Market Update | January 17, 2024

 

CONFIDENCE AMONG US HOMEBUILDERS IMPROVED SHARPLY IN JANUARY

The January Housing Market Index came in at 44, up from 37 in December and is at its highest level since September. Any reading below 50 shows a pessimistic outlook, while any reading above 50 shows optimism. The outlook over the next six months was the component that saw the largest increase, climbing from 45 to 57. The present situation component improved to 48, up from 41 in December.

 

 

Input Costs

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

• Zinc pricing came in at $1.16/lb this week, up from $1.14/lb previously and remains right at the 90-day average.
• Pricing pushed higher to start the week after global metals group Nyrstar announced it will place its 315,000t/yr Budel zinc smelter in the Netherlands on maintenance for the second half of January due to continued high energy costs and weak fundamentals.

 

Spot iron ore pricing slipped this week, sliding to $131/mt from $138/mt last week.

 

Pacific Basin met coal pricing regained some upward momentum this week, climbing to $337/mt.

• Current pricing is up 0.2% from the end of last week and is up 5.3% from this time last month.

 

 

SUPPLY

US raw steel production declined slightly this week after rebounding last week to start the new year.

• • US steelmakers produced 1.699 million tons at a 76.5% utilization rate.

 

December SC inventory on hand increased slightly from November to 4.218 million tons.

• • While up from November, this was down 1.0% from last December and marked the 16th consecutive month with a y/y decline.
    • The December total on hand, was the second lowest level since 2009 (2020).

 

Current inventory, when combined with December’s shipments, equated to 2.18 months of supply.

• • Up from November but below 2.32 months last December.
  • The days of supply in December (43.7) was well below the last 10 December’s average of 56.3 days.

 

Order activity slowed in December, sliding to its lowest level (3.134 million tons) since September.

 

DEMAND

Business activity in the manufacturing sector declined sharply in the New York region in January.

• • The January Empire Manufacturing Index dropped to -43.7, the lowest reading since May 2020.
  • The two-month average declined to 29.1, the fifth reading below 0.0 out of the last six.
    • Any reading below 0.0 shows contraction, while any reading above 0.0 shows expansion.
  • Within the overall index, the new orders and shipments components declined sharply.
    • Respondents expect some pickup in activity in the near term, with the index for future business conditions increased to 18.8.
      • This is up from 11.8 previously.

 

After dropping in October, industrial production has been relatively flat since.

• • The December Industrial Production Index came in at 102.5, up slightly from 102.4 in November and is up from 101.5 in December 2022.
  • Manufacturing output inched higher as well, climbing 0.1% in December after increasing 0.2% in November.
    • Excluding motor vehicle and part manufacturing, factory output slipped 0.1%.
  • The total Capacity Utilization rate remained flat, holding at 78.6% in December.
    • Manufacturing output utilization came in at a 77.1% rate in December.

 

Confidence among US homebuilders, while still slightly pessimistic, improved sharply in January.

• • The January Housing Market Index came in at 44, up from 37 in December and is at its highest level since September.
    • Any reading below 50 shows a pessimistic outlook, while any reading above 50 shows optimism.
  • The outlook over the next six months was the component that saw the largest increase, climbing from 45 to 57.
    • The present situation component improved to 48, up from 41 in December.

 

 

ECONOMIC

While both the Cass Shipment and Expenditure components declined in December, a sharper decline in the Expenditure component helped to push the Inferred Freight Rates lower.

• • The Shipment and Expenditure components declined 1.6% and 3.0%, respectively.
    • The drop in shipments was to the lowest level since July 2020.
  • The inferred freight rate (total expenditures divided by total shipments) declined to 3.00, down 1.5% from November.
    • The rate was down 17.7% from last December, marking the ninth straight month with a year-over-year decline of at least 10%.
    • Freight rates are now at their lowest level since July 2021.

 

Total retail sales continued to push higher in December, now up for the second consecutive month and for the eighth time in the last nine months.

• • Total retail sales came in at a $709.9 billion, up 0.6% from November and up 5.6% from the 672.3% billion rates in December 2022.
    • This is the highest y/y increase since January.
  • The largest increases in December came from motor vehicle dealers, clothing stores, and department stores.
    • ​These increases helped overcome the declines from furniture stores, health & beauty stores, and gas stations.

 

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.