Market Update | July 19, 2023

 

TOTAL RETAIL SALES INCREASED IN JUNE

Total sales at the retail level increased in June, climbing to a $689.5 billion rate. This was the third consecutive monthly increase, climbing 0.2% from May and up 1.5% from the $679.4 billion rate in June 2022. On a seasonally adjusted basis, the largest increases in June came from online retailers, electronic stores, and furniture stores. Year to date sales are now up 3.2% compared to the first half of 2022.

 

Input Costs

After inching lower last week, zinc pricing rebounded slightly this week, now up for the second time in the last three weeks.

    • Zinc pricing came in at $1.09/lb this week, down from $1.07/lb last week but has remained in a relatively tight range for the past month.

 

Spot iron ore pricing has rebounded over the last week on the back of increased buying by China.

    • Spot iron ore pricing is currently at $116/mt, up $2/mt from last week but still down over 2% from the start of the year.

 

Met coal pricing increased slightly this week, climbing to $230/mt.

    • Pricing is up 0.4% from this time last week but is still down 41.0% from the recent peak seen in February.

 

 

Supply

U.S. raw steel production increased last week after sliding the previous two weeks.

    • U.S. steelmakers produced 1.716 million tons at a 75.5% utilization rate: slipping to its lowest weekly output since mid-April.
    • The current YTD utilization rate is at 75.8%, down 2.7% compared to the same time last year.

 

Preliminary total imports for July (17) were down 20.0% compared to the same daily pace in June.

    • Carbon HDG imports are coming in at a 1% decline compared to the daily pace in June.

 
 

DEMAND

Business activity in the manufacturing sector, New York region, held steady in July.

    • The July Empire Manufacturing Index came in at 1.1, down slightly from the 6.6 reading in June but above 0.0 for the second consecutive month.

    • This is the first back-to-back positive reading since Nov/Dec 2021.
    • Any reading above 0.0 shows an expansion in activity, while any reading below 0.0 shows contraction.
    • Both the new order and shipment components remained positive in July, coming in at 3.3 and 13.4, respectively.
    • The index for future business conditions slipped slightly to 14.3 in July.
    • Despite the slight decline, the index remained well above 0.0.

 

Industrial production declined 0.5% in June, sliding for the second consecutive month.

    • Manufacturing output slipped 0.3% in June, but still finished out the quarter up 1.5% from Q1.

    • The quarter-over-quarter boost came from motor vehicle production, which was up 36.7% from Q1.
    • Total capacity utilization slipped to 78.9%, nearly 1.0% below the long-run average.
    • Capacity utilization for manufacturing slipped to 78.0%, only a slightly 0.2% below the long run average.

 

Confidence among U.S. homebuilders increased further in July, showing optimism for the second consecutive month.

    • The July Housing Market Index came in at 56, up slightly from 55 in June and 55 in July 2022.

    • This is the first year-over-year increase in the index since July 2021.
    • Any reading over 50 indicates increased optimism, while any reading below 50 denotes pessimism.
    • While the present and next six months components remained in expansion, the traffic component declined at a slower rate.
    • The present situation component increased to 62, the highest level in a year.

 

After the sharp jump in May, new residential construction slowed in June and has now declined in three of the last four months.

    • New housing starts came in at a 1.434 million unit rate, down 8.0% from May and down 8.1% from the 1.561 million unit rate in June 2022.

    • Despite the decline, the current rate remains above the year-to-date average.

    • Year-to-date starts are now down 15.0% compared to the first half of 2022.

    • The pullback in starts during June came from both single-family and multi-unit buildings.
    • Permits, an indicator for future construction, slipped as well in June, sliding 3.7% to a 1.440 million unit rate.
    • Year-to-date permits are down 18.8% compared to the first half of 2022.

 

 

ECONOMIC

Total sales at the retail level increased in June, climbing to a $689.5 billion rate.

    • This was the third consecutive monthly increase, climbing 0.2% from May and up 1.5% from the $679.4 billion rate in June 2022.

    • Excluding the volatile gas station sector, total sales were up 0.3% from May and 4.2% from June 2022.
    • On a seasonally adjusted basis, the largest increases in June came from online retailers, electronic stores, and furniture stores.
    • These increases helped to overcome declines from sporting good stores, department stores, and building material/garden stores.
    • Year to date sales are now up 3.2% compared to the first half of 2022.

 

 

 

 

 

 

 

 

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.