Market Update | August 21, 2024

 

U.S. LIGHT VEHICLE PRODUCTION’S SUMMER SLOWDOWN IS EXAGGERATED THIS YEAR

July light vehicle production totaled 685,980 units, down 18.5% from June and down 4.8% from July 2023. This is the third consecutive month in which light vehicle production declined on a year-over-year basis. This was the lowest monthly production total since July 2022. Despite the recent declines, YTD production remains 2.9% above the level from the same timeframe last year. Looking on a year-over-year basis, to smooth seasonality, both car and light truck production declined, sliding 8.0% and 4.2%, respectively.

 

PRICE

Domestic flat rolled product pricing increased this week on the back of strong increases from both HRC and CRC.

The combination of the upward movement from CRU and the slow move higher from the Nucor CSP, market sentiment should continue to improve as a clear bottom has been formed.

 

 

Input Costs

Zinc pricing rebounded this week, now up for consecutive weeks.

  • Zinc pricing increased to $1.27/lb this week, hitting its highest level in more than a month.

 

Spot iron ore pricing was virtually flat this week, slipping slightly to $103/mt from $104/mt previously.

  • Iron ore pricing was down slightly from last week and is currently trending between the 30 and 90 day averages.

 

Coking coal pricing declined this week on the back of weak demand, the current coking coal pricing of $203/mt, down 1.2% from last week and down 10.8% from last month.

  • Bloomberg reported that Arch Resources and Consol Energy are in advanced merger discussions, with an agreement potentially announced this week.
  • Arch is primarily a met coal producer, while Consol is mainly in thermal coal production, with both companies among the biggest coal producers in the US.

 

 

SUPPLY

U.S. raw steel production increased again last week, now up for the second consecutive week.

  • U.S. steelmakers produced 1.754 million tons at a 79.0% utilization rate.
    • Production was up 1.1% from the prior week but down 0.1% from the same week last year.
    • YTD production is down 2.0% from the same timeframe last year.

 

 

DEMAND

U.S. light vehicle production’s summer slowdown was exaggerated this year as total light vehicle production fell.

  • July light vehicle production totaled 685,980 units, down 18.5% from June and down 4.8% from July 2023.
  • This is the third consecutive month in which light vehicle production declined on a year-over-year basis.
    • This was the lowest monthly production total since July 2022.
  • Despite the recent declines, YTD production remains 2.9% above the level from the same timeframe last year.
  • Looking on a year-over-year basis, to smooth seasonality, both car and light truck production declined, sliding 8.0% and 4.2%, respectively.
    • The largest declines in car production came from Subaru, GM, and Honda.
    • The largest declines in light truck production came from Stellantis, Subaru, and BMW.

 

Recent updates from the home improvement sector show underwhelming recent results and weaker short-term expectations.

  • Both Home Depot and Lowe’s attribute the sales slowdown to customers waiting for interest rates to fall before taking out a loan for a new home that needs renovating or borrowing for pricey projects like a kitchen remodel in their current dwelling.
  • However, both expect more people to start rolling up their sleeves for DIY projects once the Fed slashes borrowing costs, which is widely expected to happen next month.

 

 

 

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.