NEW DOMESTIC MILLS EXPECTED TO BREAK GROUND SOON

US Steel announced that Osceola, AR will be the location of their new mill featuring two electric arc furnaces. It is expected to have a 3.0 million tons/year capacity. Although ground should break in Q1 of 2022 and it won’t be fully operational in 2024. Additionally, Nucor is also expected to build a new $2.7 billion flat-rolled steel mill and West Virginia is moving quickly to create incentives to entice them to build there.

 

INPUT COSTS

Zinc pricing remained firm this week after a sharp increase last week.

– Zinc pricing climbed above $1.60/lb this week; its highest level since mid-October.
– However, longer-term forecasts expect pricing to return to the recent $1.40/lb-$1.45/lb average.

Spot iron ore pricing continued to climb this week, jumping up to $128.60/dmt.

– Spot iron ore pricing is up 4.6% w/w and up 16.7% m/m.

Pacific basin met coal pricing saw an increase this week on a pickup in demand from China and weather related issues globally.

– Pricing continued to climb this week, climbing to $385/mt.
– Pricing is up 7.5% w/w and up +278% y/y.

Crude oil pricing continued to push higher this week, topping $83/barrel on Tuesday.

– Tight supply and expectations that the current rising coronavirus cases will not derail demand have helped push pricing higher of late.
– This is the highest oil pricing has been in over two months.

 

SUPPLY

After sliding during the holiday season, domestic raw steel production bounced back during the first full week of the New Year.

– U.S. steelmakers produced 1.813 million tons at an 82.3% utilization rate.
– This is the highest weekly production in a month.
– Year-to-date production is 4.4% above the total from the same period last year.

Based on preliminary import license data, the daily average of imports (10 days), for January, is up 1.8% compared to the pace in December.

– Excluding Brazilian slabs, the daily average in January is down 6.2% from December.

US Steel announced the location for their new mill.

– USS announced that they would build the two EAF’s, which will have a 3.0 million ton/year capacity, in Osceola, AR, just south of their current BRS location.
– Permitting for the project is underway, and US Steel expects to break ground in Q1 2022, with project completion and full operation anticipated in 2024.

West Virginia is moving quickly to create incentives to lure electric arc furnace (EAF) steelmaker Nucor’s new $2.7 billion flat-rolled steel mill to the state.

– The bill allows for tax incentives for qualified labor-intensive heavy industrial manufacturing projects that invest more than $2 billion and hire at least 500 full-time employees within three years of the facility being placed in service.

Carbon flat rolled HDG imports increased significantly in November, climbing nearly 60,000 tons from October.

– The largest increases in imports came from Vietnam, Turkey, Pakistan, and South Korea.
– The largest decline came from South Africa and Canada.

 

DEMAND

Total domestic carbon steel consumption, on per/day basis, remained strong in October. Climbing to its highest level since October 2014.

– November carbon flat rolled consumption came in at a rate of 171.0 thousand tons/day, up from October and is at its highest level since October 2014.
– November flat rolled consumption was 25.4% above year-ago levels, while the average carbon coated flat rolled per/day consumption for 2021 is up 18.8% over the same period in 2020.
– Per/day coated flat rolled consumption came in at its highest level in well over a decade and was greater than 60,000 tons/day for the eighth consecutive month. This is the longest such stretch since 2007-2008.

 

ECONOMY

While the latest update from the Fed minutes noted a possibility of three interest rate increases in 2022, key experts from the finance world are expecting even more.

– Goldman Sachs recently noted that they are anticipating at least four increases, while JP Morgan CEO suggested that four increases might be on the low side.

Prices paid by consumers continued to climb higher in December, climbing 0.31% from November and a sharp 7.04% over December 2000.

– ​This was the largest annual increase for the CPI since June 1982.
– Increased prices for shelter and used cars/trucks were the largest contributors to the increase.

 

 

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.