Market Update | July 5, 2023

 

TOTAL CONSTRUCTION SPENDING HITS ALL-TIME HIGH

Total spending came in at a $1.926 trillion rate, up 0.9% from April and up 2.4% from May 2022, increasing for the fifth consecutive month. While spending on non-residential projects slipped slightly, a large jump in spending on residential projects made up for it. Residential spending increased 2.1% from April and increased to its highest monthly rate since December. Despite the slip in May, non-residential spending still accounts for 54.9% of total spending, its ninth straight month with majority.

 

Input Costs

After slipping last week, zinc pricing rebounded once again this week, now up for the second time in the last three weeks.

    • Zinc pricing came in at $1.09/lb this week, up from $1.06/lb last week and is still near its lowest level in more than two years.

 

Spot iron ore pricing has rebounded over the last week on the back of increased buying by China.

    • Spot iron ore pricing is currently at $113/mt, up $1/mt from last week but still down over 3% from the start of the year.

 

Met coal pricing declined slightly this week, climbing to $229/mt.

    • This is up 2.6% from last week and is now up over 6.0% from this time last month.
    • This is down 3.1% from last week and virtually flat from this time last month.

 

Early July scrap reading could be down $10-$20/gt.

    • Expectations a month back was that June/July could be down a combined $75, that expectation continues as mill buying demand and export activity have slowed.

 
 

Supply

U.S. raw steel production continued to push higher last week after a sharp drop three weeks ago.

    • U.S. steelmakers produced 1.758 million tons at a 78.1% utilization rate: topping 78% for the first time since mid-September.
    • The current YTD utilization rate is at 75.8%, down 2.9% compared to the same time last year.

 

 

DEMAND

Total construction spending continued to climb in May, hitting a fresh all-time high.

    • Total spending came in at a $1.926 trillion rate, up 0.9% from April and up 2.4% from May 2022.

    • Total spending has now increased for five consecutive months.
    • After slipping slightly in April, new orders for fabricated metal products were flat in May, holding at a $35.22 million rate.
    • While spending on non-residential projects slipped slightly, a large jump in spending on residential projects made up for it.

    • Residential spending increased 2.1% from April and increased to its highest monthly rate since December.

    • Despite the slip in May, non-residential spending still accounts for 54.9% of total spending, its ninth straight month with majority.

 

Economic activity in the manufacturing sector continued to contract in June, marking the eighth consecutive monthly decline.

    • The ISM Manufacturing Index came in at 46.0, down slightly from 46.9 in May and down from 53.0 in May 2022.

    • While the new order component contracted at a slower rate, the production component slipped from expansion to contraction.
    • The new order and production components came in at 45.6 and 46.7, respectively.
    • The backlog of order component contracted at a slightly slower rate, showing a modest improvement from 37.5 to 38.7.

 

 

 

 

 

 

 

 

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.