Market Update | January 24, 2024

 

STRUCTURE FAILURE SLIGHTLY DAMAGES ALGOMA’S BLAST FURNACE

A structure that supports utility piping at Algoma’s coke-making facility has failed, and further investigation revealed slight damage to the blast furnace. Algoma has noted that they will need to take the blast furnace down for two weeks to complete the repairs. The Algoma blast furnace is rated for annual production of 2.8 million tons, so the two-week outage results in roughly 107,397 tons of lost production.

 

 

Input Costs

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

  • Zinc pricing came in at $1.14/lb this week, down from $1.16/lb previously and remains right at the 90-day average.
  • Zinc prices have been consolidating due to supply constraints amid mine closures offset by a weak Chinese economy.

 

Spot iron ore pricing rebounded this week, climbing to $137/mt from $131/mt last week.

  • Total iron ore shipments to global destinations from 19 ports and 16 mining companies in Australia and Brazil decreased 5.9% w/w to 21.5mt as of January 21.

 

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 again this week after rebounding two weeks ago to start the new year.

    • US steelmakers produced 1.682 million tons at a 75.7% utilization rate.

 

After experiencing a failure of a structure that supports utility piping at Algoma’s coke-making facility, further investigation revealed slight damage to the blast furnace.

    • Algoma has noted that they will need to take the blast furnace down for two weeks to complete the repairs.
    • The Algoma blast furnace is rated for annual production of 2.8 million tons, so the two week outage results in roughly 107,397 tons of lost production.

 

DEMAND

US light vehicle production declined in December, on a m/m basis, but continued to increase on a y/y basis.

    • December light vehicle production totaled 733,827 units, down 14.5% from November but was up 0.4% from December 2022.
      • ​This was the second consecutive month in which production increased on a year-over-year basis.
    • ​​Looking on a y/y basis, to smooth seasonality, both cars and light truck production was up from November.
      • Car and light truck production was up 0.7% and 0.4%, respectively.
    • ​2023 total light vehicle production totaled 10.35 million units, up 6.2% from the 9.74-million-unit total in 2022.
      • This was the highest annual total since 2019.

 

Activity at the architecture firm level, continued to struggle to end 2023.

    • The December Architecture Billings Index came in at 45.4, up slightly from November but below 50.0 for the fifth consecutive month.
      • Any reading below 50 denotes a contraction in activity, while any reading above 50 shows expansion.
    • ​Regionally, three of the four regions saw contraction, with only the Midwest moving into expansion.
      • ​The South remained the weakest, coming in at 43.4.
    • ​​The sector breakdown saw contraction across the board, with multi-family residential projects (45.8) being the weakest.

 

 

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.