GLOBAL STEEL PRODUCTION FEELS IMPACT OF WAR IN UKRAINE

March is the first month to see a major impact from the Russian invasion of Ukraine. Production in Ukraine has seen a significant decline. Dropping from 49,000 mt/day to 7,000 mt/day. However, global steel production continued to increase in March, up for the second consecutive month. This was lead by production in China, as they reached a 2.848 million mt/day rate which is a 6.4% increase. The rest of the world saw a 3.0% declined compared to February.

 

Input Costs

After a sharp drop to start the week, zinc pricing rebounded as the week progressed.

• • Zinc pricing is currently at $1.93/lb., still an elevated level.
  • Skyrocketing energy pricing is affecting smelters around the globe, particularly in Europe, which has helped to push the price higher.

 

Spot iron ore pricing slipped this week, sliding back to $138.95/mt.

• • Spot iron ore pricing is down 7.3% w/w and still 27.4% below prior year levels.
  • Spot iron ore pricing is now at its lowest level in a month.

 

After the recent run up in met coal pricing due to global buyers looking to stock up ahead of the EU’s import ban on Russian coal starting August 1st, price eased slightly this week.

• • Pacific met coal pricing came in at $490.50/mt this week.
  • This is down 4.2% w/w and still down 9.0% compared to this time last month.

 

 

Supply

Domestic raw steel production increased again last week, producing its highest weekly output since the first week of February.

• • U.S. steelmakers produced 1.780 million tons at an 81.7% utilization rate.
  • Despite the recent rebound, YTD production is now down 1.0% compared to the same timeframe last year.

 

Total carbon steel imports totaled 2.381 million tons in March, up 32.5% from February and up 31.1% from March 2021.

• • ​Despite the increase in March, the total came in just slightly above the monthly average (2.317 million tons) since last June.
  • Carbon flat rolled imports increased too, climbing 45.0% from February to 809,813 tons.
  • All three flat rolled product imports increased from February, with hot rolled imports increasing the most at 57.0%.
  • Cold rolled and hot-dipped galvanized imports increased as well from February, climbing 33.0% and 43.7%, respectively.
  • Year-to-date carbon flat rolled imports​ are now up 57.2% compared to Q1 2021.

 

Global steel production, on a metric tons/day basis, continued to increase in March, now up for the second consecutive month.

• • Global steel production came in at a 5.195 million mt/day rate in March, up 1.9% from February but down 5.8% from a 5.516 million mt/day rate in March 2021.
  • This is the eighth consecutive month in which production has declined on a year-over-year basis.
  • The boost in global production in March came from China, which saw a 6.4% increase to a 2.848 million mt/day rate.
  • Production from the rest of the world declined 3.0% from February to a 2.348 million mt/day rate.
  • March was first month to see the major impact from the Russian invasion of Ukraine as Ukrainian production declined to 7,000 mt/day from 49,000 mt/day in February.
  • U.S. production declined to a 225,000 mt/day rate in March, down 1.0% from February and down 1.7% from March 2021.

 
 
 

DEMAND

Sales of new homes declined in March, now falling ​for the third consecutive month.

• • New home sales came in at a 763,000-unit rate in March, down 8.6% from February and down 12.6% from a 873,000 unit rate in March 2021.
  • Actual new home sales in Q1 were down 7.0% from Q1 2021.
  • Inventory of unsold new homes increased in March, climbing to 406,000 units.
  • Current inventory, when combined with March’s sales pace, equates to 5.7 months of supply.
  • Current inventory is at its highest level since August 2008

 

New orders for durable goods increased to a $275.0 billion rate in March, up 0.8%   from February.

• • ​Excluding the volatile transportation component, new orders were up 1.1% in March.
  • ​New orders for primary metal production increased 1.5% to a $25.3 billion rate in March.
  • This followed a flat reading in February and a -0.3% decline in January.
  • Fabricated metal product new orders increased as well, climbing 0.8% from February to a $38.1 billion rate.
  • A positive sign for future demand is unfilled orders continuing to climb.
  • Unfilled orders for durable goods increased 0.4% in March, now up for the fourteenth consecutive month.​

 

 

ECONOMIC

U.S. consumer confidence slowed in April as current views on the economy slightly worsened on fears over inflation.

• • According to the Conference Board, the consumer sentiment index for March came in at 107.3 from 107.6 previously.
  • The present situation component came in at 152.6, down from 153.8 previously.
  • While the overall index and present situation component fell, the outlook on the future increased.
  • The expectations component increased to 77.2, up from 76.7 previously.​​

 

 

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.