Market Update | July 26, 2023
CONSUMER CONFIDENCE CONTINUED TO SURGE HIGHER IN JULY
Consumer confidence continued to surge higher in July after seeing a strong jump in June. The index came in at 117.0, up from 110.1 in June and hitting its highest level in two years. Other indicators that increased included the Present Situation Index at 160.0 from 155.3 previously along with the Expectations Index, a short-term outlook, improved to 88.3 from 80.0 in June.
Input Costs
After inching lower last week, zinc pricing rebounded slightly this week, now up for the third time in the last four weeks.
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Zinc pricing came in at $1.13/lb this week, up from $1.09/lb last week but has remained in a relatively tight range for the past month.
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Spot iron ore pricing has rebounded over the last week on the back of increased buying by China.
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- Spot iron ore pricing is currently at $121mt, up $5/mt from last week but now down only ~1.0% from the start of the year.
Supply
U.S. raw steel production increased sharply last week, climbing for the second consecutive week.
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- U.S. steelmakers produced 1.741 million tons at a 76.6% utilization rate: climbing to its highly weekly output in a month.
- The current YTD utilization rate is at 75.8%, down 2.5% compared to the same time last year.
Global steel production, on a tons/day basis, rebounded in June after a solid decline in May.
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- June global production averaged 5.292 million metric tons/day, up 2.1% from May and virtually flat from last June.
- The year-over-year increase in June followed two consecutive declines.
- Global production was boosted by an increase in China, which increased 4.5% from May to a 3.037 million metric tons/day rate in June.
- While China’s production increased, production from the rest of the world fell 1.0% from May, and 0.8% from June 2022.
- This was the seventeenth consecutive month in which production declined on a year-over- year basis.
- NAFTA production was up 1.2% from June, led by a 1.7% increase in U.S. production.
- U.S. production increased to a 226,000 metric ton/day rate, the highest daily rate since May 2022.
Preliminary total imports for July (17) were down 20.0% compared to the same daily pace in June.
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- Carbon HDG imports are coming in at a 1% decline compared to the daily pace in June.
DEMAND
After climbing the previous three months, sales of new homes slipped in June.
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June new home sales came in at a 697,000 unit rate, down 2.5% from May but a strong 23.8% from the 563,000 unit rate in June 2022.
- Sales have now seen year-over-year increases in three consecutive months.
- Through June, year-to-date sales are now 3.2% below the pace from the first half of 2022.
- The inventory of unsold new homes at the end of June totaled 435,000, up from 423,000 at the end of May.
- This is the highest monthly end inventory since January.
- The current inventory, when combined with June’s sales pace, equates to 7.3 months of supply.
- The median sales price slipped slightly to $415,400; the second decline in the last three months.
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ECONOMIC
Consumer confidence continued to surge higher in July after seeing a strong jump in June.
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The Conference Board’s Consumer Confidence Index came in at 117.0, up from 110.1 in June and hitting its highest level in two years.
- The Present Situation Index improved to 160.0 from 155.3 previously.
- The Expectations Index, a short-term outlook, improved to 88.3 from 80.0 in June.
- The Expectations Index has now been above 80, the key level that signals an oncoming recession for the third consecutive month.
- The lower inflation readings and tight labor market are overcoming the worries from higher interest rates to help ease consumers’ concerns.
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Despite an improving inflation picture, the Federal Reserve is expected on Wednesday to approve what would be the 11th interest rate increase since March 2022.
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- The Fed will approve a quarter percentage point hike that will take its benchmark borrowing rate to a target range of 5.25%-5.5%.
- That would push the upper boundary of the federal funds rate to its highest level since January 2001.
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.