The latest news on steel imports further confirms a belief we’ve maintained for quite a while – the real economy is substantially weaker than the liquidity driven equity markets would have you believe. The latest report on steel imports from the Census Bureau showed a massive 50% decline in year to date steel imports. Steel imports for September came in at $1B vs last year’s reading of $2.7B. Year to date, total tonnage is down 50%:
“The year to date final statistics through August 2009 showed steel imports of 9.6 million metric tons compared to 19.4 million metric tons through August 2008.”
The weakness in this data was confirmed by yesterday’s earnings reports out of U.S. Steel and AK Steel. Both companies represent the “better than expected” earnings season complimented by the very weak underlying real economy. The CEO’s at both companies had very negative comments regarding the global recovery.
“Recently, order rates in our flat-rolled and European segments have decreased,” U.S. Steel Chairman and Chief Executive John Surma told Wall Street analysts. “Demand trends remained uncertain as both the U.S. and global economies struggle to recover.”
“Technically speaking, we may be out of the recession, but it certainly doesn’t feel that way,” James Wainscott, AK Steel’s chairman, president and chief executive, told analysts. “Suffice to say we’ve bounced off the bottom, but we’ve got a long way to go from here.”
Of course, the decline in steel imports is best represented in terms of the actual recessionary period. As you can see, steel imports are actually showing no signs of economic recovery despite a 60% surge in equity prices. I’d like to think this is an anomaly, but this is a trend we’ve been seeing across the transports as well as Main Street. Don’t be fooled by the recovery on Wall Street. Yes, we’ve breathed life back into the banks (they were so deserving of it!), but the blue collar workers of America continue to struggle mightily.