Texas-based CMC reports $31.2 million net loss in Q1

Wednesday, 23 December 2009 11:53:09 (GMT+3)   |  
       

On December 22, Irving, Texas-based steel producer, recycler, trader and fabricator Commercial Metals Company (CMC) reported a net loss of $31.2 million on net sales of $1.4 billion for the first quarter of the current fiscal year, which ended November 30, 2009. This compares with a net profit of $62 million on net sales of $2.4 billion for the first quarter of last year.

Commenting on the general conditions, CMC's president and CEO Murray R. McClean said "In a period of uneven global economic recovery, our end-use markets ranged from weak to improving. We believe the worst of the economic crisis is behind us, yet the prospects for better days will be delayed by the traditionally weak winter season encompassing our second quarter. Real sustainable domestic increases in demand were not apparent and there was no discernable stimulus effect."

In the given period the company's sales volumes from its Americas mills increased 13 percent to 444,500 metric tons, of which 106,000 metric tons were billets compared with 35,380 metric tons of billets sold in the first quarter of last fiscal year. Rebar accounted for 46 percent of finished goods tonnage shipped in the first quarter. The price premium of merchant bar over reinforcing bar averaged $190/mt, down $22/mt sequentially from the fourth quarter of last year.

As SteelOrbis previously reported, CMC opened a new mini-mill in Arizona in early September. The new mill produced 12,700 metric tons of rolled products in the quarter in question and shipped 7,250 metric tons.

As regards the market outlook, Mr. McClean said, "Domestic ferrous scrap prices, which historically rise in the latter months of the winter in anticipation of the spring construction season, are already on the increase driven by export demand and some signs of US economic stabilization, if not recovery. Domestic stimulus programs may finally be evidenced by spring. Coupled with an improving economy, the second half of our fiscal year appears more promising, though we believe at modest levels. Private nonresidential construction is likely to remain weak. Import competition is also likely to be weak."

McClean added, "China will be the catalyst in calendar year 2010 with anticipated GDP growth between 9-10 percent and greater steel demand than in 2009; this most likely will exert upward pressure on both iron ore and scrap prices. The rest of Asia should follow China with anticipation of strong demand for scrap and billet export opportunities to the region."


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