steel trends in a turbulent market analysis ubs financial services presentation feb2010
DESCRIPTION
Steel Trends in a Turbulent Market: Responses from The Steel Market Update Market Survey Feb 22, 2010.TRANSCRIPT
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Steel Trends in a Turbulent Market(responses from our SMU Market Survey Feb 22, 2010)
UBS Conference Call (Postponed) – February 26, 2010 John Packard, Publisher
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John Packard – Steel Market Update
• 31 years actively selling flat rolled steel
• Newsletter developed for active buyers & sellers of flat rolled steel
• Prices – Momentum –Trends – Analysis
• SMU now in 2nd Year
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February 2010 Forecast had 29.7% forecasting growth
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End of Feb. ‘10 many companies failing to meet forecast – 43.5%
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Failure to meet forecast comparison January ‘10 to February ‘10
• Fail to meet forecast in January – 38.7%
• Fail to meet forecast in February – 43.5% - with one week to go
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73.1% of Mfg & SC are forecasting some growth for March 2010
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Mfg inventories appear balanced
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Mfg moving away from building inventory(reversal began in early February 2010 and continues)
Jan ‘10Feb ‘10
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Service Center Inventories “balanced” (week of February 22, 2010)
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Comparison of SC inventory build vs. reduction January to late February
January 2010 S.C. survey February 22, 2010 responses
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Only 23.7% plan on increasing purchases over next 3 months
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29% of companies surveyed reported they are buying foreign steel (mfg & sc combined)
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More Mfg & SC plan on buying steel over the next few months
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Buyers seeing foreign as an option
End of December 2009 – 21% End of February 2010 – 35%
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SMU Buyers Sentiment continues pessimistic trend at -30% (as of 2/22/2010)
-100.0
-75.0
-50.0
-25.0
0.0
25.0
50.0
75.0
100.0
Steel Buyers Sentiment
Updated: 2/3/2010
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SMU Buyers Sentiment with arrows indicating when price cycle changed
-100.0
-75.0
-50.0
-25.0
0.0
25.0
50.0
75.0
100.0
Steel Buyers Sentiment
Updated: 2/3/2010
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Pricing Momentum Continues to Point to Higher Prices
•scrap
•Iron oreWhy? Cost
Increases
•weather
•Production problems
•Demand growth?
Why? Issues
While we worry about
supply growth
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SMU Indexes 4 Products: HR, CR, Galvanized and Galvalume
0100200300400500600700800900
1000
Steel Market Update2009 Monthly Pricing Average
HRC
CRC
HDG
GLM
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SMU Hot Roll IndexHigh, Low & Average (as of early February 2010)
300
350
400
450
500
550
600
650
7/1/2009 8/1/2009 9/1/2009 10/1/2009 11/1/2009 12/1/2009 1/1/2010 2/1/2010
Steel Market Update HRC July 2009 to Current
Low
High
Avg
$620$600$580
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SMU Hot Roll Index tends to Lead CRU and other indexes
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The UBS Conference call has been moved to Friday March 5, 2010
www.steelmarketupdate.com