Market Update | October 2, 2024

 

DOCKWORKERS STRIKE AT EVERY MAJOR U.S. PORT ON EAST AND GULF COASTS

Dockworkers have started walking out of every major port on the East and Gulf coasts of the U.S., kicking off a strike that may ripple through the economy. The current strike is impacting activity at 36 domestic ports from Maine to Texas. The ports impacted by the industrial action have the combined capacity to handle as much as half of all U.S. trade volumes, and the strike will halt container cargo and auto shipments.

 

PRICE

Domestic flat rolled product pricing moved higher this week but remains in a tight range.

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

 

Input Costs

Zinc pricing rebounded again, now up for the third consecutive week.

  • Zinc pricing climbed to $1.42/lb this week, now at its highest level since January 2023.

 

Spot iron ore pricing rebounded again this week, climbing to $112/mt from $100/mt previously.

  • The boost this week was driven by China’s larger-than-expected stimulus announcements this week, which included plans to cut mortgage rates, reduced downpayment requirements on second homes, and an increase in its contribution to property inventory purchases via re-lending – all of which should support Chinese construction.

 

Coking coal pricing declined slightly this week, sliding to $170/mt from $185/mt last week.

  • Prices continued to be weighed down by tepid buying interest as demand from India reportedly is still sluggish due to adverse weather conditions.

 

SUPPLY

U.S. raw steel production declined sharply last week, now down for the third straight week.

  • U.S. steelmakers produced 1.646 million tons at a 74.1% utilization rate, the lowest weekly output since January 2023
    • This was the largest week-over-week decline since mid-2020.
    • Production was down 3.6% 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

Business activity in the Chicago region improved slightly in September but remained in negative territory for the 10th straight month.

  • The September Chicago PMI came in at 46.6, up from 46.1 in August and up from 44.1 in September 2023.
    • This was the second consecutive month-over-month improvement for the index.
    • Any reading below 50 shows a contraction in activity, while any reading above 50 shows an expansion.
  • Strong increases in the order backlog and employment components helped to overcome declines in new orders, production, and supplier deliveries.

 

Economic activity in the manufacturing sector continued to contract in September.

  • The ISM Manufacturing Index came in at 47.2, flat from August but down from 49.0 in September 2023.
    • September marked the sixth consecutive month and the 22nd time in the 23 months that the index has been in contraction.
  • While both improved in September, the new order and production components remained in contraction, coming in at 46.1 and 49.8, respectively.
    • The backlog of orders contracted slightly more slowly in September coming in at 44.1.

 

Total construction spending continued to slide in August, now down for the third consecutive month.

  • Total spending came in at a $2.132 trillion rate, down 0.1% from July but was still up 4.1% from last August.
    • This was the lowest year-over-year increase since May 2023.
  • The drop in August came from residential spending, which slid 0.3% from July.
    • Residential spending came in at a $911.4 billion rate, its lowest monthly rate since January.
  • Non-residential spending increased slightly after a slight decline in July and set a new all-time record high.
    • Non-residential spending came in at a $1.220 trillion rate.

 

U.S. light vehicle sales dropped in September, now down for the third time in the last four months.

  • U.S. light vehicle sales totaled 1.170 million units, down 17.9% from August and down 12.8% from the 1.341-million-unit total in September 2023.
    • Total light vehicle sales came in at a 39k units/day rate, the lowest daily rate since January.
  • The significant impacts from Hurricane Helene in the Southeast limited sales throughout the last week of the month.
  • Despite the drop in September sales, year-to-date sales are still up 0.6% compared to last year’s timeframe.
    • Total light vehicle sales are at their highest level through the first nine months of the year since 2019.

 

ECONOMIC

Dockworkers have started walking out of every major port on the East and Gulf coasts of the U.S., kicking off a strike that may ripple through the economy.

  • The current strike is impacting activity at 36 domestic ports from Maine to Texas.
    • The ports impacted by the industrial action have the combined capacity to handle as much as half of all U.S. trade volumes, and the strike will halt container cargo and auto shipments.
  • U.S. businesses are urging President Joe Biden to exercise powers under what is known as the Taft-Hartley Act, which became law in 1947, to keep the ports open and longshore workers on the job.
    • President George W. Bush applied the act in 2002 to halt an 11-day lockout of union members at West Coast ports.

 

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.