Market Update | June 29, 2022

 

NEW DURABLE GOOD ORDERS ON THE RISE

Demand for durable goods has only continued to grow, now up in seven of the last eight months, increasing 0.7% from April at a $267.2 billion rate. New orders for primary metals has increased sharply, climbing 3.1% to a $21.6 billion rate. Additionally, unfilled new orders for all manufactured durable goods continued to climb, now up for the twenty-first consecutive month.

 

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 $1.52/lb, a still elevated level however.

 

Spot iron ore pricing continued to rebound in pricing after finishing the second half of last week strong.

    • Spot iron ore pricing is now at $125/mt, up 7.5% w/w but is still 8.5% below last months level.

 

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

    • Current pricing is at $320.00/mt, down nearly 15% from the end of last week.

    • While pricing is still down 31% compared to this time last month, pricing is up 72% from this time last year.

 

U.S. Steel will construct a direct-reduced grade facility at one of its two Minnesota iron ore mines.

    • They plan to break ground this fall at either its Keetac or Minntac operations.

    • It would allow one of their existing pelletizing plants the option not only to supply its own DR-grade pellets but also blast furnace-grade pellets.
    • The DR-grade pellets could also be sold as feedstock to third-party direct reduced iron (DRI) or hot briquetted iron (HBI) producers or used to supply its own future potential DRI or HBI facilities.

 

 

Supply

Domestic raw steel production declined for the second consecutive week last week.

    • U.S. steelmakers produced 1.750 million tons at an 80.2% utilization rate.
    • This was the lowest weekly output for domestic production since the second week of April.
    • YTD production is now down 2.0% from the same time last year.

 

Based on preliminary import licenses, daily average imports in the first 20 days in June increased 4.5% compared to the rate in May.

    • The coated flat rolled import rate is down 2.1% compared to the rate in May.

 

U.S. Steel announced that it signed a non-binding letter of intent with SunCoke Energy for a potential deal in which SunCoke would acquire U.S. Steel’s two blast furnaces at Granite City Works in Illinois and build a 2M-ton granulated pig iron production facility.

    • USS will probably move forward and cease operations of the BOF, hot mill, and probably Cold Mill. It is likely that USS will continue to operate the coating line that makes galvanized and Galvalume.
    • This will represent a reduction of HR capacity in market.

 

 

DEMAND

New orders for manufactured durable goods continued to climb in May and are now up in seven of the last eight months.

    • New orders for durable goods came in at a $267.2 billion rate, up 0.7% from April.

    • Excluding the volatile transportation segment, new orders were up 0.7% as well.

    • New orders for primary metals increased sharply, climbing 3.1% to a $21.6 billion rate.
    • Fabricated metal product new orders were flat from April, holding at a $36.9 billion rate.
    • Unfilled new orders for all manufactured durable goods continued to climb, now up for the twenty-first consecutive month.
    • Unfilled orders increased 0.3% to a $1.110 trillion rate.

 

 

ECONOMIC

Confidence among U.S. consumers slipped slightly in June after a declining slightly in May.

    • The Conference Board Consumer Confidence Index declined in June, sliding to 98.7.

    • This is down 4.5 points from May and is now at its lowest level since February 2021.

    • The Present Situation Index was virtually flat, sliding slightly to 147.1 from 147.4 previously.
    • The Expectations Index declined sharply, sliding 7.3 points to 66.4.
    • Now at its lowest reading since March 2013.

 

The third and final estimate of Q1 2022 GDP showed that the U.S. economy declined at a 1.6% annual rate.

    • This is down slightly from the second estimate of a 1.5% decline.

    • The decline from the second to third (final) reading was a larger than expected decline in consumer spending.

    • Sky-rocketing inflation and recession fears have started to hit consumers buying patterns.

 

 

 

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.