As 2011 winds down, we reflect on the more-volatile-than-ever steel market that gave us quite a ride this year.  As we enter 2012, here is a look back at some of the major happenings and themes in the steel industry over the past year:

1. The recent addition/restart of capacity in the U.S. – A major talking point for the past few years finally came to fruition in 2011. Despite the recent shutdown of the RG - Sparrows Point mill, new mills from ThyssenKrupp in Alabama and from Severstal in Columbus have added to what some are calling an already oversupplied marketplace.

2. The increase in demand, especially from the automotive sector – The auto sector is on pace to have its strongest year in terms of sales and builds since 2008. While the sector is still a long way away from reaching levels seen before the recession, the climb in 2011 is a good start in recovery.  Besides automotive, we have also seen increases from heavy machinery orders and the energy sector, while the extremely weak construction market has seemed to bottom.

3. Natural disasters – 2011 seemed to be the year of the natural disaster.  A number of events from Mother Nature have affected the steel industry in both a positive and a negative manner, starting with the flooding in Australia and the devastating earthquake/tsunami in Japan at the beginning of the year.  Also this year, tornadoes ripped through the U.S. along with hurricanes and flooding around the globe (most recently in Thailand).  Taking into account the heavy human toll, the initially negative impact of these disasters on the steel market may potentially create the need to rebuild, resulting in increased demand over the medium- to long-term.

4. The volatility in finished steel prices – 2011 continued this theme that started mid-decade and has only continued to gain momentum.  Not only have we seen the pricing cycles for finished product become steeper and shorter, we have also seen this trend impact raw material prices as well.  With price volatility here to stay, it’s more important than ever for buyers to maintain cognizance of the ever-volatile dynamics of the steel market.

Stay close to the (C)ORE Report and the (C)ORE Blog to stay up-to-date with what’s sure to be another exciting ride in 2012.

2011 was a big year for Majestic Steel Research - We released the (C)ORE Report in May, which has garnered hundreds of subscribers and industry attention. Then we started the (C)ORE Blog in August, in conjunction with the newly redesigned majesticsteel.com.

As we look back on 2011, certain posts remain relevant to our business and contain themes that will continue to drive our industry in 2012. So here we present our list of the top (C)ORE Blog posts you need to read - or re-read.

1. Driving Forces in Steel Pricing - A series on the top five steel pricing drivers by account manager Tim Quinn.
Part one: Raw Materials
Part two: Supply
Part three: Inventory
Part four: Demand
Part five: Buyer Confidence

2. Greece: Stuck between a rock and a hard place - The Eurozone debt crisis and what it means for the rest of the world. As Europe remains on shaky ground, a thorough understanding of these issues will be critical in 2012.

3. Buy Smart to Optimize Your Steel - And Your Investment - In the largely unregulated steel industry, it can be difficult to ensure that you’re getting what you paid for. This post highlights the importance of understanding billing methods and how to optimize your investment.

4. Why social media matters to the steel industry - Pouring resources into social media only makes sense if it’s tied to value. Majestic’s communications specialist explains why it matters and how to get started, step by step.
Part two: If you think you don't have time for social media, read this - How to sign up for Twitter.
Part three: #FollowFriday: The Top Twitter Accounts Steel Buyers Should Follow
Part four: 3 Questions to Ask Before Jumping into Social Media Marketing - If you’re ready to take it to the next level.

5. Market research, the new pulse of the steel industry - Why access to timely information is more important than ever for well-informed steel purchasing.

6. “Steelworker for the Future” program aims to fill manufacturing labor gap - The widening gap in skilled labor will continue to impact manufacturing in 2012.
Part two: How Connecticut is combating high unemployment rates with manufacturing jobs

Thank you for your readership in 2011. We look forward to serving you in 2012!

The (C)ORE Report will return on January 8, 2012. In the meantime, stay close to steel market news by checking back here daily.

For the third consecutive week, initial jobless claims for unemployment benefits declined, this time against expectations of an increase in claims.  The U.S. Department of Labor’s Weekly Jobless Claims report declined to 364,000 claims, down 4,000 claims from an upwardly revised 368,000 claims last week.  Claims have now declined by 40,000 over the last three weeks.  Claims are now at their lowest level since May 2008.

The four-week moving average also declined for the third consecutive week, sliding to 380,250 claims.

Continuing claims or claims lasting more than one week, declined sharply for the second time in the last three weeks.  Continuing claims are at 3.55 million, down from 3.63 million last week.  The four-week moving average is now down to 3.63 million claims, the lowest level since early 2008.

There were twenty states and territories with declines of more than 1,000 claims last week, with California and New York leading the way.  There were four states with at least an 1,000 claim increase from last week.

At the beginning of December the Bureau of Labor Statistics announced that unemployment had dropped from 9% to 8.6%, and that the economy had seen a surge of 120,000 new jobs added in November. Although this sounds like great news for the American economy, analysts don’t have the same sunny outlook as the BLS, attributing the drop in unemployment to workers giving up on their job search. Estimates by some analysts predict that about half, or 0.2% of the 0.4%, drop in unemployment can be explained by these discouraged job seekers.

The unemployment rate itself is not what it seems. It’s calculated based on people without jobs who are available to work and who have “actively sought” work in the prior four weeks. The “actively sought” part is a bit hazy, but it includes people who have contacted an employer, employment agency, job center or friends, sent out resumes or filled out applications, or answered or placed ads. 

Once a total based on the above is established, it is divided by the total number of people in the labor force, and the result is the unemployment rate. The rate doesn’t include people who are no longer eligible to receive unemployment benefits, or unemployed workers who aren’t put into the “actively seeking” group, as defined above. Because of these factors it is believed that the unemployment rate at any given time is grossly underestimated.

Despite its shortfalls, the unemployment rate is a widely used statistic that won’t be going away anytime soon. Currently there are 14 million unemployed Americans, not including those who have stopped their job search due to frustration. However, it is estimated that up to 600,000 jobs in the manufacturing industry remain unfilled due to a lack of qualified candidates.

To combat the problem of matching qualified workers with employers struggling to find the right candidates, the state of Connecticut launched the Connecticut Manufacturing Job Match Initiative in early November. The Connecticut state Department of Labor received hundreds of applications from unemployed workers with manufacturing skills or a desire to work in the industry; 90 of the applicants were deemed to be “job-ready,” containing the right skills and training to be matched with an employer. The remaining applicants are encouraged to participate in training programs to get them ready for a manufacturing career. More than 40 companies looking to find skilled workers signed up for the program. 

The success of the initiative has the Connecticut Department of Labor planning to run the program again, and possibly looking to expand it to other industries. Perhaps more states should follow suit, especially those where manufacturing makes up a large chunk of the economy.

See how we’re helping job seekers prepare for a career in manufacturing through our Manufacturing Scholarship Program with the Cleveland Cavaliers.

The (C)ORE Report will return on January 8, 2012. In the meantime, stay close to steel market news by checking back here daily. 

After strong lower revisions were made to the existing home sales data dating back to 2007, November existing home sales increased month-over-month for the second consecutive month.  Sales increased to a seasonally adjusted annual rate of 4.42 million units, this is up 4.0% from October and up a strong 12.2% from November 2010.  Existing home sales have shown double-digit year-over-year increases for the fifth consecutive month.

The inventory of unsold homes declined for the fifth consecutive month to 2.58 million units at the end of November.  Inventory declined 5.8% from October and is now down nearly 20% over this five month period.  Current inventory combined with November’s sales pace represents 7.0 months of supply, down from 7.7 in October and the lowest level since November 2009.

Existing home sales were up in all four regions.  Sales in the Midwest, South, West, and Northeast regions increased 4.3%, 2.4%, 3.6%, and 9.8%, respectively.

The median sales price increased after flat to declining readings the previous four months.  The median sales price came in at $164,200 in November, up from $160,800 in October.  While up month-over-month, the median sales price is still 3.5% below the level from the same month a year ago.

Actual starts slid for the second consecutive month to 51,800 units, down 2.4% from October, but up 27.6% from November 2010.  Seasonal factors, such as the weather, are the reason actual starts have slid recently.

Housing permits, an indicator of future construction, showed some strength for the second consecutive month.  Permits increased to a 681,000 SAAR, up 5.7% from October and 20.7% year-over-year.  The recent boost in permits continues to be a strong sign for residential construction moving into 2012.

Housing starts showed month-over-month strength in the Northeast, South, and West regions, climbing 53.8%, 4.1%, and 22.6% respectively.  Starts in the Midwest region declined from October, sliding 18.2%.