Market Update | February 22, 2023

 

THE PRICE RALLY CONTINUES

Nucor started the latest round of increases, the second in as many weeks, pushing pricing up $100/st. Most notably, the minimum HRC pricing is now set at $1,000/st. Cleveland-Cliffs, USS, & AMUSA all followed quickly with similar increases of their own. This is the sixth round of price increase announcements, totaling roughly $360/st.

 

Input Costs

As the recent up and down movement for zinc continues, pricing increased slightly this week.

    • Zinc pricing came in at $1.42/lb this week, down from $1.40/lb previously and is at its lowest level in over a month.

 

Met coal pricing pushed higher this week, currently trading at $388.00/mt.

    • This is up nearly 24.0% over the last month on the back of supply concerns and the threat of a tropical cyclone heading toward Queensland, Australia, mid-week.

 

Brazilian export steel slab prices increased last week on continued strong demand and limited availability, with steel slab export prices up to $785/mt.

    • This is up 18.0% from this time last month but still down 16.2% from this time last year.

 

 

Supply

After climbing the previous five weeks, U.S. raw steel production ticked lower this week.

    • U.S. steelmakers produced 1.654 million tons at an 74.0% utilization rate.
    • Despite the recent bump higher, YTD production is down 6.3% compared to last year.

 

Preliminary import licenses, (20 days), showed carbon flat rolled imports are down 16.8% from the same time in January.

    • Coated import licenses are showing the lowest import level in almost three years.

 

The recent increased imports seen in coated products, from certain countries, has stirred up the possibility of further trade cases on the horizon.

    • Potential anti-dumping cases for coated products from Taiwan, Vietnam, Turkey, and Mexico, may further impacted the foreign side of the supply equation.

 

A jump in shipment activity in January, combined with the muted buying activity for much of last year, helped to push service center flat rolled inventories lower.

    • Coated inventory saw a continued decline, sliding below 1.0 million tons (987k tons) for the first time since August 2021.
    • Coated service center inventories have now declined for seven consecutive months.
    • Coated inventory, when combined with January’s coated sheet sales pace, equates to 1.55 months of supply.
    • Over the last seven months, service centers have shipped out 346k more tons than they have received, marking one of the largest destocking cycles since 2009.

 
 

DEMAND

After sliding the previous four months, U.S. light vehicle production increased in January.

    • January light vehicle production totaled 797,110 units, up 7.9% from December and up 12.2% from January 2022.

    • This is the tenth consecutive month in which production increased on a year-over-year basis.

    • This was the highest January production total since 2020, just before the pandemic threw a curveball into all supply chains.

    • Shipments of both cars and light trucks increased in January, climbing 6.1% and 8.3%, respectively.
    • The boost in light truck production pushed that it to a three-month high.

 

Sales of existing homes continued to decline in January, marking the 12th consecutive month-over-month decline.

    • Sales came in at a 4.000 million unit rate, down 0.7% from December and down a sharp 36.9% from the 6.340 million unit rate in January 2022.

    • Despite the continued month-over-month decline, the rate of decline has slowed of late.
    • The number of existing homes for sale increased slightly in February, ending the month at 980,000 units.
    • The current inventory, when combined with January’s sales pace, equates to 2.9 months of supply.
    • The current inventory, when combined with January’s sales pace, equates to 2.9 months of supply.
    • The median home price slipped again, sliding to $359,000, the lowest level since January 2022.

 
 

PRICE

Nucor started the latest round of increases, the second in as many weeks, pushing pricing up $100/st.

    • This is the sixth round of price increase announcements, totaling roughly $360/st.

    • Most noted that minimum HRC pricing is now at $1,000/st.

    • Cliffs/USS/AMUSA all followed quickly with similar increases of their own.

 

 

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.