Market Update | May 10, 2023
PRICES PAID BY CONSUMERS IN APRIL WELL ABOVE FED’S TARGET RATE
Prices for all goods and services increased 4.93% from April 2022, down slightly from the 4.98% increase in March. This is the lowest year-over-year increase in prices since April 2021, but still well above the 2.0% target. The largest factor in the increase was led by the shelter index followed by used vehicles, vehicle insurance, furniture, personal care, apparel, and education.
Input Costs
Zinc pricing continued to push higher this week albeit only slightly from last week.
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Zinc pricing came in at $1.21/lb this week, up from last week but still near its lowest level in over a year.
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After the run up over the previous three months, spot iron ore pricing has remained steady over the past couple of weeks.
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- Spot iron ore pricing is currently at $121.90 /mt, down slightly from last week, virtually flat from last month, but up 7.0% over the last 90 days.
Increased coking coal demand from buyers in India has helped push pricing higher of late as they continue to restock.
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- Coking coal pricing currently sits at $246/mt, up 7.4% from last week and down 14.6% from a month ago.
The national average price of diesel declined again this week, sliding to $3.92.
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- This is the third consecutive week and is now below $4.00 for the first time since February 2022.
Supply
U.S. raw steel production slipped last week, sliding after four straight increases.
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- U.S. steelmakers produced 1.712 million tons at an 76.1% utilization rate: topping 76% for the second straight week.
- The current YTD utilization rate is at 74.7%, down 4.3% compared to the same time last year.
Preliminary April import licenses, (8 days), showed total carbon steel imports are up 20.5% from the same time in April and up 4.8% from the same pace in May 2022.
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- Coated import licenses are down as well from April climbing 6.0% through the first eight days.
DEMAND
March carbon flat rolled consumption came in at a rate of 136.8 thousand tons/day, down from a 140.9 thousand tons/day rate in February and remains below the 151.2 thousand tons/day rate from last March.
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Despite the year-over-year decline, this was the second highest daily consumption rate since June.
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Per/day coated flat rolled consumption slipped after two straight monthly increases, sliding 4.2% to a 51.8 thousand tons/day rate.
- March was down 14.6% from the 60.7 thousand tons/day rate in March 2022.
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The Dodge Momentum Index continued to slide in April, sliding for the third consecutive month.
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The April DMI came in at 180.9, down from 190.6 in March but was still up from 165.0 in April 2022.
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This was the lowest reading since August.
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The combination of uncertainty around the current banking environment and worries about the economy during the back half of the year have helped push the index lower.
- The commercial sector, which is more exposed to real-time economic changes, helped drive the index lower.
- The DMI is a leading indicator for future spending on non-residential construction products.
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ECONOMIC
Prices paid by consumers continued to be well above the Fed’s targeted rate in April.
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Prices for all goods and services increased 4.93% from April 2022, down slightly from the 4.98% increase in March.
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This is the lowest year-over-year increase in prices since April 2021, but still well above the 2.0% target.
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Prices for all goods, excluding food and energy, increased 5.52% from last year, down slightly from the 5.59% annual increase in April.
- The shelter index continued to be the largest factor in the increase.
- Other sectors that increased in April were used vehicles, vehicle insurance, furniture, personal care, apparel, and education.
- These increases were partly offset by declines from airfare and new vehicles
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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.