Market Update | July 6, 2022



Light vehicle inventory ended the month at 1.222 million units, up 7.9% from May. But, it’s still down 12.3% compared to 1.394 million units in June 2021. Inventory of light trucks was actually up 10.3% compared to June 2021, and at its highest level since April 2021. This is a sign that production may be beginning to recover.


Input Costs

After rebounding last week, zinc pricing continued to slide this week on the prospects of declining demand through the back half of the year.

    • Zinc pricing is currently at $1.39/lb, its lowest level since last September.

    • Stating the recent steady decline in LME zinc pricing, SDI announced a decrease to their coating extras today.
    • The changes will take effect for all new orders for delivery beginning on August 1st.


Spot iron ore pricing saw another decline in pricing after finishing the second half of last week strong.

    • Spot iron ore pricing is now at $114/mt, down 7.2% w/w and still 22.1% below last months level.

    • Iron ore prices have declined of late, weighed down by a gloomy demand outlook in China, where many steel mills are nursing losses and cutting production.
    • Chinese mills have idled dozens of blast furnaces as iron ore stocks piled up after domestic demand weakened, hit by COVID-19 restrictions and bad weather.


Pacific Basin met coal pricing continued its recent slide this week.

    • Current pricing is at $285/mt, down nearly 11% from the end of last week.

    • While pricing is still down 32% compared to this time last month, pricing is up 43% from this time last year.




Domestic raw steel production rebounded last week after sliding the two previous weeks.

    • U.S. steelmakers produced 1.767 million tons at an 80.9% utilization rate.
    • Despite the rebound this week, YTD production is now down 2.2% from the same time last year.


Based on preliminary carbon flat rolled import licenses, daily average imports for July declined 9.9% compared to the rate in May.

    • The coated flat rolled import rate is down 7.2% compared to the rate in May.


According to Platts, China will announce a 20-30mt, or 2-3% y/y, decline in its steel output cut target for 2022.

    • That implies average daily crude steel output during June-December will be around 2.66mt to 2.71mt, down 13.0%-14.5% from May’s daily level, but still 1.4%-3.2% higher y/y.




After sliding the previous two months, U.S. light vehicle sales increased slightly in June.

    • June light vehicle sales totaled 1.127 million units, up 1.7% from May.

    • Sales were down on a year-over-year basis however, sliding 13.5% from 1.302 million units in June 2021.

    • This was the eleventh consecutive month with a year-over-year decline.
    • Sales of both cars and light trucks increased in June, climbing 1.8% and 1.0%, respectively.
    • Year-to-date sales are still down 18.3% compared to the first half of 2021.


After sliding the previous two months, U.S. light vehicle inventory rebounded slightly in June.

    • Light vehicle inventory ended the month at 1.222 million units, up 7.9% from May but still down 12.3% compared to a more comparable 1.394 million units in June 2021.

    • While the inventory of light trucks was actually up 10.3% compared to June 2021, inventory of cars and imports dropped a sharp 46.2% and 45.6%, respectively.

    • Light truck inventory is at its highest level since April 2021, a sign that production may be beginning to recover slightly.
    • Current inventory, when combined with June sales, equates to 28 days of supply.
    • This is up from 25 days in May but still well below the historical average of 67 days.


New orders for U.S. manufactured goods showed surprising resilience in the month of May, up 1.6% m/m and surpassing consensus expectations of 0.5% m/m.

    • While these factory orders suggest that demand for goods remains robust, Friday’s manufacturing ISM showed new orders dropping into contraction territory in June for the first time since May 2020.




The U.S. dollar index continued to climb, surging to the highest in 20-plus years, making commodities priced in dollars more expensive for buyers using other currencies.

    • There is currently little return on commodities so speculators are moving their money out of commodities into U.S. dollars, property, or any U.S. dollar asset outside of commodities that will provide a return.


Job openings totaled 11.25 million for May, a considerable drop from the upwardly revised 11.68 million in April.

    • There were 5.95 million people counted as unemployed in the month, meaning there were 1.9 openings per every available worker, still around historical highs.




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.