tons mark. Something happened around the year 2000 that meant that both the steel industry and the steel business would never be the same again. The something was called China, where an almost insatiable demand for infrastructure, durables and consumer goods meant an accompanying demand for the world’s number one alloy. In a few short years China’s steel production went through the proverbial roof and at the end of 2014 the country’s annual crude steel production was itself hovering around the 800 million tonnes mark, It was producing almost half the world’s steel.

Many wonderful and interesting things happened to the steel industry starting around 1950, not the least of which was oxygen steelmaking, which came out of Linz-Donawitz in Austria under the name of the LD process. This was in fact an upgrading of the Bessemer process, where air had been blown through molten steel leaving the 20 percent of oxygen in the air to take care of ridding the steel of its impurities, but unfortunately leaving lots of nitrogen in it, resulting in a hard, britttle product. The LD process used what was known as tonnage oxygen, a commodity unfortunately unavailable in Bessemer’s day. Oxygen steelmaking would revolutionize the industry, allowing large quantities of steel to be made in a relatively short time, much quicker than the Open Hearth process that was being used at the time.

Oxygen steelmaking was followed by the continuous casting process, allowing elaboration of a uniform, segregation-free product that did away with the necessity of cropping the tops and bottoms from ingots. This process had its world premiere in North America, at Allegheny Ludlum and at Atlas Steels in Welland, Ontario. Ladle metallurgy, or degassing and ‘cleaning’ steel in the ladle, continuous annealing, pickling, and coating – with zinc and aluminum – were other advances in the steelmaking process that are today common practice, as were forging presses that until not too long ago would have seemed like science fiction. The metallurgy of the steel itself, or as we should say, the steels, resulted in advances that allow production of advanced high strength steels that can be easily fabricated and welded and used in the automotive and other industries with very significant weight savings.

So where does all this steel go? What do we make from it, the billion and a half tons that comes spitting out of furnaces, through mills and more mills, onto boats and trains that take it halfway around the world? Well, let’s have a look.

In 2013, in the United States, 40 percent of the steel went into construction, 3 percent into national defense and homeland security, 4 percent into appliances, 4 percent into containers, 26 percent into automotive, 10 percent into energy, 10 percent into machinery and equipment and 3 percent into other applications.

On a global basis, we’re looking at 50 percent of steel being used in construction, 16 percent on transport (cars, trucks, aviation, shipbuilding and rail), 14 percent on machinery, 14 percent on metal products, and the remaining 6 percent on domestic appliances and electrical equipment.

Flat-rolled steel accounts for 46 percent of global production, long products – bars, wire rod, structurals and rails – for 46 percent, and pipes and tubes for the remaining 8 percent. Here of course we are referring to finished products: we should not forget all the forged products that are made (mostly) from semi-finished products such as billets.

In early 2015 we can look at an industry, and a business, that are  both fascinating and largely unpredictable, and it is here that we find ourselves at this time. The Chinese engine shows signs of losing some of its steam, at least for some time, with its real estate market in somewhat of a downspin, and other manufacturing sectors, such as automotive, showing some weakness.

The lack of domestic demand for Chinese steel means even more aggressive exporting on China’s part, with the main targets being the US and Europe. Anti-dumping actions were expected and have been filed en masse. This raises the question as to whither goest the steel business in the next couple of years. The two largest iron ore producers, Vale and Rio Tinto expect – for which read are banking on – China’s steel consumption to pick up for ten more years: they are even talking 2030, when (Rio Tinto) are forecasting one billion tons of crude steel production in China.

The World Steel Association, Worldsteel, forecast in the fall of 2014 that global apparent steel use would increase by 2 percent in 2015 to 1,594Mt. They may or may not be on track, or they may or may not have changed their forecast. There are and will be many forecasts as to how the steel business will fare this year, and next, and the ones after that. If you wish to hand over a little more than $8,000 you can purchase Metal Bulletin Research’s  forecast out to 2020, in which they give a state-by-state analysis of steel usage, even where to build your plant etc.

Or you can just wait and see what happens, and whatever that is it will be anything but boring.

THE 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 the % change on the previous quarter, 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.
NOTE: Data for taiwan have been substituted for those of Argentina that was previously shown.

GDP Indl Prodn Cons prices Unemployt
United States +2.2 (qtr) +2.0 (Mar) -0.1 (Mar) 5.5 (Mar)
Canada +2.4 (qtr) +4.1 (Jan) +1.2 (Mar) 6.8 (Mar)
China +5.3 (qtr) +5.6 (Mar) +1.4 (Mar) 4.1 (Qtr 4)
Japan +1.5 (qtr) -2.0 (Feb) +2.2 (Feb) 3.5 (Feb)
Britain +2.5 (qtr) +0.1 (Feb) nil (Mar) 5.6 (Jan)
Euro Area +1.3 (qtr) +1.6 (Feb) -0.1 (Mar) 11.3 (Feb)
France +0.5 (qtr) + 0.6 (Feb) -0.1 (Mar) 10.6 (Feb)
Germany +2.8 (qtr) -0.3 (Feb) +0.3 (Mar) 6.4 (Mar)
Spain +2.7 (qtr) +1.1 (Feb) – 0.7 (Mar) 23.2 (Feb)
India + 4.0 (qtr) +5.0 (Feb) + 5.2(Mar) 8.6 (2014)
Brazil + 1.3 (qtr) – 9.1 (Jan) + 8.1 (Mar) 5.9 (Feb)
Taiwan +4.8 (qtr) +2.7 (Feb) – 0.6 (Mar) 3.8 (Mar)
Mexico + 2.7 (qtr) + 1.6 (Feb) + 3.1 (Mar) 4.5 (Feb)


by Royce Lowe

Asia EconomyThings this month are the way things are this month. We get used to things changing from month to month, particularly as we are constantly bombarded by news that’s very good or very bad or somewhere in between. Whatever the news it’s never-ending, and some of it needs to be taken with the proverbial pinch of salt.
The bottom line is that the U.S. economy appears to be in good shape, and the consensus is that it has underlying strength. All the other major economies are going through varying degrees of ‘worry’. But at some point they’ll snap out of it.
GALLUP’s U.S. Economic Confidence Index dropped six points to -9 for the week ending May 3, its lowest since December and the largest week-to-week drop since last July. The Gallup Job Creation Index, just in, hot off the press, reached a new high of +31.
Cautiously optimistic. It’s mostly the China thing.

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