Market Update | April 20, 2022
PRODUCTION RISING IN HOUSING & AUTOMOTIVE SECTORS
Confidence among U.S. homebuilders remains robust in April, with the Present Situation component showing the most strength. Additionally, new housing starts are up both month-over-month and year-over-year. Housing permits have topped 1.8 million units for the longest stretch since mid-2006. Total units under construction reached 1.622 million, which is the most 1973 when apartments were going up for the baby boom generation. The automotive sector is also seeing an uptick in demand as U.S. light vehicle production rebounds for the 3rd consecutive month in March.
Zinc pricing remained above the key $2.00/lb. level this week.
- Zinc pricing is currently at $2.048/lb., its highest level in over fifteen years.
- Skyrocketing energy pricing is affecting smelters around the globe, particularly in Europe, which has helped to push the price higher.
- Nucor, CSI, and UPI all announced increased coating weight extras for June production this week.
- Nucor extras moved from Table F to Table G.
Spot iron ore pricing slipped this week, sliding back to $149.85/mt.
- Spot iron ore pricing is down 3.2% w/w and still 17% below prior year levels.
Met coal pricing continued its recent rebound this week as global buyers look to stock up ahead of the EU’s import ban on Russian coal starting August 1st.
- Pacific met coal pricing came in at $512/mt this week.
- This is up 13.7% w/w but still down 23.6% compared to this time last month.
Domestic raw steel production increased again last week, producing its highest weekly output since the first week of February.
- U.S. steelmakers produced 1.766 million tons at an 80.9% utilization rate.
- Despite the recent rebound, YTD production is now down 1.0% compared to the same timeframe last year.
Based on preliminary import licenses, the daily average (18 days) import rate for April is down 13.9% compared to the same timeframe in March.
- Excluding the volatile Brazilian slabs, imports are down 19.3% compared to the first 18 days of March.
The U.S. issued guidance detailing domestic steel and iron sourcing requirements for federally funded infrastructure projects that aligns with the “Buy America” provisions included in the infrastructure package.
- The guidance ensures that “none of the funds made available for a federal financial assistance program for infrastructure, including each deficient program, may be obligated for a project unless all of the iron, steel, manufactured products, and construction materials used in the project are produced in the United States.”
- The exception to the guidance is if domestic sourcing is not possible, inconsistent with public interest, or would increase the cost of a project by over 25%.
Confidence among U.S. homebuilders remained robust in April, despite slowing slightly of late.
- The April Housing Market Index came in at 77, down slightly from 79 in March and below the 83 in April 2021.
- Despite the slowdown, the index remained well above the key 50 level.
- Any reading over 50 indicates a positive outlook by homebuilders and any reading below 50 denote a negative view.
- The three components of the index remained above 50 as well, with the Present Situation (85) coming in the strongest.
March new housing starts came in at a 1.793 million-unit rate, up 0.3% from February and up 3.9% from a 1.725 million-unit rate in March 2021.
- The boost in March housing starts came from multi-family units as single-family unit starts slipped 1.7% from February.
- For Q1, actual new home starts are up 10.3% compared to Q1 last year.
- March housing permits came in at a 1.873 million-unit rate, up 0.4% from February and 6.7% from a 1.755 million-unit rate in March 2021.
- Housing permits have now topped the 1.800 million-rate market for the fourth consecutive month, the longest such stretch since mid-2006.
- There are 1.622 million units under construction, the most since February 1973, when a record 1.628 million units were under construction (mostly apartments in 1973 for the baby boom generation).
U.S. light vehicle production rebounded for the third consecutive in March as supply chains, while still constrained, begin to ease slightly.
- U.S. light vehicle production totaled 915,188 units in March, up 24.6% from February but down 1.0% from 924,357 units in March 2021.
- This is the highest monthly production total since March of last year.
- Production of both cars and light trucks increased sharply in March, climbing 23.2% and 24.9%, respectively.
- Car production increased on a year-over-year basis as well, climbing 10.8%.
- This ended a string of nine consecutive months with a year-over-year decline.
- Year-to-date light vehicle production is down 3.3% compared to the Q1 2021 total.
Housing activity slowed for a second straight month in March.
- Existing home sales fell 2.7% to a seasonally adjusted 5.77 million units in March from February.
- Home sales fell across all regions in the U.S. from February.
- Home price growth slowed but remained elevated, as the median existing-home price for all housing types in March was $375,300, up 15.0% from $326,300 in March 2021.
- This marks another high and the longest-running streak on record.
This material, information and analyses (the “Content”) may include certain statements, estimates and projections prepared with respect to, among other things, historical data and anticipated performance. Content may reflect various assumptions by Majestic Steel USA, Inc. concerning anticipated results that are inherently subject to significant economic, competitive and other uncertainties and contingencies and have been included for illustrative purposes. Content is provided AS-IS.