Market Update | June 5, 2024

 

U.S. LIGHT VEHICLE SALES REBOUNDED

Sales in May totaled a seasonally adjusted annual rate of 15.9 million units, a small increase from April’s 15.8 million and above May 2023’s 15.5 million unit rate. Actual May U.S. light vehicle sales totaled 1.429 million units, up 8.5% from April and up 4.8% from 1.364 million units in May 2023. Sales are now up for the third time in the last four months on an actual basis.

 

PRICE

Pricing continues to be slowed by stagnant spot activity as buyers continue to only purchase what they need.

 

 

 

Input Costs

After climbing for nine consecutive weeks, zinc pricing declined this week.

• • Zinc pricing came in at $1.33/lb this week, down from $1.41/lb previously.
  • Despite the slip this week, Nucor announced increased coating extra costs, moving from Table D to Table E.

 

Spot iron ore pricing slipped this week, sliding nearly $4/mt to $118/mt.

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

 

Coking coal pricing was up this week on the back of improved demand prospects.

• • The current coking coal pricing of $248/mt, is up 3.8% from last week and is up 4.2% from this time last month.

 

 

 

SUPPLY

U.S. raw steel production increased again last week, now up for the fifth consecutive week.

• • U.S. steelmakers produced 1.743 million tons at a 78.5% utilization rate.
    • Production was up 0.5% from the prior week but down 0.5% from the same week last year.
    • YTD production is down 2.6% from the same timeframe last year.

 

Based on preliminary import licenses, steel imports in the first 27 days of May increased 0.9% m/m on a daily average basis (+25.8% y/ y), with imports of flat products up 11.1% m/m on a daily average basis.

 

 

DEMAND

Business activity in the manufacturing sector in the Chicago area continued to weaken in May.

• • The May Chicago PMI came in at 35.4, down from 37.9 from April and is now at its lowest level since May 2020.
    • This is the sixth consecutive and twenty out of the last twenty-one readings in contraction, any reading below 50.0.
  • Both the new orders and order backlog components continued to fall and are now at levels last seen immediately following the onset of the pandemic.
    • While the order backlog component declined by 8.0 points, the new order component dropped by 9.2 points.
  • One of the few positives from the report was the production component, which increased by 8.1 points to its highest level since January.

 

Economic activity in the manufacturing sector contracted once again in May, now down for the second consecutive month.

• • The May ISM Manufacturing Index came in at 48.7, down slightly from 49.2 in April.
    • Any reading below 50 shows contraction, while any reading above 50 shows expansion.
  • Despite the recent month-over-month decline, compared to last year, May’s reading is up nearly 2.0 points.
  • Both the new order and order backlog components slipped further into contraction, sliding to 45.4 and 42.4, respectively.
    • The production component came in at 50.2, down slightly from April but still in expansion.

 

Total construction spending, on an adjusted basis, continued to slide in April and is now down for the third time in the last four months.

• • Total spending slipped to a $2.099 billion rate, down from a $2.102 billion rate in March but still up 10.0% from the $1.908 billion rate last April.
    • Spending has now increased on a year-over-year basis in fifty-nine consecutive months.
  • While spending increased 0.1% on a residential products, it was not enough to overcome the decline in non-residential product spending.
    • Spending on non-residential projects slipped 0.3% from March and is at its lowest level since January.
  • Despite the slip in April, non-residential spending still accounts for 57.0% of the total spend.

 

After sliding in April, U.S. light vehicle sales rebounded in May.

• • Sales in May totaled a seasonally adjusted annual rate of 15.9 million units, a small increase from April’s 15.8 million and above May 2023’s 15.5 million unit rate.
    • Actual May U.S. light vehicle sales totaled 1.429 million units, up 8.5% from April and up 4.8% from 1.364 million units in May 2023.
  • Sales are now up for the third time in the last four months on an actual basis.
    • On a daily basis, sales totaled 46.1k units/day, up from 43.9k units/day in April.
  • Year-to-date sales are now up 3.5% compared to the same timeframe last year.

 

After climbing in the previous four months, U.S. light vehicle inventory softened slightly in May.

• • U.S. light vehicle inventory ended May at 2.728 million units, down 0.3% from April but was still up over 50.0% from 1.814 million units in May 2023.
    • Inventories have now seen year-over-year increases, of at least 35%, for twenty-one straight months.
  • Current inventory, when combined with May’s sales rate, equates to 50 days of supply.
    • This is down from 52 days in April and remains below the long run average of 65 days of supply.
    • Current days of supply is above the post-pandemic average of 48 days.

 

 

 

 

 

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.