Market Update | December 18, 2024

 

NEW RESIDENTIAL CONSTRUCTION CONTINUED TO DECLINE IN NOVEMBER

November new housing starts were at a 1.289 million unit rate, down 1.8% from October and down 14.6% from the 1.510 million unit rate in November 2023. This is the lowest monthly start rate since July. The drop in starts in November mainly came from multi-family units, which came in at their lowest rate since March. However, permits, an indicator for future construction, increased after sliding in the previous two months.

 

PRICE

Domestic flat rolled pricing continues to show minimal movement weekly as spot buying activity continues to be soft.

• Cleveland Cliffs recently lifted their spot HRC to $800/t with the opening of the February order book.

 

Input Costs

Zinc pricing dropped slightly this week, slipping after three consecutive increases.

• Pricing came in at $1.38/lb this week, down from $1.42/lb last week.

 

Spot iron ore pricing remained relatively steady this week, slipping slightly to $112/mt.

 

Coking coal pricing rebounded slightly this week, climbing to $206/mt from $204/mt last week.

• Prices are up 1.2% from last week (the second straight w/w increase) and are up 0.1% from this time last month.

 

SUPPLY

U.S. raw steel production slipped last week, after climbing in two of the previous three weeks.

• U.S. steelmakers produced 1.651 million tons at a 74.3% utilization rate, down from 1.668 million tons last week.
  • Production was down 1.0% from last week and was down 3.7% from the same week last year.

• YTD production is down 2.3% from the same timeframe last year.

 

Continued uncertainty around future directional movement, combined with the unease around the pending election, helped to slow the daily shipment rate in October.

• Despite the slower daily shipment rate, the extra shipping day in October helped to push total flat-rolled shipments to a five-month high.
• The increased shipments, combined with continued slower order entry at the mill level helped to push the total inventory on hand lower.
• As we begin to move into 2025 lead times, the expectation is for increased order rates at the mills in anticipation of improved demand for service center material in Q1.

 

DEMAND

Business activity from the manufacturing sector in the New York region held steady in December.

• After a sharp increase in November, the Empire Manufacturing Index came in at 0.2.
• The two-month average was up sharply, coming in at 15.7.
  • Any reading over 0.0 shows growth, while any reading below 0.0 shows contraction.
• Both the new orders and shipments components increased steadily in December, coming in at 6.1 and 9.4, respectively.
• Looking out over the next six months, respondents remained optimistic as the index for future business activity came in at 24.6.
  • This was slightly less optimistic than in November when the index came in at 33.6.

 

The Industrial Production Index slipped slightly in November, now down for the third consecutive month.

• The November Industrial Production Index came in at 102.0, down from 102.1 in October and down from 102.9 in November 2023.
• The manufacturing index increased slightly, climbing 0.2 points to 98.4.
  • A boost in consumer goods output was canceled by a stronger decline in the output of nonconsumer goods.
  • The boost in consumer goods output came from appliances, furniture, and carpeting (+3.4%) and automotive products (+2.0%).
• The capacity utilization for manufacturing inched up 0.1% to 76.0%, a rate 2.3% below the long-run average.

 

Confidence among U.S. homebuilders held steady in December, remaining slightly pessimistic about the outlook.

• The December Housing Market Index came in at 46, flat from November but up from 37 in December 2023.
  • This is the eighth consecutive reading in which the index has been below 50.
  • Any reading below 50 shows a pessimistic outlook, while any reading over 50 indicates a positive one.
• Within the overall index, the current situation came in at 48, while the next six months’ outlook increased to 66.
  • This is the highest outlook for the next six months since April 2022.
  • The traffic component continues to lag, coming in at 31 in December.

 

New residential construction continued to decline in November and is now down for the third consecutive month.

• November new housing starts were at a 1.505-million-unit rate, down 1.8% from October and down 14.6% from the 1.505-million-unit rate in November 2023.
  • This is the lowest monthly start rate since July.
• The drop in starts in November mainly came from multi-family units, which came in at their lowest rate since March.
• Year-to-date actual starts are now down 4.3% compared to the same timeframe last year.
• Permits, an indicator for future construction, increased after sliding in the previous two months.
  • Permits increased 6.1% from October to a 1.505-million-unit rate.

 

ECONOMIC

U.S. retail sales, adjusted for seasonality and holidays, came in at a $724.6 billion rate in November, up 0.7% from October.

• Sales were also up year over year, climbing 3.8% from the $698.1 billion rate in November 2023.
  • This was the highest y/y increase since last December.
• Excluding sales at gas stations, total sales slipped 0.8% from October, the first m/m decline since June.
• The largest m/m increases in sales came from online retailers, motor vehicle dealers, and sporting goods stores.
  • These increases more than overcame the declines seen in sales from food & beverage stores, clothing stores, and grocery 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.