Market Update | June 19, 2024

 

INDUSTRIAL PRODUCTION INCREASED IN MAY

The May industrial production index came in at 103.3, up from, a downwardly revised, 102.5 in April. Within the overall index, the manufacturing component increased a similar 0.9% after sliding in the previous two months. Within manufacturing, the durable manufacturing component increased 0.6%. The largest increases were in the indexes for wood products, machinery, and for computer and electronic products.

 

PRICE

The continued imbalance of supply and demand is allowing buyers to limit purchases and cause pricing to continue to slide lower.

 

 

 

Input Costs

After sliding the previous two weeks, zinc pricing rebounded slightly this week.

• • Zinc pricing came in at $1.27/lb this week, up 0.2% from $1.25/lb previously.

 

Spot iron ore pricing slipped again this week, sliding nearly $5/mt to $107/mt.

• • Iron ore pricing is now at its lowest level in more than six weeks on worries over the outlook for Chinese demand.

 

Coking coal pricing was up this week on the back of improved demand prospects.

• • The current coking coal pricing of $256/mt, is up slightly from $248/mt previously.

 

 

 

SUPPLY

U.S. raw steel production declined again last week, now down for the second consecutive week.

• • U.S. steelmakers produced 1.743 million tons at a 76.7 % utilization rate.
    • Production was down 0.7% from the prior week and down 2.0% from the same week last year and at its lowest weekly output since the end of April.
    • YTD production is down 2.8% from the same timeframe last year.

 

Based on preliminary import licenses, steel flat rolled imports in the first 16 days of June declined 13.5% m/m on a daily average basis, with imports of HDG sheet products down 15.2% m/m on a daily average basis.

 

Despite the slowing shipment levels, the slowdown on order rates helped service center inventories on hand to decline in May.

• • Total inventory on hand (4.327 million tons) was down 1.0% from April but up 12.6% from last May.
    • Total inventory has now increased, on a y/y basis, for five consecutive months.
  • The current inventory on hand remains well below the average from the past 10 May’s (4.509 million tons).
  • The current months of supply (1.88 months) was up slightly from April and up sharply from May 2023.

 

After beginning to commission their new 325,000st/yr dual coating line (Big River) in Q1, US Steel said it has officially started up both the galvanized and galvalume lines recently.

• • Of that line’s capacity, 75% will be dedicated to galvalume and the remainder to galvanized products.

 

 

 

DEMAND

Business activity in the New York region declined again in June albeit slightly more modestly than the last few months.

• • The June Empire Manufacturing Index came in at -6.0, an improvement from the – 15.6 reading in May but remaining below 0.0.
    • The index has now been below 0.0, a sign of contraction, for the seventh consecutive month.
    • The two-month average was -10.8, its best reading since December.
  • While the new orders component held steady, shipments inched higher.
    • Supply availability, a new indicator to the report, held steady as well.
  • Despite the current activity remaining reach, optimism about the six-month outlook picked up to its highest level in more than two years.

 

After a flat reading in April, industrial production increased a strong 0.9% in May.

• • The May industrial production index came in at 103.3, up from, a downwardly revised, 102.5 in April.
  • Within the overall index, the manufacturing component increased a similar 0.9% after sliding in the previous two months.
    • Within manufacturing, the durable manufacturing component increased 0.6%.
    • The largest increases were in the indexes for wood products, machinery, and for computer and electronic products.
  • Total capacity utilization increased to 78.7% from 78.2% previously.
    • Manufacturing utilization increased as well, climbing to 77.1%, but remaining below the long run average.

 

 

 

ECONOMIC

After falling in the previous seven months, the shipment component of the Cass Transportation Index held steady in May.

• • The Cass Shipment component came in at 1.098, flat from April but was down 5.8% from last May.
    • While the shipment component remained flat, the expenditure component, or the total value of shipments, increased in May.
  • The expenditures component came in at 3.288 up from April but down a sharp 9.0% from last May.
    • The May reading was the highest since November.
  • The increased total cost, combined with the flat shipment reading, pushed the inferred freight rate measure higher.
    • Inferred freight rates were up 1.9% from April but still down 3.4% from last year.

 

After slipping in April, the total adjusted (for seasonal variation and holidays but not prices) increased in May.

• • May retail sales totaled $703.1 billion, up 0.1% from April and up 2.3% from the $687.5 billion rate in May 2023.
    • Total sales, excluding sales from gas stations, saw a stronger increase, climbing 0.3% from April to a $685.2 billion rate.
    • Sales from grocery stores declined as well, sliding 0.4% from April but were up 1.3% from May 2023.
  • The kinds of business with the largest increases in sales were sporting goods stores, motor vehicle dealers, clothing stores, and online retailers.
    • These increases were partly offset by declines in the previously mentioned gas stations and grocery stores, but also building material stores, and furniture stores.

 

 

 

 

 

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.