TOTAL CONSTRUCTION SPENDING ENDED THE YEAR ON A SOFT NOTE
Total construction spending ended the year on a soft note, sliding slightly in December. Total spending came in at a $1.810 trillion rate, down 0.4% from November but up 7.7% from last December. Despite the continued year-over- year increase in spending, this was the lowest year-over-year growth since February 2021.
Input Costs
As the recent up and down movement for zinc continues, pricing held relatively steady this week.
Spot iron ore pricing pushed slightly higher ahead of the Chinese New Year this week, climbing slightly to $124.95/mt.
Met coal pricing pushed higher as well this week, ending the week at $335.00/mt.
Supply
U.S. raw steel production climbed once again last week, now up for the third consecutive week.
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- U.S. steelmakers produced 1.620 million tons at an 73.1% utilization rate.
- This was the highest weekly output since mid-November.
- Despite the recent bump higher, YTD production is down 7.0% compared to last year.
After sliding the previous two months, global raw steel production rebounded slightly in December.
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- December global steel production totaled 140.8 million metric tons, up 1.4% from November but still down 10.7% from 157.6 million metric tons in December 2021.
- Excluding China, global production totaled 62.9 million metric tons, down 2.3% from November and down 11.8% from 71.3 million metric tons in December 2021.
- Global steel production totaled 1.828 billion metric tons for 2022, the lowest annual total since 2018.
- Chinese production rebounded in December after sliding the previous two months.
- Chinese production increased 4.6% from November to 77.9 million metric tons.
- For the full year, Chinese production totaled 1.011 billion metric tons, down 2.1% total from 2021.
Based on preliminary import license data, January imports are up after seeing sharp declines throughout the fourth quarter.
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- Carbon flat rolled import licenses in January are are up 5.3% from the rate in December.
Four Illinois dams that connect Lake Michigan with the Mississippi River will be closed between June 1 to September 30 for necessary maintenance.
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- This 120-day closure will disrupt barge shipments and potentially have an impact on scrap and finished steel products from Canada to Texas and will likely put more stress on rail capacity.
DEMAND
After climbing for 28 consecutive months, economic activity from the manufacturing sector has now declined for three straight months.
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The January ISM Manufacturing Index came in at 47.4, down from 48.4 in December and is at its lowest level since peak-pandemic lockdowns.
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Any reading below 50 denotes contraction, while any reading above 50.0 shows expansion.
- Both the New Order and Production components declined at a slightly faster rate in January, sliding to 42.5 and 48.0, respectively.
- The backlog of orders contracted at a slower rate however, improving from 41.4 to 43.4 in January.
Total construction spending ended the year on a soft note, sliding slightly in December.
ECONOMIC
After climbing in December, confidence from consumers declined in January.
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.