Market Update | June 28, 2023

 

NEW HOME SALES INCREASED FOR THIRD CONSECUTIVE MONTH

The positive momentum around the residential market continued in May as new home sales increased for the third consecutive month. New home sales came in at a 763,000 unit rate in May, up 12.2% from April and up 20.0% from the 636,000 unit rate in May 2022.

 

Input Costs

After increasing last week, zinc pricing slipped once again this week, now down for the fifth time in the last six weeks.

    • Zinc pricing came in at $1.063/lb this week, down from $1.11/lb last week and 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 $112/mt, up over $4/mt from last week but still down over 3% from the start of the year.

 

Met coal pricing increased slightly this week, climbing to $236/mt.

    • This is up 2.6% from last week and is now up over 6.0% from this time last month.
    • Despite the recent rebound, pricing is still down nearly 40% since the recent high seen in February.

 
 
 

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.

 

Total carbon steel imports continued to decline in May, sliding for the third consecutive month.

    • Total carbon steel imports totaled 1.701 million tons, down from April and down 20.5% from 2.140 million tons in May 2023.
    • Total imports, on a per/day basis, declined to their lowest level since December.
    • Total carbon flat rolled imports increased in May however, climbing 30.2% from the very low April level to 510,066 tons.
    • Imports continued to slide on a year-over-year basis however, sliding 18.4% from 625,903 ton in May 2022.
    • On a year-over-year basis, all three flat rolled product groups declined, with hot rolled (- 20.5%) sliding the most.
    • Cold rolled and hot-dipped galvanized imports saw 18.4% and 12.7% declines, respectively.
    • Year-to-date carbon flat rolled imports are still down 36.1% compared to the same timeframe last year.

 

 

DEMAND

New orders for manufactured durable goods continued to climb in May, now up for the third consecutive month.

    • May new orders have increased 1.7% from April to a $288.2 billion rate.

    • Excluding transportation, new orders saw a 0.6% increase in May.
    • After slipping slightly in April, new orders for fabricated metal products were flat in May, holding at a $35.22 million rate.
    • Shipments of non-defense capital goods, ex-aircraft, increased sharply to a new record high of $74.0 million rate.

    • This is a good gauge of business investment and a positive sign regarding any back half of the year recession talk.

 

The positive momentum around the residential market continued in May as new home sales increased for the third consecutive month.

    • New home sales came in at a 763,000 unit rate in May, up 12.2% from April and up 20.0% from the 636,000 unit rate in May 2022.

    • This is the second consecutive month with a year-over-year increase in sales.
    • The inventory of unsold new homes increased slightly to 424,000 units, up 0.7% from April but down 3.05 from last May.
    • The current inventory, when combined with the May sales pace, equates to 5.8 months of supply.
    • This is the lowest months of supply since last February.

 

 

ECONOMIC

Confidence among U.S. consumers jumped in June, climbing to its highest level since early 2022.

    • The confidence index increased to 109.7, up from 102.5 in May.

    • The present situation component came in at 155.3, up from 148.9 in May.
    • The expectations component, a short-term outlook, rose to 79.3 from 71.5 previously.
    • Despite the increase, the expectation component has been below 80 every month since February 2022.
    • This prolonged stretch typically predicts a recession within the next year.
    • However, the June reading being just below that could put an end to that.

 

 

 

 

 

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.