Market Update | May 08, 2024

 

THE DODGE MOMENTUM INDEX REBOUNDED IN APRIL

The April DMI, a leading indicator for non-residential construction spending, came in at 173.9, up from 164.0 in March but is below the 184.1 reading in April 2023. A rebound in the commercial planning component was partly offset by a decline in the institutional planning component. A sharp increase in data center planning, mainly to support the growing Cloud and AI infrastructure, was the leader for commercial planning.

 

Input Costs

Zinc pricing continued to push higher this week, now up for the sixth consecutive week.

    • Zinc pricing came in at $1.34/lb this week, up from $1.29/lb previously and is at its highest level in over a year.

 

Spot iron ore pricing slipped this week, sliding nearly $5/mt to $122/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 slipped slightly this week on the back of lower demand.

    • The current coking coal pricing of $241/mt, down 0.8% from last week but up 7.6% from this time last month.

 

After initial expectations for a strong sideways for May scrap trade, the recent downturn in finished steel pricing, especially the sharp drop in the Weekly Nucor CSP, has turned sentiment sour.

    • Expectations are now for a flat at best trade, with the more likely scenario of prime scrap pricing sliding $20/gt to $400/gt.

 

 

SUPPLY

U.S. raw steel production rebounded slightly last week after sliding in the previous three weeks.

    • U.S. steelmakers produced 1.709 million tons at a 77.0% utilization rate.
      • Production was up 0.5% from the prior week but down 1.0% from the same week last year.
      • YTD production is down 2.9% from the same timeframe last year.

 

 

DEMAND

Steady domestic mill shipments combined with a decline in imports and exports helped to push total steel consumption higher in March.

    • Per/day domestic carbon steel consumption declined, however, after climbing the previous two months.
      • Total carbon steel consumption (steel shipments + imports – exports) came in at a per/day rate of 265.8k tons in March, down from 274.0k tons/day in February but up 1.5% from 261.8k tons/day in March 2023.
    • March flat rolled consumption came in at a rate of 145.4k tons/day, down from the 148.5k tons/day rate in February but is up 6.2% from the 136.8k tons/day rate from last March.
      • This was the twelfth straight month with a year-over-year increase after nearly a year of declines.
    • Q1 carbon flat rolled consumption is now up 10.3% compared to the same timeframe last year.

 

After slipping in March, the April Dodge Momentum Index rebounded.

    • The April DMI came in at 173.9, up from 164.0 in March but is below the 184.1 reading in April 2023.
    • A rebound in the commercial planning component was partly offset by a decline in the institutional planning component.
      • A sharp increase in data center planning, mainly to support the growing Cloud and AI infrastructure, was the leader for commercial planning.
      • A side from the data center boom, uncertainty around interest rates and lending standards, is delaying decisions to push projects into the planning queue.
    • The DMI is a leading indicator for non-residential construction spending.

 

On Monday, United Auto Workers (UAW) members at Stellantis’ Warren Stamping Plant in Michigan voted to authorize a strike at the factory, giving the union the legal right to walk off the job should the automaker continue to ignore the union’s health and safety concerns.

    • A strike at the facility could have a ripple effect, as it is a supplier for multiple Stellantis plants in North America.

 

 

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.