his line, “…and feel by turns the bitter change of fierce extremes,” comes from John Milton’s poem “Paradise Lost.” Black swan is defined as “an unpredictable or unforeseen event, typically one with extreme consequences.” And so here we are.
There are numerous measures for how the economy is faring during a black swan event such as the global pandemic. These include sharp changes in GDP, shipments, new orders, prices, capacity utilization and trade activity. Buckle up as we hit the speed bumps.
the number of jobs lost in metal production between august 2019 and august 2020 is 47,900. 
his line, “…and feel by turns the bitter change of fierce extremes,” comes from John Milton’s poem “Paradise Lost.” Black swan is defined as “an unpredictable or unforeseen event, typically one with extreme consequences.” And so here we are.
There are numerous measures for how the economy is faring during a black swan event such as the global pandemic. These include sharp changes in GDP, shipments, new orders, prices, capacity utilization and trade activity. Buckle up as we hit the speed bumps.
the number of jobs lost in metal production between august 2019 and august 2020 is 47,900. CAPACITY: The capacity utilization (CU) rate for primary metal producers was 56.7 percent during August, the Fed reports. That compares with 67.1 percent in March 2020, with a low of 48.7 percent in 2009 and an average of 77.9 percent between 1972 and 2019. The CU rate for the fabricated metal products sector stood at 73.6 percent in August, down only 4.6 points from March. This compares with a low of 62.0 percent in 2009 and an average of 77.7 percent from 1972 through 2019.
PRICES: Domestically, the Producer Price Index for steel mill products declined 3 points between July and August. The PPI for aluminum mill shapes rose 3 points, and the PPI for copper and brass mill shapes rose 13 points.
The export price index for primary metals jumped to 170.3 in August from 158.8 in July, according to the Bureau of Labor Statistics (BLS). The import price index for the same product group was 179.9 in August, up from July’s 166.2. The export and import price indices for fabricated metal products moved up only incrementally month over month.
TRADE: Steel imports have been bouncing up and down month to month, with a high of nearly 2.85 million tons in January to a low of just under 1.27 million tons in June, followed by a surge to 2.44 million tons in July. Copper exports fell 19.8 percent through July, compared with last year. Aluminum and alumina exports fell 23.6 percent. Copper and aluminum imports were down 10.1 and 23.3 percent, respectively, year over year.
SHIPMENTS: The value of shipments by domestic steel producers during the first seven months of 2020 fell 12.7 percent compared with the same 2020 period, the U.S. Census Bureau reports. Shipments from aluminum and other nonferrous metal producers fell 4 percent, and shipments from metal fabricators declined 18.1 percent year over year.
That downturn likely reflects declining shipments of automobiles, light trucks and utility vehicles, heavy-duty trucks, motor vehicle bodies, aircraft and ships. Manufacturers in these sectors saw shipments reduced by between 9 and 47.3 percent year over year. Shipments of farm machinery, construction machinery and mining, oil and gas field machinery all fell by double digits (down 11.6, 16.2 and 15.5 percent, respectively) over the past year.
PMI: The manufacturing Purchasing Managers Index from the Institute for Supply Management (ISM) moved up to 56.0 in August, strengthened by a 6.1-point uptick in the new orders subindex and a 2.8-percent rise in order backlogs. The August PMI compares with a low of 41.5 in April. Primary metal producers and fabricators did report overall growth during August, compared with July, including higher production rates and backlog orders. Both industries reduced inventories and reported higher costs for raw material inputs.
AUTO SUPPLIERS: The third-quarter Supplier Barometer Index, from the Original Equipment Suppliers Association, improved substantially with the reopening of factories, rising 38 points from the lowest level in the history of the index—15 during the second quarter—to 53. “The outlook is polarized, however, as 36 percent of respondents indicate they became more pessimistic over the past three months, while 47 percent became more optimistic,” the OESA survey report states.
Survey responses overwhelmingly pointed to the pandemic as the biggest risk to automotive suppliers “but its impact on the overall health of the economy and the vehicle sales of programs supplied is also of great concern.”
A metal producer told ISM, “Rolling production forecasts are increasing each week compared to prior forecast.”
Although the International Monetary Fund projected a 4.9-percent decline in world output (real GDP) for 2020, versus 2.9 percent growth last year, it also projects a rebound in 2021. IMF forecasts global output rising 5.4 percent and predicts the U.S. will recover with 4.5 percent growth next year.
Some folks in lockdown, quarantined or who otherwise stayed home for the safety of others these past months, may have had a similar thought to Shakespeare’s King Richard III: “I … have no delight to pass away the time, unless to spy my shadow in the sun.”
Here’s hoping the black swan will soon be replaced by the phoenix.
