Market Update | July 17, 2024

 

NEW HOUSING STARTS REBOUNDED IN JUNE

After slipping in May, new housing starts rebounded in June and are now up for the second time in the last three months. June new housing starts came in at a 1.353-million-unit rate, up 3.0% from May but were still 4.4% below year-ago levels. This is the second consecutive month in which starts have declined on a year-over-year basis.

 

PRICE

Domestic flat rolled pricing continued to slide this week as both hot rolled and hot-dipped galvanized price are at new 52-week lows.

 

Input Costs

After holding steady last week, zinc pricing slipped slightly this week.

  • Zinc pricing slipped to $1.31/lb this week, but remains above the thirty-day average of $1.28/lb.

 

Spot iron ore pricing held steady this week, holding at $113/mt.

  • Iron ore pricing is near its lowest level in more than six weeks on worries over the outlook for Chinese demand.

 

Coking coal pricing declined this week on the back of increased supply, the current coking coal price of $234/mt, down 7.1% from last week and down 2.7% from last month.

 

SUPPLY

U.S. raw steel production rebounded sharply last week, climbing to a six-week high.

  • U.S. steelmakers produced 1.735 million tons at a 78.1% utilization rate.
    • Production was up 2.4% from the prior week and up 1.1% from the same week last year.
    • YTD production is down 2.5% from the same timeframe last year.

 

Cleveland Cliffs announced that they will acquire Canadian steelmaker Stelco in a cash and stock deal.

  • As a result of the deal, Cliffs will double their exposure to the NA spot market and further diversify from contract buyers.
  • This acquisition will increase their total market share to somewhere between 20%- 25%, up from slightly below 20% previously.

 

Preliminary flat rolled steel import licenses, for the first eight days of July, were down 0.6% compared to the same period in June.

  • Hot-dipped galvanized import licenses are virtually flat, down 0.4% compared to the first week of June.

 

DEMAND

Business activity in the New York region continued to modestly decline in July.

  • The Empire Manufacturing Index came in at -6.6, down slightly from -6.0 in June.
    • The two-month average declined to -6.3 and is at its highest level since December.
    • Any reading above 0.0 shows expansion in activity, while any reading below shows contraction.
  • The new order component was virtually unchanged, climbing slightly to -0.6 from –1.0 previously
    • The shipment component expanded further, climbing to 3.9 from 3.0 in June.
    • After expanding slightly in June, unfilled orders declined sharply to -11.2 in July.

• The index for future business conditions was slightly lower than last month but remained well into expansion at 25.8.

 

The views among U.S. homebuilders remained pessimistic in July, now in that territory for the third consecutive month.

  • The July Housing Market Index came in at 42, down from 43 in June and 56 in July 2023.
    • Any reading below 50 shows a more pessimistic outlook, while any reading above 50 shows optimism.
  • Within the overall index, all three components remained below the key 50 barometer.
  • The present situation came in at 47, while the next six months’ component came in at 48.
    • The traffic component continues to be the weakest component at 27
    • This was the lowest the traffic component has been since December.
  • High mortgage rates and elevated construction financing continue to negatively impact confidence.

 

After slipping in May, new housing starts rebounded in June and are now up for the second time in the last three months.

  • June new housing starts came in at a 1.353-million-unit rate, up 3.0% from May but were still 4.4% below year-ago levels.
    • This is the second consecutive month in which starts have declined on a year-overyear basis.
    • Single-unit housing starts dropped 2.2% from May and are now down for the fourth consecutive month and for sixth time in the last seven months.
  • Year-to-date starts are now 3.0% below the same timeframe last year.
  • Permits, a leading indicator for construction starts, increased after sliding in the previous three months.
    • Permits came in at a 1.446-million-unit rate, up 3.4% from May but still down 3.1% June 2023.

 

ECONOMIC

Retail sales were virtually flat in June after increasing in May.

  • Retail sales came in at a $704.3 billion rate, up 2.3% from the $688.6 billion rate in June 2023.
    • Excluding the volatile sales from the gasoline stations, total sales were up 0.2% from May and up 2.5% from June 2023 to a $652.4 billion rate.
  • Compared to May, the kinds of business with the largest declines were auto dealers and gasoline stations.
  • The drop in sales at the auto dealers is still reflecting the cyber-attack that negatively impacted their sales software.
    • These declines were nearly offset by increased from building material stores, online retailers, furniture stores, and clothing stores.
  • For Q2, total sales were up 2.5% after seeing a 0.6% increase in Q1.

 

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.