Market Update | April 17, 2024

 

TOTAL RETAIL SALES CONTINUED TO CLIMB IN MARCH.

March retail sales came in at a $709.6 billion rate, up 0.7% from February and up 4.0% from a $682.2 billion rate in March 2023. Excluding sales from gas stations, total sales were up 0.6% from February to a $655.0 billion rate. Year-to-date actual sales are now up 3.3% compared to Q1 2023. The largest increases in March, compared to February, came from building material and garden stores, gas stations, and online retailers. These increases helped to offset declines seen in sales at motor vehicle dealers, electronic and appliance stores, and clothing stores.

 

Input Costs

Zinc pricing continued to push higher this week, now up for the third straight week.

• Zinc pricing came in at $1.26/lb this week, up from $1.23/lb previously and is at its highest level in a year.

 

Spot iron ore pricing rebounded this week, climbing to $123/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 jumped sharply this week, climbing to its highest level in a few weeks.

• The current coking coal pricing of $252/mt, up 12.6% from last week but still down 6.5% from this time last month.

 

 

SUPPLY

After hitting a multi-month high two weeks ago, U.S. raw steel production declined last week.

• • U.S. steelmakers produced 1.726 million tons at a 77.7% utilization rate.
    • Production was down 1.1% from the prior week and down 2.4% from the same week last year.
    • YTD production is down 2.4% from the same timeframe last year.

 

This week it is reported that President Joe Biden is calling for raising Section 301 tariffs on a wide range of Chinese steel and aluminum products.

• • Products that currently have 0% to 7.5% tariffs should each be raised to 25%.
    • Rates on products already subject to 25% tariffs would not change.
  • Overall, these steps target a relatively small segment of the U.S. market, for reference, since 2018 total steel imports from China accounted for 2% of total steel imports.

 

 

DEMAND

Business activity, from the manufacturing sector in NY, continued to decline in April.

• • The April Empire Manufacturing Index came in at -14.3, a slight improvement from the – 20.9 reading in March but still below 0.0 for the fifth consecutive month.

• • • Any reading below 0.0 shows contraction in activity, while any reading above 0.0 shows expansion.
  • Both the new order and shipment components dropped sharply in April, coming in at -16.2 and -14.4, respectively.
    • The unfilled orders component continued to contract as well, coming in at -10.1.
  • The index for future business conditions slipped to 16.7, down from 21.6 previously.

 

Confidence among U.S. homebuilders was flat compared to March, staying in positive territory for the second straight month.

• • The April Housing Market Index came in at 51, flat from April but up from 45 in April 2023.

• • • Any reading over 50 indicates builders see the outlook as positive versus any reading below 50 being negative.
  • The outlook on the current situation increased slightly, climbing to 57 from 56, previously.
    • This is the highest the current outlook has been since August.
  • The outlook for the next six months was slightly less optimistic than in March as that component slipped to 60 from 62 previously.
    • The traffic component improved slightly but remained well below 50 at 35.

 

New residential construction declined in March, now down for the second consecutive month.

• • Housing starts came in at a 1.321 million unit rate, down 14.7% from February and down 4.3% from the 1.380 million unit rate in March 2023.

• • • Starts declined on a year-over-year basis for the first time since October.
    • Multi-family starts declined to 22.6% of total starts, the lowest percentage since December 2020.
  • Total new starts through Q1 are now up 1.3% compared to Q1 2023.
  • Permits, an indicator for future construction, declined as well, sliding 4.3% from February to a 1.458 million unit rate.
    • Permits continued to climb on a year-over-year basis however, climbing 1.5% from a 1.437 million unit rate in March 2023.

 

While climbing from February, industrial production declined at the annual rate of 1.8% in Q1.

• • In March, the overall index increased 0.4% from February, boosted by a 0.5% increase in manufacturing output.

• • • The index for durable goods manufacturing increased 0.3% from February despite primary metal and fabricated metal product manufacturing sliding -0.7% and -0.2%, respectively.
    • Motor vehicle and part manufacturing led the increase by gaining 3.1%.
  • The capacity utilization rate increased to 78.4%, up from 78.2% in February.
    • Despite the increase in March, the current utilization rate remains 1.2% below the long-run average.

 

 

 

ECONOMIC

Total retail sales continued to climb in March, now up for the second consecutive month.

• • March retail sales came in at a $709.6 billion rate, up 0.7% from February and up 4.0% from a $682.2 billion rate in March 2023.

• • • Excluding sales from gas stations, total sales were up 0.6% from February to a $655.0 billion rate.
  • Year-to-date actual sales are now up 3.3% compared to Q1 2023.
  • The largest increases in March, compared to February, came from building material and garden stores, gas stations, and online retailers.
    • These increases helped to offset declines seen in sales at motor vehicle dealers, electronic and appliance stores, and clothing stores.

 

 

 

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.