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Why Are China’s Steel Exports Increasing?
One of the reasons for the increase in Chinese steel exports is excess production capacity. Higher global steel prices are another reason.
Chinese steel exports, often subsidized by the Chinese government, upset steel markets elsewhere. Some Chinese steel products are nearly 20% cheaper.
Compared to the first ten months of last year, steel imports are up by more than 35%. This is an alarming situation.
The World Steel Association had forecast that North American steel demand would grow in excess of 5%. But steel production is up by less than 1% in 2014.
The US rig count is an indicator of the oil and gas exploration industry’s health. The energy sector accounts for 10% of total steel consumption in the US.
The construction industry is still a pale shadow of its pre-crisis self. Automobile sales, on the other hand, have surged past pre-crisis levels.
Rising consumer confidence leads to high-value purchases such as real estate or automobiles. These sectors are the biggest consumers of steel.
U.S. Census Bureau data show a new home sales increase for the last three months. This uptrend is good news for the steel industry.
The U.S. Census Bureau’s monthly construction spending figures for October indicate an increase of more than 1% over the previous month.
The automobile industry is on of the biggest end consumers of steel. It accounts for a quarter of steel consumption in the US.
Steel scrap prices fell ~15% in 4Q so far, which will likely benefit mini mills such as Nucor and Steel Dynamics.
Iron ore prices are a key metric investors in steel plays should watch. Iron ore is the primary raw material for producing steel.
Steel prices are a key driver for steel companies. Steel companies either make sales on contract pricing, or at current spot prices.
In this series, we’ll discuss the key steel industry indicators that investors in steel players should watch.
Frontline’s (FRO) current tanker fleet level has reached its highest since 2009. Looking ahead, it’s likely that there could be higher utilization environments and thereby a stronger tanker market.
Frontline recorded better vessel earnings compared to the second quarter. Improved fleet utilization was due to increased travel distance driven by crude moving from the Atlantic Basin to China.
As of September 30, 2014, Frontline Ltd.’s (FRO) cash and cash equivalents increased to $104.6 million from $79.3 million as of September 30, 2013.
Frontline’s board is continuing to consider several alternatives in restructuring the company’s debt and capital lease obligations with a target to rebuild Frontline as a leading tanker company.
Frontline’s (FRO) financial expenses increased by $3.4 million during 3Q14, which includes an increase in expenses of $5.0 million of Independent Tankers Corporation Limited (ITCL) related to the deconsolidation of the Windsor group.
Frontline’s (FRO) total operating revenues for 3Q14 were $135.6 million compared to $126.5 million in the year-ago quarter. Frontline also reported a net loss of $59.6 million, or $0.60 per share.