Market Update | December 04, 2024

 

TOTAL CONSTRUCTION SPENDING INCREASED IN OCTOBER

Now up for the third consecutive month, total construction spending continued to increase in October. Total spending came in at a $2.174 trillion rate, up 0.4% from September and up 5.0% from the $2.071 trillion rate in October 2023. Despite the continued year-over-year increases, this was the smallest increase since April 2020. While non-residential construction declined, the boost in residential spending helped lift the overall number. Residential spending was up 1.5% from September and up 6.4% from October 2023.

 

PRICE

Domestic flat rolled pricing continues to show minimal movement from week-to-week as spot buying activity continues to be soft. As lead times begin to move into January and the last buying opportunities for the year are here, expectations are for pricing to hold steady and begin to possibly see a slight uptick.

 

Input Costs

Zinc pricing increased slightly this week, improving for the second straight week.

  • Pricing came in at $1.40/lb this week, up slightly from $1.38/lb last week

Spot iron ore pricing remained relatively steady this week, climbing slightly to $110/mt.

Coking coal pricing slipped slightly this week, sliding to $202/mt from $204/mt
last week.

  • Prices are down 0.5% from last week and now down 0.3% from this time last month.

 

SUPPLY

U.S. raw steel production slipped last week, sliding after a strong increase two weeks ago.

  • U.S. steelmakers produced 1.638 million tons at a 73.8% utilization rate, down from 1.655 million tons last week.
    • Production was down 1.0% from the prior week and down 2.9% from the same week last year.
  • YTD production is down 2.3% from the same timeframe last year.

 

President-elect Trump reiterated his opposition to Nippon’s acquisition of U.S. Steel and said he would block the deal from happening.

  • In a statement on Tuesday following Trump’s comments, Nippon Steel defended the deal by saying it would invest no less than $2.7b into U.S. Steel’s unionized facilities, secure union jobs, and share technological innovations.
    • The deadline for the CFIUS review is this month, and thus decision could fall on President Biden, although he has also been opposing the transaction.
  • If the deal does get blocked, U.S. Steel may end up being broken apart and sold in pieces.

 

DEMAND

Economic activity in the manufacturing sector contracted once again in November, however at its slowest rate since June.

  • The November ISM Manufacturing PMI came in at 48.4, up from 46.5 in October and 46.7 in November last year.
  • The index remained below 50.0 however, now contracting for the eighth consecutive month and for the 24th time in the last 25 months.
    • Any reading above 50 shows expansion, while any reading below 50 shows contraction.
  • The new orders component increased to 50.4, up over 3 points from 47.1 previously.
    • The production component continued to contract, albeit at a slightly slower rate than in October, as the index improved to 46.8 from 46.2.
  • The backlog of orders component contracted faster in November, sliding to 41.8 from 42.3 previously.

 

Total construction spending continued to increase in October, now up for the third consecutive month.

  • Total spending came in at a $2.174 trillion rate, up 0.4% from September and up 5.0% from the $2.071 trillion rate in October 2023.
    • Despite the continued year-over-year increases, this was the smallest increase since April 2020.
  • While non-residential construction declined, the boost in residential spending helped lift the overall number.
    • Residential spending was up 1.5% from September and up 6.4% from October 2023.
  • Month-over-month declines in nearly every sector helped to pull non-residential construction down.
    • Despite the slight pullback in October, YTD actual spending on non-residential projects is up 7.4% compared to the same timeframe last year.

 

After a sharp increase in October, U.S. light vehicle sales continued to push higher in November.

  • November light vehicle sales totaled 1.360 million units, up 1.3% from October and up 10.1% from 1.236 million units in November 2023.
    • This was the highest monthly sales total since August and the strongest November sales total since November 2019.
  • Light vehicle sales increased to a 16.50 million unit rate, the highest monthly sales rate in May 2021.
  • Improved vehicle affordability, lower interest rates, and clarity around the election helped to bring more consumers into auto dealers in November.

 

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.