Fabricated metal products manufacturers with high levels of exposure to markets relating to energy and mining are likely to remain cautious with staffing and production until more concrete evidence of a commodities price recovery emerges. US industrial production, a demand indicator for metal fab products, declined 2% in March 2016 compared to the same month a year earlier. US industrial output has been hurt by low commodity prices and reduced production in the mining and energy sectors, which has reduced demand for machinery and metals. Throughout 2015, a strong dollar made US exports less competitive, and low oil prices hurt demand for machinery and equipment. But so far in 2016, those headwinds have abated somewhat as oil prices stabilized and the dollar weakened relative to some other key currencies, according to The Wall Street Journal. Also pointing to a possible turnaround, the manufacturing portion of the industrial production index rose 0.4% in March year-over-year. Additionally, in April 2016 the Institute for Supply Management reported that March manufacturing activity marked the first increase in six months.
US new orders for manufactured goods, a demand indicator for metal coating, engraving, and heat treating services, fell by 2.3% in the first four months of 2016 compared to the same period a year earlier. New machinery orders were off by 4.8% overall, as construction machinery orders fell 20% and mining and oil and gas field machinery orders declined by 56%. New orders increased in a couple of key markets for metal coating, engraving, and heat treating services, however. Transportation equipment orders rose by 4.5%, and orders for fabricated metal products were up 2.4%.
Industry Indicators
- US durable goods manufacturers’ shipments of fabricated metal products, an indicator of fabricated metal parts production, rose 0.7% year-to-date in May 2016 compared to the same period in 2015.
- US steel mill product prices, an indicator of commodity steel costs for fabricated metal products manufacturers, fell 4.6% in June 2016 compared to the same month in 2015.
Posted by Bob Contaldo.
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