GROWTH & OPTIMISM WELCOME THE NEW YEAR

Despite the challenges of 2021, the year ended with record breaking growth and optimism. Total construction spending climbed for nine consecutive months. The ISM Manufacturing Index averaged 60.7 throughout the year. Its highest annual rate in recent history. In December, light vehicle sales reached their highest monthly total since July. Additionally, confidence in the U.S. job market improved as evidenced by the staggering number of people who quit their jobs and were hired in November.
 
 

Input Costs

Zinc pricing rebounded this week after a slight decline last week.

– Zinc pricing climbed above $1.60/lb this week; reaching 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 $122.90/dmt.

– Spot iron ore pricing is up 4.4% w/w and is up 22.4% 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 rebounded to $358/mt, from the lowest level since early-September.

– Pricing is up 0.8% w/w and up +249% y/y.

After a flat reading in December that finished off an historic climb in domestic scrap pricing, 2022 is poised to start on a slow note.

– The current expectation is for prime scrap to see a $20-$30/gt decline.

– This decline would bring pricing back to $550-$560/gt, still well above historical levels.

 

Supply

After increasing two weeks ago, domestic raw steel production declined once again last week.

– U.S. steelmakers produced 1.785 million tons at an 80.9% utilization rate.

– This is the lowest weekly output since late April.

– Year-to-date production is 9.5% above the total from the same period last year.

Based on preliminary import license data, the daily average of imports for December, is down 8.7% compared to the pace in November.

– Excluding Brazilian slabs, the daily average in December is down 12.7% from November.

– Factoring December’s license data, full year 2021 imports were up 48.4% compared to 2020.

The current lead-time for domestic flat rolled products continued to ease this week.

– Current HRC lead-time of 3.9 weeks is at its lowest level since May 2020.

– Domestic HDG lead times have pulled back as well, currently 6.7 weeks.

 

Demand

Construction spending continued to climb in November, now up for the ninth consecutive month.

– Total construction spending came in at a $1.626 trillion rate in November, up 0.4% from October and up 9.3% from a $1.487 trillion rate in November 2020.

– While non-residential construction spending was virtually flat month-over-month, spending on residential construction continued to climb.

Growth the manufacturing sector continued in December, just at a slightly lower rate than most of the year.

– The ISM Manufacturing Index came in at 58.7, down from 61.1 in November and down from 60.7 in December 2020.

– Despite being the slowest growth since January, the index remained above 50 for the nineteenth consecutive month.

– For 2021, the index averaged 60.7, its highest annual rate in recent history.

After slipping in November, U.S. light vehicle sales rebounded in December, climbing to their highest monthly total since July.

– U.S. light vehicle sales totaled 1.194 million units, up 19.4% from November but still 25.6% below year ago levels.

– While sales of both cars and light trucks increased on a month-over-month basis, the largest increase came from light truck sales.

– Despite the slowdown in sales during the second half of the year, full year, 2021, sales totaled 14.91 million units, up 3.0% from 2020.

 

Economy

The Labor Department reported that 4.5 million people quit their jobs in November. While staggering, it is a sign of confidence and more evidence that the U.S. job market is bouncing back strongly.

– The 4.5 million people that quit their jobs, equates to roughly 3% of the workforce.

– As far as hiring goes, companies hired 6.7 million people in November.

– Since April 2020, employers have added 18.5 million jobs, still leaving the U.S. 3.9 million jobs short of what it had before the pandemic.

 

 

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.