Market Update | September 20, 2023

 

CASS SHIPMENT INDEX INCREASED IN AUGUST

The Cass shipment index increased in August, climbing 1.9% from July but was down 10.6% from last August. The current downtrend for shipments is at the 20-month mark, which compares to a range of 21-25 months the previous three downcycles. The Cass expenditure index, which measures total spend for freight, increased as well climbing 1.1% compared to July.

 

Input Costs

After holding steady last week, zinc pricing pushed higher this week.

  • Zinc pricing increased to $1.15/lb this week and has remained in a relatively tight range for the past month.
    • The average over the past 30 days is $1.08/lb.

 

Spot iron ore increased slightly this week, climbing to $119/mt.

Met coal pricing held steady this week, holding at $280/mt on the increased demand and tight supply.

  • This is up 30% from this time last month.

 

Supply

U.S. raw steel production increased slightly this week after sliding the previous three readings.

  • U.S. steelmakers produced 1.733 million tons at an 76.2% utilization rate, up from a two-month low previously.
    • The increase last week was boosted from the Great Lakes region, which saw the largest week-over-week decline since April.
  • The current YTD utilization rate is at 76.0%, down 1.6% compared to the same time last year.

 

U.S. Steel announced that it would be idling the remaining active blast furnace at its Granite City location in response to the UAW strike.

  • The “B” furnace is rated for 1.4 million st/year capacity, but now both furnaces at Granite City are now idled.

 

Preliminary total imports for September (11 days) were up slightly compared to the daily pace in August.

  • Flat rolled imports are coming in at a slightly faster rate as well compared to the daily pace in August.

 

DEMAND

Tractor and combine shipments continued to slip in August, now down for the second consecutive month.

  • North American (US and Canada) shipments totaled 23,970 units, down 2.9% from July and down 5.1% from August 2022.
  • Shipments are now down on a year-over-year basis for the third consecutive month and now down for the seventeenth time in the last eighteenth month.
    • Shipments of both tractors and combines declined in August, with the largest decline coming from combine shipments.
      • Year-to-date shipments are now down 8.4% compared to the same timeframe last year.

 

New construction of residential units declined sharply in August, sliding 11.3% from July to a 1.283 million unit rate.

  • This is down 14.8% from the 1.505 million unit rate in August 2022 and is at its lowest level since June 2020.
    • Year-to-date actual new residential construction is now down 12.5% compared to the same timeframe last year.
  • Contrary to the decline in starts, new permits increased again in August, now up for the third time in the last four months.
    • Permits increased to a 1.543 million unit rate, up 6.9% from July, but was down slightly from the 1.586 million unit rate in August 2022.
    • Permits are a leading indicator for future new residential construction.

 

Confidence among US homebuilders contracted in September after a neutral reading in August.

  • The Housing Market Index came in at 45, down from 50 in August and down from 46 in September 2022.
    • Any reading below 50 denotes a pessimism about the housing market, while a reading above 50 shows optimism.

 

  • Within the index, the present situation components (51), was the only to come in
    above 50.

    • The next six month and traffic components both declined in September, sliding to 49 and 30, respectively.

 

ECONOMIC

The Cass shipment index increased in August, climbing 1.9% from July but was down 10.6% from last August.

  • The current downtrend for shipments is at the 20-month mark, which compares to a range of 21-25 months the previous three downcycles.
  • The Cass expenditure index, which measures total spend for freight, increased as well climbing 1.1% compared to July.
    • The inferred freight rate (spend / shipments) declined again, sliding for the ninth consecutive month.
    • Current rates of 3.026 are now at their lowest level since July 2021.

 

 

 

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.