Introducing the Ulbrich Economic Update - Volume 1, Number 1 (September 2019)

Introducing the New Ulbrich Economic Update

| A Letter from the CEO, Chris Ulbrich

Welcome to the first edition of Ulbrich's new monthly economic update newsletter publication. Our main goal in publishing this informative newsletter is to provide our customers, employees, vendors, shareholders, banking partners, community members and others with timely business information about what is going on around us. It is my hope that this update will allow readers to regularly and quickly get up to speed on key metrics, global and industry economic trends, and important events that impact the business world. We are absolutely delighted to present it to our readers and we hope you will find it to be a must read each month!

In terms of format, the Ulbrich Economic Update will be multi-faceted in its coverage of key global and industry metrics, government statistics, interesting business news, and special features. We also plan to include articles focusing on the metals industry, as well as news stories about Ulbrich and its experiences in the markets that we serve. Each issue will include an executive summary for those with limited time but a strong desire to be in the know.

Ulbrich Steel is planning to publish this update monthly. It will be distributed via email toward the middle of each month. We are building a subscription list to be used only for this publication and I sincerely hope that you choose to be a regular subscriber. We also plan to have these posted monthly on our website blog and we will archive all issues for you to reference. Sign up for the newsletter here.

I firmly believe that regularly reviewed facts, data and trends can be acted upon to support business in a positive and thoughtful way. While we certainly have our global, national, and local economic challenges, there is plenty of opportunity for all to prosper and grow. We hope the information provided in the Ulbrich Economic Update will facilitate a greater understanding of the possibilities that lie ahead and allow you to chart an appropriate course to pursue.

Thank you for your time and I hope you enjoy our first edition, and all future issues of the Ulbrich Economic Update!

Sincerely,

Chris Ulbrich, Chief Executive Officer

September 2019 // Economic Update Executive Summary

Americas:

ULBRICH CELEBRATED LABOR DAY along with the rest of the nation, commending the men and women of the company who contribute to the strength, prosperity and endurance of our country. The holiday’s respite was tempered by heightened concerns about the economy after the U.S. and China imposed a new round of tariffs in the latest escalation of the trade war. August economic data brought a growing number of signs that the U.S. may be headed for a recession. U.S. manufacturing activity dipped for the first time in three years as domestic manufacturers grappled with the fallout from the trade uncertainties. The ISM index of factory activity slid into contraction territory, indicating the manufacturing sector is weakening. The housing market continued to struggle as housing starts and new home sales declined. Consumer sentiment about current economic conditions fell to its lowest level since 2016. Still, there were positive signs as continued consumer spending powered on, pushing U.S. retail sales higher. Employers added 130,000 jobs and the latest leading economic indicator (LEI) index rose after two-consecutive monthly declines.

Overseas:

THE EUROPEAN UNION looked particularly fragile, with a weakening Germany at its core and the mounting prospect of losing the U.K. without a negotiated exit on Oct. 31. The expansion of world merchandise trade volumes is likely to remain weak in the 3rdQtr according to the WTO’s Goods Trade Barometer. The Eurozone Manufacturing PMI rose slightly in August, but it marked the seventh consecutive contraction of factory activity. New orders, output, employment and purchasing activity fell further. Factory activity in China shrank in August for the fourth month in a row as the U.S. ramped up trade pressure. China’s domestic demand remained sluggish, pointing to a further slowdown. Japan's exports slipped for an eighth month in July, and manufacturers' confidence turned negative for the first time in over six years as China-bound sales slumped again.

Steel:

STAINLESS STEEL PRICES IN THE U.S. were pushed higher by increases in stainless surcharges, while base prices held flat and seem unlikely to change in the near term. Stainless steel scrap prices climbed higher in August, following the surge in nickel prices. Total steel imports into the U.S. were down 11% through July. Outokumpu forecast stable 3rdQtr stainless steel deliveries in the Americas but lower shipments in Europe. Their projection to 2024 has global demand expanding, especially in automotive, consumer and medical goods, energy and heavy industry.

Metals & Commodities:

NICKEL PRICES soared to a nearly five year high after Indonesia expedited a ban on ore exports, raising concerns about shortages of the metal. LME nickel prices have now surged 68% in 2019. Iron-ore prices collapsed 27% by the end of August, their biggest one-month fall in eight years. Copper skidded to its lowest price since mid-2017. Long known as a canary in the coal mine for the economy, copper’s price has slumped 16% since mid-April due to a sharp downturn in factory output and warnings that major economies are heading into recession.

Aerospace:

PLANE DELIVERIES by Boeing for the year through July were down 38% from a year ago. The cost to airlines and the supply chain is estimated at $4 billion every quarter the MAX is grounded. Lockheed will keep the F-16 flying with an $8 billion sale to Taiwan. Sierra Nevada Corp. chose the Boeing/Lockheed joint venture UAL as its resupply partner to the Space Station and ULA's new Centaur rocket as its launch vehicle.

Automotive:

U.S. LIGHT VEHICLE SALES rose for the second straight month in August, helped by five sales weekends. The UAW union selected GM as its initial target for a new contract as current labor pacts with the Detroit 3 automakers expire Sept. 14. The auto parts industry is cutting payrolls in response to the strains of falling vehicle sales, rising material costs and huge demands for R&D spending. Tesla raised prices in China ahead of new Chinese tariffs on imported U.S. cars, increasing the pressure on Tesla to fast-track production at its new Shanghai plant.

Medical:

THE MEDICAL DEVICE INDUSTRY has already felt the sting of the trade tensions between the U.S. and China, paying tariffs of up to 25% on $860 million in Chinese imports and nearly $5 billion in goods exports to China. Stryker Corp., a manufacturer of robotic arms for hip and knee replacement surgery, reported its Mako robotic surgical system is achieving better outcomes for patients, leading to market share gains. Implantable devices are becoming more mainstream, including an FDA approved continuous glucose monitoring system for Type 1 diabetics.

Energy:

RENEWABLE ENERGIES briefly generated more electricity than coal earlier this year for the first time in U.S. history. A solar energy facility constructed for Fifth Third Bankcorp was dedicated in August. It is expected to generate clean power ≥ the amount the company uses in a year, eliminating 143,000 tonnes of greenhouse gases. Wind and solar generated power is competitive with natural gas, without subsidies. The August World Nuclear Industry Status Report showed that nuclear reactor startups are climbing briskly in China and boosting nuclear operating capacity.

Innovation:

THE WORLD'S 10 MOST INNOVATIVE ECONOMIES in 2019 are led by South Korea, followed by Germany and Finland. The U.S. was ranked 8th. Russian and German scientists have developed multifunctional metal alloys that absorb and emit heat at the same time and change their volume and size under the influence of a magnetic field. These alloys may have applications in medicine and industry.

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