March Steel Import Licenses Up 20%

March import licenses hit the highest level since January 2009, up 20% to 1,787,756 tons from February.
By Michelle Applebaum ,

March import licenses hit the highest level since January 2009, up 20% to 1,787,756 tons from February and were up more than 128% from the low in June 2009. The bulk of the increase was due to a 75% surge in oil country tubular goods which rose to the highest level since March 2009 due to a combination of improving demand combined with a pickup in global production. The overall surge in total licenses was tempered by a 7% drop in semi-finished steel as domestic mills came back on line.

NAFTA Mixed - Canada Jumps, Mexico Drops; China's Back Bigtime

Canada contributed meaningfully to the increase in the month, up some 14% against February to the highest level since July 2008; Germany nearly doubled in the month, while Mexico dropped 11%, still the second highest level for the past year. Chinese imports surged in the month, up nearly 60%, to the second highest level since June 2009.

Chinese OCTG is Back; Semi-Finished Not So Much

The jump in Chinese import licenses was due to a surprising rise in OCTG tonnage to 18,709 tons, up from 787 tons in February; Korean and Canadian OCTG also rose 92% and 55%, respectively. Despite the meaningful increases we're seeing, OCTG imports were nevertheless a scant 30% of the November 2008 peak of 506,839 tons. Hot-dip galvanized imports rose 43%, up 166% from the bottom in June 2009 and beam imports more than doubled as well. Bucking the trend due to particularly low relative pricing in the US, rebar imports fell 21% in the month, but are still up four-fold from the bottom in November 2009

Outlook

The combination of low relative domestic steel prices, stronger global markets, and unwillingness by domestic buyers to commit to the three-month delivery schedule for imported steel kept imports at nearly record low levels in the second half of 2009. Foreign steel is quickly picking up the pace despite prices that are near record highs relative to domestic. Import levels should moderate in coming months as domestic production ramps up and foreign markets continue to remain more robust than domestic.

Michelle Galanter Applebaum spent more than 20 years as a managing director at Salomon Brothers in New York and was the No. 1-rated steel analyst from 1988-2003, according to Institutional Investor magazine. In 2003, Ms. Applebaum formed Steel Market Intelligence, a 5-person Chicago-based equity research boutique providing advisory services to institutional investors. In addition to publishing 10-15 reports/week, Ms. Applebaum sponsors numerous CEO-level meetings for her investor clients during the year. She is regularly quoted on Bloomberg, Dow Jones, The New York Times and makes frequent appearances on CNBC and other news programs. Ms. Applebaum lives near Chicago with her husband, visiting children and 2 dogs.

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