Market Update | January 11, 2023

 

SCRAP TRADE STRONGER THAN EXPECTED

The Chicago #1 busheling scrap price settled at $425/gt in January, up $60/gt from December. This puts scrap at its highest level since July. The stronger than expected move in scrap pricing will continue to provide upward momentum to this recent finished steel price bounce.

 

Input Costs

As the recent up and down movement for zinc continues, pricing increased this week after seeing a decline a week ago.

    • Zinc pricing came in at $1.43/lb this week, up from #1.36/lb previously but below $1.50/lb for the third consecutive week.

 

Spot iron ore pricing increased this week, climbing to $122.15/mt.

    • This is up 3.8 % from the end of last week and is up 10.8% on a m/m basis.

 

Met coal pricing rebounded again this week, ending the week at $313.25/mt.

    • This is up 3.1% from the end of last week and is now up 18.6% from this time last month.

 

The January scrap trade came in stronger than expected.

    • The Chicago #1 busheling scrap price settled at $425/gt in January, up $60/gt from December.

    • Scrap is now at its highest level since July.
    • The stronger than expected move in scrap pricing will continue to provide upward momentum to this recent finished steel price bounce.

 

 

Supply

U.S. raw steel production declined again last week now down for three consecutive weeks.

    • U.S. steelmakers produced 1.595 million tons at an 71.3% utilization rate.
    • This was the lowest weekly output since mid-December 2020.
    • Compared to the same week last year, production was down 8.1%.

 

Based on preliminary import license data, January imports (through 9 days) are up sharply from the same rate in December.

    • Carbon flat rolled import licenses in January are down a sharp 14.7% from the rate in December.
    • These numbers are just preliminary and tend to be skewed during the first half of the month.

 

Nucor/CSI announced new increased pricing to start the week, raising prices $50/st from their previous level.

  • This increase helps support the similar increases from Cliffs and NLMK a couple of weeks ago.
  • Increased order activity, extending lead times, and rising raw material costs help to support this increase as well.

 

 

DEMAND

November carbon flat rolled consumption came in at a rate of 130.3 thousand tons/day, down from a 134.1 thousand tons/day rate in October and is well below the 171.0 thousand tons/day rate in November 2021.

    • Year to date total carbon flat rolled consumption came in at 47.54 million tons, down 10.8% from the same timeframe last year and only 5.8% above the total from the first eleven months of 2020.

    • Per/day coated flat rolled consumption declined for the third consecutive month in November, sliding 3.3% to a 50.5 thousand tons/day.

    • November was down 24.2% from the 66.7 thousand tons/day rate in November 2021 and remains below the 2022 daily average of 55.8 thousand tons/day.

 

The Dodge Construction Network on Monday reported that the Dodge Momentum Index in December increased 6.6% m/m to 222.2 (+40% y/y).

    • The increase was reportedly driven by broad-based increases in office, warehouse, retail, and hotel projects.

    • Much like the ABI, the Dodge Momentum Index gives a forward looking (9-12 month) view into non-residential construction.

 

North American (Canada/USA) tractor and combine shipments increased sharply in December but still remain well below year ago levels.

    • Shipments totaled 23,912 units, up 46.3% from November but down 16.3% compared to 28,573 units shipped in December 2021.

    • This is the tenth consecutive month to see a decline in year-over-year shipments.
    • The drop in shipments, on a year-over-year basis, solely came from tractors, which were down 17.3%.
    • Combine shipments continued to climb however, increasing 18.2% compared to December 2021.
    • For the full year 2022, total shipments were down 10.5% compared to 2021.

 

 

 

 

 

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.