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    Analysis

    January 8, 2023

    Johnson: Last Week in HRC Futures

    Last week was a short one for US HRC futures, but overall volumes were surprisingly strong given the holiday, as traders were eager to start the year. We see this is a good sign, and we will soon have our annual roundup and breakdown of volumes and open interest in 2022 compared to years past, so stay tuned for that.

    Nearby months, which do remain impacted by the lackluster print that ended December, were kept on track last week by a strong uptick on the spot market assessment from $664 to $692. Many of the daily indices are leading higher than this now in the $720-$740/ton range, which seems more reflective of current mill offers than anything else, as spot deals have not been as robust as hoped, though they do seem to have improved with the new year (the price reflects this, of course, up $28/ton week over week and likely up again this week). These are not the $40/ton moves the market was once pricing in recently, but the market does have some apparent momentum to the upside. The question is now can mills keep that momentum going? And for how long?

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    Price: Blue wave may rock tariff boat, but some ships like Section 232 aren’t sinking

    The midterms are over, and Democrats will control both chambers of Congress in January. In this space last week, Lewis Leibowitz predicted that President Trump's tariffs, including Section 232, may not last much longer. We disagree. To be sure, the new Congress will change trade policy. It will hold hearings, write bills, and almost certainly revisit the trade dispute with Canada. But the foundation of US trade policy is unlikely to be disturbed. Section 232 and Section 301 are established, court-tested authorities that both parties have used. They are also working.

    SMU Survey: Current and Future Steel Buyers’ Sentiment Indices rise

    SMU’s Current and Future Steel Buyers’ Sentiment Indices increased this week, according to our latest market survey.   Every two weeks, SMU polls thousands of steel-industry executives, asking them to rate their companies’ chances of success today and also three to six months down the road. We use their responses to calculate our proprietary Current and Future Steel Buyers’ Sentiment Indices, measures tracked since 2008.

    US heating and cooling shipments fall for third straight month

    US shipments of heating and cooling equipment slipped in September for a third consecutive month, according to the latest data from the Air-Conditioning, Heating, and Refrigeration Institute (AHRI). Shipments declined 2.6% month on month (m/m) in September, after having fallen 10% m/m in August. The monthly pace marks the third-slowest shipment rate year to date. Historically, shipments are strongest in early summer and weakest around the turn of the year, driven by seasonal air conditioner and heat pump volumes. AHRI's data shows September shipments totaled 1,687,240 units, down 2.6% m/m but up 7.7% year over year (y/y) (Figure 1, left). From August to September, shipments of warm air furnaces, A/C, and heat pumps declined, while water heater shipments rose. Compared with a year earlier, only air conditioners and heat pump shipments were higher.