Market Update | June 21, 2023

 

DOMESTIC MILLS ANNOUNCE PRICE INCREASES

After last week’s batch of price increases led by U.S. Steel and Nucor, Cleveland Cliffs and Stelco announced a $50/t increase from previous levels. Cliffs set their minimum HRC pricing at $950/t.

 

Input Costs

After sliding the previous four weeks, zinc pricing is up slightly this week.

    • Zinc pricing came in at $1.11/lb this week, up from $1.05/lb last week but still near its lowest level in more than two years.

 

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 $112/mt, up over $4/mt from last week but still down over 3% from the start of the year.

 

 

Supply

After a sharp drop last week, U.S. raw steel production rebounded slightly this week.

    • U.S. steelmakers produced 1.743 million tons at a 77.5% utilization rate: topping 76% for the eighth straight week.
    • The current YTD utilization rate is at 75.7%, down 3.3% compared to the same time last year.

 

Preliminary import licenses for June (19 days) showed overall steel imports increased 5.6% from May on a daily average.

    • Import licenses for flat products are coming in lower however, sliding nearly 20% from the higher level seen in May.

 

 

DEMAND

Confidence among U.S. homebuilders grew at its highest rate in nearly a year in June.

    • The June Housing Market Index came in at 55, up from 50 in May.

    • The HMI has now improved for six consecutive months.
    • Any reading over 50 indicates growing optimism, while any reading below 50 shows increased skepticism.
    • Within the overall index, both the present and next six months component grew stronger, climbing to 61 and 62, respectively.

    • The traffic component continued to decline however, coming in at 37.

    • Slightly easing mortgage rates and the continued tight inventory situation have helped the index of late.

 

New residential construction increased sharply in May after sliding the previous two months.

    • New housing starts came in at a 1.631-million-unit rate, up 21.7% from April and up 5.7% from the 1.543 million unit rate in May 2022.

    • This was the highest start rate since April 2022.
    • Starts for both single-family and multi-family units increased in May, as multi-family starts were at their highest level in nearly two decades.
    • Currently there are 994k multi-family units under construction. This ties the record set in July 1973 of multi-family units being built for the baby-boom generation.
    • Despite the jump in May, the YTD starts are still 15.5% below the level from the same timeframe last year.
    • Housing permits, an indicator for future construction, increased as well, climbing 5.2% to a 1.491-million-unit rate.

 

U.S. light vehicle production continued to improve in May, hitting its highest monthly output since October 2018.

    • U.S. production totaled 976,264 units, up 17.7% from April and up 21.8% from the 801,618 unit total in May 2022.

    • Production of both cars and light trucks increased from last May, climbing 11.9% and 24.0%, respectively.
    • The 813,007 light trucks built in May, was the highest monthly output on record.
    • Year-to-date light vehicle production is 4.417 million units, up 12.6% from the same timeframe last year.
    • The continued strong demand, specifically for fleet vehicles, and lean dealer inventories should continue to push demand higher.

 

 

PRICE

After last week’s batch of price increases led by U.S. Steel and Nucor, the rest of the market jumped in to start this week.

    • Cleveland Cliffs and Stelco announced a $50/t increase from previous levels.

    • Cliffs also set minimum HRC pricing at $950/t.

 

 

 

 

 

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.