Market Update | March 20, 2024

 

NEW RESIDENTIAL CONSTRUCTION REBOUNDED IN FEBRUARY

February new housing starts came in at a 1.521 million unit rate, up 10.7% from January and up 5.9% from the 1.436 million unit rate in February 2023. This is the fourth consecutive month in which starts increased on a year-over-year basis. While both single-family and multi-family starts increased in February, single-family starts led the push higher.

 

Input Costs

After a slight decline last week, zinc pricing rebounded again this week.

• Zinc pricing came in at $1.14/lb this week, up from $1.11/lb previously and is still below the 30-day average.

 

Spot iron ore pricing was essentially flat this week, inching higher to $115/mt.

• Rising inventories and low steel mill profitability in China, combined with weaker steel demand in 2024, have negatively impacted iron ore pricing.

 

Coking coal pricing continued to decline this week, sliding to the lowest level since August.

• The current pricing of $262/mt, is down 11.1% from last week and down 16.9% from this time last month.

 

 

SUPPLY

After climbing to a six-plus month high last week, U.S. raw steel production slipped this week.

• • U.S. steelmakers produced 1.714 million tons at a 77.2% utilization rate.
    • This was the lowest weekly output since the second week of February.
  • YTD production is down 1.7% from the same timeframe last year.

 

Inventory – 4.275 million tons (up 1.5% y/y); up on a y/y basis for the second consecutive month but was down slightly (0.2%) from January.

• • Inventory on hand remains well below the average from the past 10 February’s (4.622 million tons).
    • Months of Supply – 1.87 months, up slightly from January and flat from February last year.
    • Days of Supply – 39.3, up slightly from January and up from 37.5 in February 2023.

• • Material on Order – 2.804 million tons, down from January and lowest level since August 2023.
    • Percentage of Inventory on Order – 65.6%, lowest level since December 2022.
  • Potential Months of Supply – 3.10 months, down from January and at the lowest level since October.

 
 

DEMAND

Confidence among U.S. homebuilders expanded in March, reaching that level for the first time since July.

• • The March Housing Market Index came in at 51, up from 48 in February and up from 44 in March 2023.

• • • Any reading above 50 indicates a positive outlook, while any reading below 50 is more negative.
  • Within the overall index both the present situation and the next six months’ components continued to grow, climbing to 56 and 62, respectively.
    • The traffic component, while showing slight improvement from February, remains deep in contraction at 34.
  • Builders noted strong buyer demand and anticipated increased activity as buyers anticipate lower mortgage rates, as reasons for the recent upswing in the HMI.

 

After sliding to start the year, new residential construction rebounded in February.

• • February new housing starts came in at a 1.521 million unit rate, up 10.7% from January and up 5.9% from the 1.436 million unit rate in February 2023.
    • This is the fourth consecutive month in which starts increased on a year-over-year basis.
  • While both single-family and multi-family starts increased in February, single-family starts led the push higher.
  • Permits, an indicator for future construction, increased as well, climbing 1.9% from January to a 1.518 million unit rate.
    • This was the highest rate for permits since August.

 

 

 

 

 

 

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.