Market Update | July 3, 2024

 

U.S. LIGHT VEHICLE SALES SLOWED IN JUNE AFTER AN INCREASE IN MAY.

U.S. light vehicle sales totaled 1.322 million units, down 7.6% from May and down 3.4% from June 2023. The main reason for the drop in June sales was due to a wide cyberattack that impacted a third party, used by over 15,000 dealers, to process sales. It is being estimated that the cyber issues decreased sales in June by at least 50,000 units. As of this writing the issue appears to be resolved and sales are expected to be made up for in July. ​Despite the decline in June sales, the year-to-date total (7.824 million units) remains 2.3% above the total from the first half of 2023.

 

PRICE

While domestic pricing declined further this week, the search for a bottom accelerated as HRC pricing inched higher for the first time in nearly three months.

 

Input Costs

After sliding the previous two weeks, zinc has now rebounded for three consecutive weeks.

  • Zinc pricing came in at $1.33/lb this week, up from $1.30/lb previously.

 

Spot iron ore pricing rebounded slightly this week, climbing by $5/mt to $117/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 pricing of $252/mt, down 1.6% from last week but up 0.4% from last month.

  • Anglo American has announced the suspension of the 2.5Mtpa Grosvenor metallurgical coal mine in Australia following a gas ignition incident.
  • With anticipation that this mine could be offline for a relatively extended period it is likely to provide some support for spot hard coking coal prices in the near term.

 

 

SUPPLY

U.S. raw steel production inched higher last week, now up for the second consecutive week.

  • U.S. steelmakers produced 1.721 million tons at a 77.5% utilization rate.
    • Production was up 0.6% from the prior week but down 1.0% from the same week last year.
    • YTD production is down 2.6% from the same timeframe last year.

 

 

DEMAND

Economic activity in the manufacturing sector continued to contract in June, now sliding for the third consecutive month.

  • The June ISM Manufacturing Index came in at 48.5, down slightly​ from 48.7 in May but up from 46.0 in June last year.
    • The 12-month average improved to 48.1, up from 47.9 in May and is now at its highest level since last July.
    • Despite the recent recovery, the 12-month average has now been in contraction for fourteen consecutive months.
  • ​Within the overall index, the strong rebound from the new orders component (+3.9) couldn’t overcome the continued weakness from production (48.5) and backlog of orders (41.7).
  • Overall demand remains subdued, as companies demonstrate an unwillingness to invest in capital and inventory due to current monetary policy and overall general uncertainty about future conditions.

 

Construction spending slipped slightly in May, sliding to a $2.140 billion rate.

  • This was down 0.1% from April but was up 6.4% from the $2.012 billion rate in May 2023.
    • During the first five months of 2024, spending totaled $836.3 billion, up 8.8% from the same timeframe last year.
  • ​Both residential and non-residential spending slipped in May, sliding 0.2% and 0.1%, respectfully from April.
    • ​With non-residential spending, the bright spots remain manufacturing, transportation, and sewage/wage disposal.
    • ​A 0.5% increase in public construction spending could not overcome a 0.3% decline in private construction spending.

 

U.S. light vehicle sales slowed in June after a decent pick up in May.

  • U.S. light vehicle sales totaled 1.322 million units, down 7.6% from May and down 3.4% from June 2023.
    • The main reason for the drop in June sales was due to a wide cyberattack that impacted a third party, used by over 15,000 dealers, to process sales.
    • It is being estimated that the cyber issues decreased sales in June by at least 50,000 units.
    • As of this writing the issue appears to be resolved and sales are expected to be made up for in July.
  • ​Despite the decline in June sales, the year-to-date total (7.824 million units) remains 2.3% above the total from the first half of 2023.

 

 

 

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.