Market Update | February 8, 2023

 

FEBRUARY PRIME SCRAP TRADE HAS GAINED MORE MOMENTUM

After initially trading up $20/gt in the Detroit region, the February prime scrap trade has gained further momentum this week. Increased demand has helped to push offers up closer to a $30/gt increase.

 

Input Costs

As the recent up and down movement for zinc continues, pricing dropped sharply this week.

    • Zinc pricing came in at $1.42/lb this week, down from $1.54/lb previously and is at its lowest level in over a month.

 

Met coal pricing pushed higher this week, currently trading at $360.00/mt.

    • This is up nearly 14.8% over the last month on the back of supply concerns and the threat of a tropical cyclone heading toward Queensland, Australia, mid-week.

    • The recent train derailment in Australia, causing at least a ten-day delay, has also helped keep upward pressure on pricing.
    • Some experts expect this to push pricing higher as Chinese demand picks up throughout the year, with the high-end expectations to as high as a 20% increase.

 

After initially trading up $20/gt in the Detroit region, the February prime scrap trade has gained further momentum this week.

    • Increased demand has helped to push offers up closer to a $30/gt increase.

 

 

Supply

U.S. raw steel production climbed once again last week, now up for the fourth consecutive week.

    • U.S. steelmakers produced 1.657 million tons at an 74.1% utilization rate.
    • This was the highest weekly output since the week before Halloween.
    • Despite the recent bump higher, YTD production is down 6.7% compared to last year.

 

Based on preliminary import license data, February imports, through the first 6 days of the month, are up sharply compared to the same timeframe in January.

    • Carbon flat rolled import licenses in February are down 21.4% from the rate in January.

 

 

DEMAND

After ending the year on a high note, the Dodge Momentum Index fell in January.

    • The January DMI came in at 201.5, down 8.4% from the revised 222.0 reading in December.

    • The decline in January ended a string of ten consecutive monthly increases.

    • The DMI typically leads nonresidential construction spending by a full year.

    • Within the index, the commercial component saw a 10% decline and the institutional component declined 4.7%.
    • Declines in office, warehouse, retail, and hotel activity brought the commercial component lower, while education and amusement projects pushed the institutional component lower.
    • After a strong year in 2022, expectations are that the index will continue to decline to more historically normal levels in 2023.

 

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.
    • Both residential and non-residential construction spending declined in December, sliding 0.3% and 0.5%, respectively.
    • This was the first month-over-month decline in non-residential projects since May.

 

 

 

 

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.