Market Update | April 3, 2024

 

ECONOMIC ACTIVITY IN THE MANUFACTURING SECTOR EXPANDED IN MARCH

After contracting for sixteen consecutive months, economic activity in the manufacturing sector expanded in March. The March ISM Manufacturing Index came in at 50.3, up from 47.8 in February and up from 46.3 last March. This is the highest monthly reading since September 2022.The production and new order components both rebounded, climbing 6.2 and 2.2 points, respectively. The increase in new orders points to firming demand for manufactured goods and suggests inventories are more aligned with sales.

 

Input Costs

After slipping last week, zinc pricing rebounded slightly this week.

  • Zinc pricing came in at $1.12/lb this week, up from $1.11/lb previously and is right at the 30-day average.

 

Spot iron ore pricing slipped this week, slipping to $111/mt.

  • Rising inventories and low steel mill profitability in China, combined with weaker steel demand in 2024, have negatively impacted iron ore pricing.

 

Coking coal pricing continued to decline this week, sliding to the lowest level since August.

  • The current coking coal pricing of $240/mt, down 2.2% from last week and down 22.0% from this time last month.

 

 

SUPPLY

After sliding the previous two weeks ago, U.S. raw steel production rebounded this week.

    • U.S. steelmakers produced 1.722 million tons at a 77.5% utilization rate.
      • Production was up 1.1% from the prior week and up 0.2% from the same week last year.
      • YTD production is essentially flat from the same timeframe last year.

 

 

DEMAND

After climbing for twelve consecutive months, total construction spending has now slipped in back-to-back months.

    • February total construction spending came in at a $2.092 trillion rate, down 0.3% from January.
    • Despite the recent decline, total spending was still up 10.7% from the $1.890 trillion rate last February.
      • February marked the fifty-seventh consecutive month with a year-over-year increase in spending.
    • A continued boost in residential construction spending could not overcome the larger decline in non-residential spending in February.
      • While residential spending, now up for the third consecutive month, increased 0.7%, nonresidential construction saw spending drop 1.0%.

 

After contracting for sixteen consecutive months, economic activity in the manufacturing sector expanded in March.

    • The March ISM Manufacturing Index came in at 50.3, up from 47.8 in February and up from 46.3 last March.
      • This is the highest monthly reading since September 2022.
      • Any reading above 50.0 shows expansion, while any reading below 50.0 shows contraction.
    • The production and new order components both rebounded into expansion in March, climbing 6.2 and 2.2 points, respectively.
      • The increase in new orders points to firming demand for manufactured goods and suggests inventories are more aligned with sales.
    • The backlog of orders component held steady at 46.3, while the inventory component increased nearly 3.0 points to 48.2.

 

U.S. light vehicle sales continued to push higher in March, climbing to their highest monthly total since December.

    • Actual U.S. light vehicle sales totaled 1.438 million units, up 16.1% from February and up 4.6% from 1.375 million units in March 2023.
      • Sales have now increased, on a year-over-year basis, for twenty consecutive months
      • On a daily rate basis, March sales (47,934/day) were at their strongest rate since May 2021.
    • On a seasonally adjusted basis, sales of both cars and light trucks slipped from February, sliding 4.7% and 2.4%, respectively.
    • Imports’ share of the U.S. light vehicle market increased to 24.3% in March, up from 23.8% in February and a May 2023 low of 22.3%.

 

 

 

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.