Market Update | October 16, 2024

 

SHIPMENTS OF TRACTORS & COMBINES INCREASE

After sliding in the previous four months, shipments of tractors and combines increased slightly in September. Shipments totaled 19,265 units, up 0.8% from August but still down sharply, 20.7%, from September 2023. This is the sixteenth consecutive month in which shipments declined on a year-over-year basis. The increase in September came from tractor shipments, which increased 1.4% from August, but were down 19.7% from last year. Combine shipments were down 15.8% from August and down 42.6% from September 2023. The year-to-date shipments are down 7.3% compared to the same timeframe last year.

 

PRICE

Domestic flat rolled pricing remained in a tight range this week as the recent supply outages have balanced out a weaker demand environment.

  • The trade cases, stronger scrap pricing, leaner service center inventory, and upcoming mill outages are still providing upward momentum for pricing.

 

Input Costs

Zinc pricing slipped this week, slipping for the second consecutive week.

  • Zinc pricing slipped to $1.38 /lb this week, down slightly from the 20-month high two weeks ago.

 

Spot iron ore pricing rebounded slightly this week, inching to $111/mt from $110/mt previously.

Coking coal pricing rebounded this week, climbing to $209/mt from $190/mt last week.

  • Prices are up 3.0% from last week and are now up 15.5% from this time last month.

 

SUPPLY

U.S. raw steel production increased slightly last week, after sliding the previous four weeks.

  • U.S. steelmakers produced 1.620 million tons at a 72.9% utilization rate, up slightly from the lowest weekly output since the last week of December 2022.
    • Despite the slight increase weekly output has dropped by more than 100k tons in just three weeks.
    • Production was up 0.9% from the prior week and down 4.4% from the same week last year.
  • YTD production is down 1.7% from the same timeframe last year.

 

DEMAND

After sliding in the previous four months, shipments of tractors and combines increased slightly in September.

  • Shipments totaled 19,265 units, up 0.8% from August but still down sharply, 20.7%, from September 2023.
    • This is the sixteenth consecutive month in which shipments declined on a year-over-year basis.
  • The increase in September came from tractor shipments, which increased 1.4% from August, but were down 19.7% from last year.
    • Combine shipments were down 15.8% from August and down 42.6% from September 2023.
  • The year-to-date shipments are down 7.3% compared to the same timeframe last year.

 

Business activity, in the New York region, contracted again in October after climbing into positive territory in September.

  • The October Empire Manufacturing Index came in at -11.9, down sharply from the 11.5 reading in September.
    • The two-month average slipped to -0.2, down from 3.4 in September.
    • Any reading below 0.0 shows a contraction in activity, while any reading above 0.0 shows expansion.
  • Of the five main categories within the index, all five slipped into contraction in October.
    • Shipments and new orders both saw the biggest declines from September, sliding 20.6 and 19.6 points, respectively.
  • Despite sliding in October, optimism about outlook increased.
    • The index for future business activity moved up 8.0 points to 38.7, a fresh multi-year high.

 

ECONOMIC

Inferred freight rates increased slightly in September but were still down on a year-over-year basis, however.

  • Inferred freight rates are a simple equation of the total value of shipments divided by total shipments.
    • The freight rate index came in at 2.93, up 4.2% from August but down 1.4% from last September.
  • Freight rates have now declined, on a year-over-year basis, for twenty-two consecutive months.
  • The shipment component slipped again in September, sliding 1.7% to 1.102, while the expenditure component increased 2.5% to 3.224.
    • Both components continued to decline on a year-over-year basis, sliding 5.3% and 6.6%, respectively.

 

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.