Economy
January at a Glance
Written by John Packard
January 31, 2017
Today is the last day in the month of January 2017. The following is our monthly review of key data collected by Steel Market Update during the month including a number of our own proprietary indices and indicators.
SMU Price Momentum is ending the month pointing toward higher prices ahead. We do admit that there have been questions raised as to whether we have seen the peak of the current pricing cycle but, even with a drop in our own flat rolled indices today, we have not yet moved our Indicator. We continue to advise steel buyers to be aware of the debate, of the potential for lower scrap prices in February and to remain aware of price offers in the marketplace by as many suppliers as possible.
At the same time we saw January set new records for Sentiment (SMU Steel Buyers Sentiment Index) which is how buyers and sellers of steel feel about their company’s ability to be successful both in the current market environment (Current Sentiment Index) as well as out three to six months into the future (Future Sentiment Index). As you can see in the table below the trend is positive (optimistic).
Steel prices on all flat rolled products rose during the month of January. We did, however, end the month down slightly on each product. Whether this represents a change in direction or just an adjustment due to the collection of data during the week is not yet known.
Scrap prices were up, zinc prices rose to levels that has many questioning whether there may be another increase in coating extras coming. Aluminum was up slightly but nowhere near the levels or pace of zinc. Iron ore prices were also up (Chinese spot).
SMU service center number of months inventory on hand was up which leads us to believe that there may be more inventory at the service centers than we are being led to believe by the MSCI data. Our analysis of the MSCI data for the month of December is indicating a small excess of 116,000 tons which is up from 1,000 tons at the end of November.
Imports continue to be at higher levels than we anticipated when the dumping suit results began to come down from Commerce and the ITC. Hot rolled is down significantly while cold rolled and coated steels continue to be at high levels. SMU opinion is this is due to the higher than normal spread between HRC and CR/Coated base prices.
John Packard
Read more from John PackardLatest in Economy
SMU Community Chat: Tariff-induced panic purchases, inflation, and calculating costs
Chief executive of the Institute for Supply Management (ISM), Tom Derry highlighted how reactive buying behavior has shifted the market into a quiet demand period. Derry presented ISM data during the weekly SMU community chat.
Architecture billings still sluggish despite project inquiry uptick
The Architecture Billings Index (ABI), a leading indicator for non-residential construction activity, declined for an eighth straight month in June.
Beige Book: Tariff pressures mount, flat outlook
All districts reported “experiencing modest to pronounced input cost pressures related to tariffs, especially for raw materials used in manufacturing and construction.”
Steel exports recovered in May but still historically low
US steel exports rose 10% from April to May but remained low compared to recent years. This came just one month after exports fell to the lowest level recorded in nearly five years.
AISI: Raw steel production ticks up near recent high
The volume of raw steel produced by US mills inched higher last week, according to the American Iron and Steel Institute (AISI). After steadily increasing in April and May, domestic mill output stabilized in early June and has remained historically strong since.