In the last few weeks debate has resumed about the benefits of expanding international trade. It’s about time.

Last week, former Treasury Secretary Larry Summers gave a major speech challenging the views of anti-trade leaders, such as (but not limited to) Bob Lighthizer. Ambassador Lighthizer’s recent book “No Trade Is Free” posits that, until the Trump administration, policy elites had led the nation astray in an orgy of outsourcing manufacturing jobs. Many politicians, who consider themselves part of that very elite, have joined the chorus.

Frequently debates center on the preconceived conclusions of a debater, who cites cherry-picked evidence in support of the view he or she espouses. Both sides do it, and reality’s subtleties rarely intervene.

Let’s look at some evidence and draw conclusions from it in keeping with my complaint.

First, trade is and always has been about mutual benefit. Summers started with this point in his speech, and it is still true. With certain exceptions (more about those anon), increasing trade has the following benefits:

Lighthizer and others argue, however, that increased trade has hollowed out American industry. But has it? We need an acceptable way of measuring that. Here are three: (1) gross domestic product growth, adjusted for inflation; (2) wage growth; and (3) growth in industrial production.

Since 2000, the year the Uruguay Round tariff cuts took effect, real GDP (constant 2012 dollars) of the United States has grown from $13 trillion to $20 trillion, an increase of more than 50%.

Average real wages in the United States for the same period have increased from $334 per week to $365 per week, an increase of about 10%. The road has been bumpy. In late 2020 the average weekly wage was $393, but wages have come off that heady level.

Industrial production has increased from an index of 91 in 2000 (100 is the 2017 figure) to 103. Not as impressive as the other numbers but remember two “episodes” in 2008 and 2020, which tanked the economy during that period, and can hardly be blamed on trade liberalization.

Compared to other economies, the United States remains at the top. No other country, apart from China, has seriously challenged the US as the top economy in the world.

Now, let’s look at the arguments that trade has injured the United States. First, the decline in manufacturing employment. Second, international competition has stolen American jobs. And third, that other countries don’t play by the rules, and steal American knowledge.

There has clearly been a decline in manufacturing employment. According to Federal Reserve statistics, manufacturing employment has declined from about 17 million in 2000 to about 13 million today, a decline of more than 20%. To blame trade for the decline in manufacturing employment requires ignoring a lot of evidence concerning automation, productivity gains, and changing consumer tastes. Trade has also led to increasing employment in sectors other than manufacturing, such as services of all sorts.

If trade expansion were a curse, as Ambassador Lighthizer asserts, then there should be little or no effort to increase it. While the President advocates creating jobs at home by building infrastructure and electric vehicles, look who is going overseas to link with foreign businesses. In just the last month, the Governors of Maryland, Pennsylvania, Nebraska, New Mexico and Missouri announced overseas trips to stimulate investment in these states, which are, of course, part of the US.

And investment is the obverse of the trade deficit. When money flows out of the country to pay for imported goods, it comes right back in the form of investment. Investment is roaring into the United States. Governors are aware and are trying to steer it to their states.

Politically, the federal government is picking favored industries, such as steel, aluminum, electric vehicles, clean energy, and semiconductors. Another industry I would focus on is modernizing the electric grid. But that requires goods that are not made in the US in sufficient quantity, which complicates things.

To upgrade the grid, many thousands of transformers (both power transformers and distribution transformers) must be purchased. American producers can’t make enough of them. The grain-oriented electrical steel that goes into them is not produced in sufficient quantities to manufacture them. So, the transformers must be made overseas.

Solving many of our most pressing problems, therefore, requires expanding trade. If we embrace the real challenges, it becomes apparent that trade is not a bug, but a feature.

As the world changes, it does some things better than it used to. With competition comes advances in technology and innovation. Those advances themselves create challenges, such as the decline in manufacturing employment. So other sectors will need to take up the slack. A dynamic economy with expanding opportunities will do that better than government edicts.

Government is important in redirecting energy in the private sector—but government has its limits. In a dangerous world, innovation is our most powerful weapon.

One metric that does not seem to matter much is the magnitude of the trade deficit. Here, Ambassador Lighthizer is just wrong. Trade deficits are the difference between national savings and net national investment. If we want to reduce them, the American people will need either to save more or invest less. As the Trump tariffs demonstrated, tariffs will not shrink the trade deficit. And, in that period, as former Senator Pat Toomey wrote this week, the US economy vaulted ahead of the total GDP of the European Union, which has 100 million more people than we do. In 2008, the US economy was 10% smaller than the EU’s. Now it is 50% larger.

I hope Larry Summers keeps talking up the benefits of trade in keeping the US the bastion of innovation and productivity that it has been for 200 years.

Editor’s note: This is an opinion column. The views in this article are those of an experienced trade attorney on issues of relevance to the current steel market. They do not necessarily reflect those of SMU. We welcome you to share your thoughts as well at

The United Auto Workers (UAW) union has more leverage than the “Big Three” automakers in the strike that started Sept. 15, according to Jason Schenker, president of Prestige Economics.

“Labor force participation is super tight right now,” Schenker said said during a Institute of Scrap Recycling Industries’ (ISRI’s) webinar on Wednesday titled “The UAW Strike and Impacts on the Recycled Metals Industries.”

The Labor Shortage Is Real

The US labor force is at a record high of 167.8 million people. The unemployment rate, meanwhile, remained low at 3.8% in August. And only about 1% of workers are currently collecting unemployment, he said.

The total percentage of people working has not recovered to pre-Covid levels. But that figure is deceptive. That’s because the largest group of people not working are those 55+ years old, Schenker said.

“Why does the UAW have leverage?” he asked. “There is no one to hire and there is no one collecting unemployment.”

“Given the labor market data, if I were the auto companies, I would resolve it sooner rather than later,” he added.

Price Impact Limited, as Long as the Strike Isn’t Protracted

Joseph Pickard, ISRI chief economist and director of commodities, provided some context to the current stoppage. He said strikes were nothing new in the auto industry, with many having occurred since the first half of the last century.

What does the strike mean for metallics? Pickard estimated that automotive represented about 26% of US steel demand and 35% of domestic aluminum demand.

“Traditionally, there have been price downturns in ferrous in or around these auto strikes,” Pickard said. But such dips impacts are typically transitory.  

Recall that the most recent UAW strike in 2019 lasted for six weeks, which was par for the course. The average strike lasts five weeks. That’s based on 30 years of data and among strikes with more than 1,000 workers in the past 30 years, according to an NBC analysis of Bureau of Labor Statistics data.

But Pickard also noted that nine of the 20 longest strikes of the past three decades lasted longer than a year.

Another thing that has changed in the last quarter century: market share. In 1999, the Big Three automakers had a combined market share of 68%. It stood at just 40% in 2023, Pickard said, citing figures from the Center for Automotive Research (CAR) in Ann Arbor, Mich.

The UAW began its strike at three plants last week. The union UAW expanded its strike on Friday, calling for work stoppages in parts distribution plants across the country at General Motors and Stellantis.

The number of active oil and gas drilling rigs in the US dropped this week. Canada’s count remains unchanged, according to the most recent data from oilfield services company Baker Hughes.

There were 630 active rotary rigs in the US for the week ended Sept. 22, down 11 from the week prior. The US lost eight oil rigs and three gas rigs in the past week. Miscellaneous rigs were unchanged.

The US rig count is down 134 rigs compared to a year ago, when there 764 active rigs. Compared to last year, there were 95 fewer oil rigs and 42 fewer gas rigs. A gain of three miscellaneous rigs offset the year-over-year drop only minimally.

There were a total of 215 active rigs in Canada this week, flat compared to last week. Oil rigs fell by four, but gas rigs increased by four to offset the loss.

The Canadian rig count is down 25 rigs compared to this time in 2022. Oil rigs were down 33 year over year. Gas rigs were up by eight.

The international rig count is updated on a monthly basis. It is therefore unchanged from last week’s report.

The Baker Hughes rig count is important to the steel industry because it is is a leading indicator of demand for oil country tubular goods (OCTG), a key end-market for steel sheet.

A rotary rig rotates the drill pipe from the surface to either drill a new well or sidetrack an existing one. Wells are drilled to explore for, develop, and produce oil or natural gas. Baker Hughes’ rotary rig count includes only those rigs that are significant consumers of oilfield services and supplies.

For a history of the US and Canadian rig counts, visit the rig count page on our website.

Demand will be the determining factor in what happens to steel sheet prices globally for the remainder of the year, and most risks right now are to the downside.

An autoworkers strike has started in the USA and could increase price volatility in the domestic sheet market. The longer and more severe this strike is, the deeper sheet prices will fall. However, this will be balanced by a price recovery of similar (or greater) magnitude after any agreement is reached. Maintenance is planned at many US mills in the near term and will be extended if the strike persists. Supply-side action is unlikely to be enough to tighten the market and prevent price declines from occurring, although mills will likely need to reduce output to prevent a total price crash.

In Europe, market participants are concerned over near term end-use demand, and this has weighed on potential price support from restocking. At the same time, imports have continued to arrive and have reduced buyers’ need to source from domestic mills. We do not expect to see these factors change much over the coming month.

The Chinese market is waiting to see evidence of higher demand from recently announced stimulus measures. Supply-side restrictions have been enacted at some mills, but larger restrictions have still not been announced. Raw material costs have increased but with demand weak and supply cuts, limited margins will continue to be squeezed. Developments in China will be key to price direction in other areas of Asia. In ​Southeast Asia, and particularly in India, some seasonal restocking has allowed domestic prices to rise. There are also expectations in the market that exports to Europe and the Middle East will rise. As such, we see some price support heading into October for much of Asia, especially in the Indian domestic market.

Looking at South America, domestic demand in Brazil remains weak, although some market participants expect it to rise over the near term. Still, supply availability in the country is high and an uptick in demand is unlikely to cause a meaningful upswing in prices. At the same time, import availability remains high as Brazilian prices sit at a 22% premium over imported Chinese material.

LME Aluminum Stable While US Midwest Premium Stays Between 19.5–20 ¢/lb

The LME aluminum 3-month price was up 0.8% on the morning of Friday Sept. 22. It was last seen trading at $2,238/metric tons, remaining above the $2,200/t mark for most of the past week.

The US Midwest premium stayed between 19.5–20 ¢/lb but with very little trading activity. There is speculation that the premium will likely continue to sit in the low 20 ¢/lb range into 2024. Despite careful inventory management, there is still a large amount of unsold stock.

Novelis Shares Progress Towards Sustainability Goals

Novelis released its sustainability reports for FY 2023, which highlight the company’s progress towards its sustainability goals. The goals include key environmental metrics, employee safety, diversity and inclusion; and community engagement.

With a 14% reduction in FY 2023 (which encompasses scopes 1, 2, and 3), the company reported progress toward its objective of a 30% decrease in carbon emissions by 2026 from its FY 2016 baseline.

Maximizing the use of recycled aluminum into its products is one of Novelis’s main sustainability strategies. In FY 2023, the company utilized 61% recycled material across all products globally. Additionally, it recycled 2.3 million metric tons of aluminum.

 UAW Strike Will Impact the Recycled Aluminum Industry                                                                                         

Auto workers are currently advocating for a 40% general wage increase during the four-contract period. The auto makers countered with approximately 20% in pay raises as of the end of this week. Additionally, the United Auto Workers (UAW) has relinquished its demand for cost-of-living adjustments but maintains its stance on securing protection against the transition to electric vehicles (EVs).

Several prevailing economic conditions in the US and globally stand to influence these negotiations, which affect the recycled materials industry. Despite elevated inflation and interest rates, increased consumer purchasing power has driven heightened demand for goods. Demand increase includes light vehicle sales, while low consumer debt delinquencies further bolster this trend.

While the strain on supply chains following the COVID-19 pandemic has gradually eased over the last 18 months, strikes may exacerbate this pressure. High Consumer Price Index (CPI) and energy and oil prices provide the UAW with leverage in its quest for higher wages. This potentially higher wage standard within the auto industry may trigger increased wage demands from workers in the scrap and recycling aluminum market.

Picket Lines Remain Up and Hard Lines Form 1 week Into UAW Strike

One week into the stand-up strike authorized by the UAW, targeting the Big 3 US automakers at GM in Wentzville, MO; Stellantis in Toledo, OH; and Ford, in Wayne, MI. So far there is no real traction towards a settlement. The strike sent 13,000 rank-and-file union workers to the picket lines last Thursday at midnight, idling 9% of the auto industry’s workforce. The strike has caused auto makers to furlough thousands of workers at downstream assembly plants, as production and output are constrained by supply shortages from the 3 facilities effected by the strike. 

As both sides continue negotiations, so do their plans to ramp-up the pressure. The OEMs have indicated that further layoffs may be likely as the strike continues. The UAW has targeted key bottleneck supply plants in this initial phase of the stand-up strike, preserving both strike funds and options for larger assembly plants in subsequent strike phasing. Pickup truck assembly plants are possibly in line for walkouts due to their attractive volumes and profit margin profile.

CRU’s aluminum industry contacts indicate that, for now, aluminum mills are shipping at pre-strike rates. Ford, GM, and Stellantis hold a combined 40% market share of North American light vehicle sales. Should this be a prolonged strike, market share will shift to other brands as the Noth American consumer remains hungry for new cars and light trucks. CRU’s auto body sheet (ABS) forecast had held better than 8% growth year-over-year (YoY), an additional 160,000 metric tons of ABS demand for 2023.

In a tight US labor market, where there are nearly 9 million open job postings, and less than 2 million people reported on unemployment rolls, union negotiators have a strong position. Across the table, the OEMs are carrying higher inflation costs for labor, energy, and materials alongside the transition costs to new energy vehicles. Amid this week’s labor news, the US Federal Reserve Bank held interest rates steady on Wednesday, despite earlier hints of another 25-basis point move up to further curb inflation. While another rate hike is not off the table for 2023, before an election year in 2024, the convergence of fiscal, labor and political agendas will be interesting.

To learn more about CRU’s services go to

By Marziyeh Horeh, CRU Aluminum Analyst,

The American Iron and Steel Institute (AISI) has laid out a case for China’s failure to comply with its World Trade Organization (WTO) obligations, which it joined in 2001.

“Despite more than two decades in which to make reforms, China continues to use massive subsidies and other forms of government support to build and maintain an enormous steel industry in violation of market principles and China’s WTO commitments,” AISI said in a 42-page document to the US Trade Representative (USTR) on Sept. 20.

The institute said “these comments particularly relate to import regulation, export regulation, internal policies affecting trade, intellectual property rights, and other WTO commitments.”

AISI said that in 2023 crude steel production in China is expected to exceed 1 billion metric tons for the fifth consecutive year. This is ~10 times the annual steel demand in the US.

“AISI strongly urges the Biden administration to take action to hold China accountable for its trade-distorting policies and practices,” the institute wrote. This can be accomplished by “reinforcing the trade actions taken by the previous administration.” These measures “aimed to counter China’s export-driven economic policies that adversely impact US steelmakers.”

The institute noted there is “a broad, international consensus, based on an overwhelming amount of evidence, that China has largely abandoned its policy of liberalizing its economy.” Instead, AISI said, China “continues to adhere to a policy of state capitalism that is antithetical to the principles of free and fair trade.”

AISI submitted the comments in response to a request from the Office of the USTR. They were given to the interagency Trade Policy Staff Committee (TPSC). View the full document here.

Zekelman Industries has announced an expansion of its ZI-Strut™ metal framing and accessories product line.

The independently owned pipe and tube producer said that ZI-Strut™ is made at US facilities. The product is cold-formed from hot-rolled, structural-grade carbon steel and engineered with “half-slot, full-slot, and solid construction.”

The company said the strut and accessories range from clamps and fittings to brackets and threaded rods. Also, they can be co-loaded with steel conduit from Western Tube in Rochelle, Ill., and Wheatland Tube based in Wheatland, Pa., to arrive in one delivery.

“With multiple finishes, sizes and punch configurations plus accessories to fit any job, ZI-Strut is truly a one-stop shop for the majority of strut installations,” Todd Walrod, VP of electrical with Wheatland Tube, a division of Zekelman Industries, said in a statement on Sept. 20.

Zekelman Industries includes the operating divisions of Atlas Tube, Picoma, Sharon Tube, Wheatland Tube, Western Tube and Z Modular.

The United Auto Workers (UAW) significantly escalated its strike against General Motors and Stellantis on Friday.

UAW president Shawn Fain called on all workers in parts distribution centers at the two automakers to go on strike on Friday at noon. The move would impact 38 locations across 20 states, he said.

The UAW did not expand its strike against Ford because “real progress” had been made in negotiations with the Dearborn, Mich.-based automaker, Fain said in a Facebook Live stream on Friday.

GM and Stellantis, in contrast, “need some serious pushing,” he said.

Also, the UAW will remain on strike at the three plants it struck last week, Fain said.

He acknowledged that parts shortages could impact consumers across the US looking to have their vehicles repaired. He said they should channel that “frustrating” experience into action against what he called “price gouging”.

That was a reference to the high sales prices car dealers have enjoyed thanks to supply chain snarls and increased demand. Those trends stem from the early days of the Covid-19 pandemic.


Ford has moved to cut back on “tiers” in which newer hires make significantly less in wages and benefits than veteran workers. It has also reinstated cost-of-living adjustments (COLA) that were suspended in 2009, Fain said.

Recall that the UAW made significant concessions to automakers in the wake of the 2007-08 global financial crisis. The panic resulted in Chrsyler (now owned by Stellantis) and GM receiving government bailouts.

“To be clear, we are not done at Ford. … But we do want to recognize that Ford has shown that they are serious about reaching a deal,” Fain said. “At GM and Stellantis, it’s a different story.”

Case in point: Fain said GM had agreed to eliminate tiers for 85% of its union workforce. But the UAW wants that figure to be increased to 100%.

GM Could Use Non-Union Workers

Separately, GM is reportedly looking for volunteers among its salaried, non-union employees to cross the picket line and work at its parts distribution centers, the Detroit Free Press said in an article on Friday afternoon.

Th paper cited an internal email that it had obtained for which the date was unclear. The email mentioned a “temporary commitment” but added that the length of it would depend on the length of the strike. 


The union began its “stand up” strike last Friday with strikes one operation at each of the “Big Three” union-represented automakers: a GM plant in Wentzville, Mo.; a Jeep plant in Toledo, Ohio (Stellantis owns the Jeep brand), and a Ford plant in Wayne, Mich.

The UAW has deployed what it calls a “Stand Up” strike. The tactic involves striking specific plants, and expanding the strike as it sees necessary to increase leverage at the bargaining table.

It’s not just the UAW that is exerting pressure. Automakers have responded by laying off workers at plants impacted by the strike,

A prior four-year labor contract between the UAW and the “Big Three” expired at midnight on Sept. 15.

Editor’s note: This is a breaking news story. Please check back for updates.

Canadian steelmaker Stelco Holdings Inc. is in the mix to purchase U.S. Steel, according to an article in Bloomberg on Thursday, which cited people familiar with the matter.

The article said Stelco was seeking to buy the entire company as “it looks to increase its portfolio of steelmaking assets and boost its share of the market for supplying metal to the automotive sector.”

Stelco, Canada’s biggest steelmaker, “is in talks with a potential partner on its bid, the people said, asking not to be identified because the details are private,” according to Bloomberg.

The article’s sources noted that no final decision has been made and that Stelco could opt against making a bid.

U.S. Steel declined to comment for this article. Stelco did not respond to a request for comment.

Several companies are reported to be in the hunt for the Pittsburgh-based steelmaker.

Cleveland-Cliffs publicly made a bid for U.S. Steel, one that U.S. Steel rejected. ArcelorMittal has also been said to be interested in the company.

Guppy Swallowing a Whale?

U.S. Steel is much larger than Stelco, which operates a sole blast furnace at its Lake Erie Works in Nanticoke, Ontario, according to SMU’s blast furnace status table.

In contrast, U.S. Steel has six active blast furnaces. That includes two at its Mon Valley Works in Pittsburgh and four at its Gary Works in northwest Indiana. The company also has a temporarily idled blast furnace at its Granite City Works near St. Louis.

U.S. Steel’s operations in addition include Big River Steel, an EAF mill in Arkansas considered to be among the crown jewels of the company. Other assets include energy tubular mills, iron ore mining and pellet operations in Minnesota, and its UPI sheet processing facility in Pittsburg, Calif.

In Europe, meanwhile, the company owns a large steel works in Kosice, Slovakia. It sports three blast furnaces and annual raw steel capacity of five million tons.

A big “thank you” to Wolfe Research and Timna Tanners for organizing a lunch in today in Chicago with a group of steel industry participants and investors.

I tagged along too. Below are some themes that stood out to me in the discussions. I’ve also added some of my own thoughts.

A Reasonable Bull Case

Steel market participants at the lunch reasoned that we might be at or near a sheet price bottom – as counterintuitive as that might sound with the UAW strike likely poised to expand Friday afternoon. They reasoned along the lines of what I wrote in Final Thoughts on Tuesday.

Namely, demand outside of automotive remains steady on average, even if it’s highly variable from customer to customer. Steel consumers are running inventories lean. And offshore imports are not competitive – unless you’re ordering thin-gauge galvanized. (Note I wrote “offshore.” Imports from Canada and Mexico are competitive – including imports into the Midwest from Mexico, according to folks at the lunch.)

The result: Deals below $600 per ton ($30 per cwt) for HRC are probably out of the market. That figure matters because ~$600/ton was kicked around as a rough breakeven point for some US mills.

There also seemed to be a consensus that the UAW strike would last no longer than approximately 4-6 weeks. And once a deal is within sight, mills probably won’t be shy with price increases. Especially not after the market got used to $100-per-ton price hikes earlier this year.

Our latest survey data broadly reflect that consensus.

Case in point: 76% of survey respondents think prices have already bottomed, will later this month, or will in October:

Also, about two-thirds think that prices two months from now will be roughly where they are now (our current average HRC price is $660 per ton) or back into the $700s per ton:

I asked folks at the lunch how to square that mostly constructive outlook, and our own somewhat bullish survey results, with more than 80% of service centers reporting that they continue to lower prices:

The takeaway: Service centers would stop cutting prices as soon as mills did. And, even if we do see a “failed” price hike, it will at least temporarily stabilize tags – akin to what we saw when mills announced price hikes last June.

How Long Will the UAW Strike Last?

I questioned how safe it was to assume that a strike would only last six weeks. That’s how long the UAW struck GM in 2019, the last time the union negotiated a labor contract with the “Big Three.” But history doesn’t usually repeat.

Or does it? Another interesting factoid: Since 1993, and among strikes involving more than 1,000 workers, the average length has been five weeks. That came from a good webinar held Wednesday afternoon by the Institute of Scrap Recycling Industries (ISRI): UAW Strike and Its Impact on the Recycled Metals Industry.

Roughly 13,000 workers are on strike now at three plants. And the UAW, as ISRI noted, has $825 million in its strike fund – enough to support a full strike, not just one at individual plants, for nearly 11 weeks.

So what happens if we were to see a more extended work stoppage? The consensus at the Wolfe lunch was that (a) sticker prices for new cars would go up, (b) another round of discounting might be necessary for mills to tide themselves over, and (c) the snapback in demand and in steel prices would be even more pronounced once automotive production resumed. So let’s say a big price rebound in Q4 if the strike not protracted and a potentially huge price spike in Q1 if negotiations drag on.

Keep in mind, the generally constructive outlook on price also assumed that fall maintenance outages would be extended. It also assumed that at least one or two more blast furnaces might be idled. Why? For starters, Granite City, which has been temporarily idled, does not have as much exposure to automotive as some furnaces that are still running.

Another interesting wrinkle. The strike will probably extend contract negotiations. They unofficially start at Steel Summit in August. Sometimes they are wrapped up as soon as Halloween. But mills aren’t keen to negotiate contracts from what they see as a position of weakness.

That means they’ll probably wait at least until a tentative deal with the UAW is in hand before negotiating pricing contracts. The result: Good luck getting your contracts done my Christmas this year.

Shawn Fain Takes to Twitter (aka X)

We’ll know more about what the future might hold on Friday should the UAW’s noon deadline pass with no new labor agreement.

Automakers might reasonably say that they cannot offer massive wage increases, better benefits, and a shorter work week while also having any reasonable hope making the investments necessary to transition to EVs.

That argument, however, does not appear to be gaining traction with UAW president Shawn Fain. He on Thursday posted a bargaining update on X, formerly Twitter. It said… Well, I can’t write it in a family publication like ours.

Take a look yourself. It’s a GIF from the 2017 movie The Hitman’s Body Guard featuring Samuel L. Jackson. He is in no mood to bargain.

After a quiet couple of weeks, the futures market has recently come to life over the last three days, and is starting to show some bullish signals. The shaded region in the chart below shows the tight trading range from Aug. 28 to Sept. 18 (Monday). The lines below also represent futures settlements on 9/21 (solid), 9/20 (dashed), and 9/19 (dotted). The takeaway is clear, market participants believe that if we have not already seen the floor in spot pricing, we soon will.

Let’s think about some of the signals that support this recent turn. First, according to our calculations, domestic prices dipped below delivered global pricing this week. This is historically a bullish signal, albeit one that takes time to trigger a rally. Furthermore, domestic producers appear to be quickly approaching cost support (even after the recent lower settlements of scrap). Another signal comes from the plumbing of the forward curve.

The top panel of the chart above shows “Managed Money’s” net speculative positioning (i.e., whether participants without a physical position are long or short futures) as the shortest they have been since May, through 9/12 (Tuesday). The second panel shows aggregate open interest (total amount of contracts exposed to market fluctuations) and aggregate volume (total amount of contracts that traded in each day). Through Monday, these charts were telling a clear story. Futures prices were mostly grinding lower, volume was muted but healthy, open interest was increasing – all driven by speculators getting shorter. Since then, prices have firmly broken out of that recent range with the highest volume trading day in months occurring on Wednesday. Furthermore, open interest decreased on Wednesday – a signal that participants with short positions “paid up” to cover their exposure, essentially throwing in the towel. To be clear, we will not receive confirmation that these participants were speculators for another two weeks due to the net spec data lag, but it is a reasonable expectation given the trend at the beginning of the month.

Taking all of that into account, there are good reasons to believe that the forward curve has bottomed out for the time being, but now is a good time to include our typical reminder that the forward curve is not a predictor of physical prices. Starting tomorrow, new, and unknown shocks will impact the curve in unanticipated ways, but given all the information we have today, let’s briefly look at the main upside and downside risks to this curve namely, the supply/demand balance given the United Auto Workers (UAW) strike. To start, it should be noted that the unexpected temporary idling of U.S. Steel’s Granite City Furnace ‘B,’ near St. Louis, is likely the primary factor for the recent shift in forward curve pricing, pushing supply available below anticipated demand.

Prior to that action, it was estimated that the UAW strike fund had the capacity to sustain a full strike for approximately 2.5 months. During this time, the loss in steel consumption would have been greater than the planned production outages. The main downside risk now is the strike lasting longer than anticipated. While it is not our base case, the UAW’s “stand up” style of striking could aim to disrupt the broader auto supply chain, leading to plant closures without direct strikes. In such a scenario, workers could access unemployment benefits, lasting 20-26 weeks depending on the state without the UAW needing to support them through the strike fund until those benefits expire.

Now, taking a step back from game theory/speculation corner and looking at the broader economy: data continues to surprise to the upside, shown here by the “Bloomberg Surprise Index” for the US which is calculated as the percentage difference between the actual economic data release vs. the median of analysts’ forecasts of the same release.

This is also perfectly encapsulated by the fact that the Federal Open Market Committee (FOMC) more than doubled their expectation for year-end 2023 GDP growth from 1% to 2.1% in their latest summary of economic projections, published Sept. 20. While it is important to note that like any forecast, this should be taken with a grain of salt and there are meaningful headwinds in front of the economy the sustained resilience is encouraging. Furthermore, although these signals are broadly promising, it would be disingenuous to suggest that steel consumption has not been negatively impacted by higher interest rates, inventory management, and softening demand. However, going forward, we view the physical market as pricing in too much asymmetric downside risk going into Q4 given promising seasonal fundamentals and domestic producers eagerness to throttle back production.

About Flack Global Metals

In 2010, Flack Global Metals (FGM) was founded with the mission to reinvent how metal is bought and sold. Over 13 years later, the company has evolved into a hybrid organization combining an innovative domestic flat-rolled metals distributor and supply chain manager, a hedging and risk management group supported by the most sophisticated ferrous trading desk in the industry known as Flack Metal Bank (FMB), and an investment platform focused on steel-consuming OEMs called Flack Manufacturing Investments (FMI). Together, these entities deliver certainty and provide optionality to control commodity price risk in the volatile steel industry.

Disclaimer: The content of this article is for informational purposes only. The views in this article do not represent financial services or advice. Any opinion expressed by Flack Global Metals or Flack Metal Bank should not be treated as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Views and forecasts expressed are as of date indicated, are subject to change without notice, may not come to be and do not represent a recommendation or offer of any particular security, strategy or investment. Strategies mentioned may not be suitable for you. You must make an independent decision regarding investments or strategies mentioned in this article. It is recommended you consider your own particular circumstances and seek the advice from a financial professional before taking action in financial markets.

When you think about the steel industry, steel mills and service centers are probably at the forefront. But there’s one specific component that often flies under the radar: graphite electrodes.

An electrode is threaded onto a socket above the furnace. Electricity passes through the electrode, creating an arc of extreme heat that melts the contents of the furnace.

If you don’t know much about this subject, you’re in luck. Tim Saxon, the chief marketing officer for electrode manufacturer Resonac, made some time to talk to us about melting steel.

A lightly edited version of the interview is below.

Steel Market Update: Tell me a little about what you do at Resonac.

Tim Saxon: I’m the chief marketing officer, so I have a few responsibilities. The market analysis portion of it. We study the electrode, steel, and scrap markets to get a feel for where things are going. And then I also oversee the promotions, branding, and advertising side.

SMU: You guys make electrodes for use in steel mills?

TS: We are one, if not the world’s, largest ultra-high powered graphite electrode supplier. You’ll hear the term UHP and that’s ultra-high power; there are different grades. That’s primarily for melting furnaces. We have facilities all over the world: US, Spain, Austria, Malaysia–we have one in Japan.

SMU: How often do you have to replace an electrode?

TS: You’re not actually melting the steel with the electrode; you’re melting the steel with the arc that comes from the electrode. The electrodes oxidize and become part of the bath. It becomes part of the steel.

SMU: You mentioned there are a few grades of electrodes. What are the differences?

TS: One of the thing that’s important is that there is no universally agreed upon standard for electrodes. How the electrode is made is what determines the grade. Our primary raw material is needle coke. Needle coke is a byproduct of companies like Phillips 66 and other refineries. It’s the equivalent of scrap to an electric furnace steelmaker. There are a couple other ingredients like binder pitch and a couple others like stearic acids and things like that. Then the electrode is extruded and baked. All the volatiles get baked out.

SMU: It sounds like the oil industry plays a major part in creating electrodes. How do you guys look at decarbonization?

TS: I think all electrode suppliers are probably trying to explore different kinds of carbons like biocarbon, because I think that’s really where the next frontier is. But one of the ironic parts of the electrode business is we get the binder pitch that we use from the blast furnace and coke ovens. So that’s an ongoing question. As they start to shutter these blast furnaces, what’s going to happen to the pitch supply?

SMU: Are there other ways Resonac is integrating a green approach?

TS: We have really automated a lot of our facilities. In our Spanish facility for example, we’re reusing heat from our processes to preheat our other furnaces. At our Austrian plant we use process heat to heat the water for the village. We have this symbiotic relationship where they send water and then we use sort of our heat elements to heat the water that then goes back to the town and saves it for the residents. Our Japanese facility is on 100% hydropower. We’ve built this irrigation system for the farmers where we control the rice field flooding every season. So we’re helping the farmers and helping the citizens.

SMU: Wow! Sounds like you guys are doing some great things.

TS: Yeah, it’s a great time to be in the industry.

SMU: How did you choose the steel industry?

TS: I grew up in McKeesport, Pa. My dad and grandfather were both steel workers. I had an opportunity after college to get into the refractory business and I really enjoyed it. I’ve always loved the industrial part of the business.

SMU: Being in a leadership position, how do you hire and retain talent?

TS: We’re want to become the employer of choice and we think outside the box when it comes to recruiting. We’ve implemented several programs including:

We hire for attitude and train for aptitude. We stand by our values and live them. Our values include a solid vision and solid integrity; passionate and results driven; being agile and flexible; and having open minds and open connections. Resonac’s purpose is to change society through the power of chemistry.

SMU:  It sounds like the company has a lot to be proud of.

TS: We focus on production-driven organizations rather than ones only worried about purchasing. Resonac is very, very committed to quality and a sustainable supply chain. There’s a lot that we do that our competitors don’t do. We have a complete global team of technical services and have invested a lot to help the furnaces run efficiently.

Click here to learn more about Resonac.

Mexican steelmaker Grupo Deacero will invest $1 billion over the next three years as it aims to expand its steel production by 1.2 million tons per year, according to a local media report.

Deacero said earlier this month in a Spanish article in Reforma that it would build a new steel mill in Ramos Arizpe, a city in Mexico’s Coahuila state. The company also said it would acquire machinery and equipment to strengthen operations at its current plants in Saltillo, in Coahuila state, and in its Celaya Industrial Complex, in Guanajuato.

Raúl Gutiérrez Muguerza, president of the Monterrey, Mexico-based longs producer told Reforma the project would take three years to complete. He noted that the new steel mill would be “be “one of the most modern plants in the world.”

A company spokesman confirmed to SMU that it would be an electric-arc furnace mill but provided no further detail by time of publication.

“The purpose is to promote regional development and increase the production capacity of the business units with investments destined for the national market,” Muguerza said in the article.

He said the company hopes to generate close to a thousand direct and five thousand indirect jobs with the investment.

“This decision promotes the growth of business partners and clients, while seeking to address part of the new demand from foreign companies in Mexico derived from nearshoring,” Muguerza said.

Deputy United States Trade Representative (USTR) Jayme White met on Wednesday with Mexico’s Under Secretary of Economy for Foreign Trade Alejandro Encinas, and discussed issues regarding the “surge” into the US of Mexican steel and aluminum imports.

Among other topics during the meeting, White “reiterated concerns about the recent surge into the US of imports of certain steel and aluminum products from Mexico,” according to a USTR statement.

The deputy USTR also stressed “the lack of transparency regarding Mexico’s steel and aluminum imports from third countries, and encouraged Mexico to enhance its monitoring of Mexican steel and aluminum exports to the United States in accordance with the 2019 Joint Statement by the United States and Mexico on Section 232 Duties on Steel and Aluminum.

The meeting took place ahead of the second United States-Mexico-Canada Agreement (USMCA) Small- and Medium-Sized Enterprise (SME) taking place Thursday in Mexico City, the statement said.

US hot-rolled coil (HRC) prices fell further relative to imported product this week. Domestic hot band remains cheaper than offshore HRC as US tags continue to sink at a sharper rate than those overseas, according to SMU’s latest foreign vs. domestic price analysis.

Domestic HRC prices have eroded for nearly six months, far outpacing a similar trend for offshore hot band. The premium US hot-rolled held over imported material has turned by nearly 25% since early July. Imported product is now roughly 10% more expensive than stateside hot band.

Since the beginning of Q1, US HRC had been significantly more expensive than imports, peaking in mid-April, and ballooning to a 23% premium on average. Imports are now more expensive, given that US tags have fallen by $230 per ton ($11.50 per cwt) just since mid-July. However, offshore product is down on average just $32 per ton over the same period.

HRC tags stateside are at an average of $660 per net ton this week, declining by $30 from the previous week. They’ve slipped to their lowest level since the first week of December 2022. Domestic prices are now down $500 per ton since peaking this year at $1,160 per ton back in April.

Overseas prices have also been weakening since April, but declines have been less pronounced. That has caused domestic HRC pricing to reverse quickly and become noticeably cheaper.

Domestic hot band is now 9.4% cheaper than foreign material. It was 15% more expensive just about two months ago.

SMU uses the following calculation to identify the theoretical spread between foreign HRC prices (delivered to US ports) and domestic HRC prices (FOB domestic mills): Our analysis compares the SMU US HRC weekly index to the CRU HRC weekly indices for Germany, Italy, and east and southeast Asia ports. This is only a theoretical calculation because costs to import can vary greatly, influencing the true market spread.

In consideration of freight costs, handling, and trader margin, we add $90 per ton to all foreign prices to provide an approximate CIF US ports price to compare to the SMU domestic HRC price. Buyers should use our $90-per-ton figure as a benchmark and adjust up or down based on their own shipping and handling costs. If you import steel and want to share your thoughts on these costs, we welcome your insight at

Asian Hot-Rolled Coil (East and Southeast Asian Ports)

As of Thursday, Sept. 21, the CRU Asian HRC price was $517 per ton, unchanged from the previous week. Adding a 25% tariff and $90 per ton in estimated import costs, the delivered price of Asian HRC to the US is approximately $736 per ton. The latest SMU hot rolled average for domestic material is $660 per ton.

Now $76 per ton cheaper, US-produced HRC has lost its parity with steel imported from Asia. And it’s trending cheaper ahead of the fourth quarter.

Italian Hot-Rolled Coil

Italian HRC prices fell week over week (WoW,), down $23 per ton this week to roughly $619 per ton. After adding import costs, the delivered price of Italian HRC is approximately $709 per ton.

Domestic HRC is now theoretically $49 per ton cheaper than imported Italian HRC. That is a far cry from late March, when US tags were $260 per ton more expensive than those of imported Italian hot band.

German Hot-Rolled Coil

CRU’s latest price for German HRC declined last week, down $12 per ton WoW to $631 per ton. After adding import costs, the delivered price of German HRC is roughly $721 per ton.

Domestic HRC is now theoretically $61 per ton cheaper than imported German HRC. That’s down $18 per ton WoW, and still a $294-per-ton change vs. late March when German hot band was 20% cheaper than US product.

Figure 4 compares all four price indices. The chart on the right zooms in to highlight the difference in pricing from the second quarter of this year to the present.

Notes: Freight is important in deciding whether to import foreign steel or buy from a domestic mill. Domestic prices are referenced as FOB the producing mill, while foreign prices are CIF the port (Houston, NOLA, Savannah, Los Angeles, Camden, etc.). Inland freight, from either a domestic mill or from the port, can dramatically impact the competitiveness of both domestic and foreign steel. It’s also important to factor in lead times. In most markets, domestic steel will deliver more quickly than foreign steel.

Effective Jan. 1, 2022, the traditional Section 232 tariff no longer applies to most imports from the European Union. It has been replaced by a tariff rate quota (TRQ). Therefore, the German and Italian price comparisons in this analysis no longer include a 25% tariff. SMU still includes the 25% Section 232 tariff on foreign prices from other countries. We do not include any antidumping (AD) or countervailing duties (CVD) in this analysis.

August’s Architecture Billings Index (ABI) reading from the American Institute of Architects (AIA) and Deltek showed a moderate decrease.

The index fell to 48.1 in August, just below July’s reading of 50.0. The reading had been at or above 50.0 since May of this year. August was the first dip below that level.

The ABI is a leading economic indicator for nonresidential construction activity with a lead time of 9-12 months. Any score above 50 indicates an increase in billings. A score below 50 indicates a decrease.

Fewer clients signed new design contracts in August compared to the previous eight months, with the new contract index falling to 47.9 from 50.0 the month prior.

Billings declined for the 11th consecutive month at firms in the Western region, dropping to 45.8 from 49.6. Those in the South remained roughly flat, inching up to 49.9 in August from 48.9 in July. Billings in the Northeast rose to 50.6 from 49.3. Those in the Midwest declined from 51.6 in in July to 48.1 in August, after reporting the strongest billings in the country for the past nine months, the AIA report said.

Firms with a commercial and industrial focus reported a drop from 52.7 in July to 51.5 in August, while residential firms went from 45.4 to 44.1. Invoices from firms with a specialty in institutional projects were flat.

Employment continues to be a problem for many architecture firms, however.

“With many firms continuing to report difficulties finding enough qualified staff, this month we asked them about outsourcing domestic design work offshore (e.g., subcontracting work to individuals or firms in other countries that are not part of their company),” AIA said.

Of responding firms, 16% noted that their company is outsourcing domestic design work to overseas companies, according to AIA. The highest being for multifamily residential specialization. Overall, those firms report a high level of satisfaction for the work that is being done offshore.

One firm in the Midwest with an institutional specialization noted that business has softened to a degree, and its clients are slowly paying their invoices.

A small firm in the South with a commercial/industrial specialization said that business remains strong. “We have received quite a few preliminary scope projects, which could generate strong utilization in the fourth quarter and a strong start to 2024,” reported the firm.

An interactive history of the AIA Architecture Billings Index is available on the SMU website.

On Monday and Tuesday of this week, SMU polled steel buyers on a variety of subjects, including steel prices, demand, inventories, the UAW strike, and what people were talking about in the market.

Rather than summarizing the comments we received, we are sharing some of them in each buyer’s own words.

We want to hear your thoughts, too! Contact to be included in our questionnaires.

When and at what price level do you think steel prices will bottom, and why?

“We’ve got a bit of room left. I bet we’ll get right around $600/ton.”

“Below $600 – too much capacity.”

“Depends on the length of the auto strike.”

“Plate will bottom in Q4 in the $1450/t range, then rebound higher in Q1/2024.”

“I think we are there. The mills will shutter some capacity to protect pricing from further erosion.”

“After the strike of the ‘Big Three’ is over.”

“Prices will plateau in November. After that, 2024 purchases start in earnest. Everything changes if the strike ends soon.”

“Sometime in October around $700/ton.”

“Plate prices could trend down over the next 6-9 months and bottom towards the middle of next year.”

“$650 due to the UAW strike. Also, demand is lower

Is demand improving, declining or stable, and why?

“Our demand is stable to declining.”

“Demand is remaining stable, but some folks seem pretty bearish out there.”

“Demand is improving slightly for us.”

“Plate demand is stable currently.”

“Demand for our company is still steady.”

“Our demand is declining due to the strike.”

“There’s been a general slowdown in plate, but the bigger factor is the delta between HRC and plate.   We are seeing more customers move to 72″ wide or narrower on 3/4″ thick and down.”

Is inventory moving faster or slower than this time last year – and why?

“For us, it continues to be a bit faster.”

“It’s been slower due to the economy.”

“We can’t keep inventory on our floor.”

“No change year over year for us.”

“Demand has been slower for us. As the auto strike continues, we will see more of an impact.”

Are imports still attractive vs. domestic material? Why or why not?

“Depends on the product. Pre-painted and lighter gauges are attractive.”

“Nope. Too long to get here.”

“No. Because of price and lead time.”

“Pricewise, they continue to be on the cusp. Lead times are obviously the main hurdle for imports – but some folks can wait.”

“Imports are always attractively priced for us.”

“No – the spread is too small.”

“We’ve turned down four recent import plate offers. Not attractive enough to consider.”

“Not at this time as lead times for arrival are too far out, and the perception of declining plate prices domestically will probably keep people on the sidelines.”

“Pricing is only attractive in Thailand and India because other pricing is the same as domestic costing.”

Will the UAW strike have an impact on your business? Why or why not?

“It will have a limited impact, but it depends on the length of the strike.”

“Yes, tangential impact on supply and demand.”

“Yes – falling replacement cost.”

“Most folks seem to think it lingers at minimum … for a few weeks. The union certainly has a big war chest to fight. On the market side of things, I understand the rhetoric about pricing spiking after the strike is settled. But I do question whether it would last. We have a soft scrap market, short mill lead times, and a lowering utilization rate. Add to that, imports remain waiting in the wings. So, while I do expect the mills to try and raise pricing after the strike is over, I don’t see it lasting medium term.”

“Yes, if it causes the price of steel to continue to drop.”

“The UAW will impact every business and every person regardless if you are in the automotive industry or not.”

“If it goes on long enough, it will impact a lot more than our business. Hopefully cooler heads will prevail, and they will come to a reasonable settlement.”

“Yes, if furnaces shutter supply may be reduced in the short term.”

What’s something that’s going on in the market that nobody is talking about?

“The “fabrication arms race” between service centers and mills.”

“Price increases likely to come from the strike/contract UAW is pushing for.”

“Iron ore futures.”

“Short mill lead times! I continue to look at those as a major hurdle for the bulls out there. I don’t expect the end of the strike or the scheduled outages to reverse that trend.”

“Everyone seems to be suffering from employee shortages!”

“I have not heard much on the impact of BRICS move to dethrone the US dollar and what impact it will have on our industry.”

“AHMSA’s possible restart, or at least takeover. It has gone very quiet.”

“The (potential) sale of US Steel has gotten quiet.”

“Maintenance outages at some mills.”

“Possible anti-dumping tariffs from Asian countries.”

U.S. Steel and the National Energy Technology Laboratory (NETL) plan to test carbon-capture technology at the company’s Edgar Thomson Plant in Braddock, Pa.

The project is part of the US Department of Energy (DOE)/NETL Point Source Carbon Capture Program, the Pittsburgh-based steelmaker said. It will use an “advanced membrane technology” to capture CO2 at the plant.

“The testing of this promising NETL-developed membrane at the Edgar Thomson Plant is an important step to move this groundbreaking technology closer to commercial deployment,” NETL’s David Hopkinson, technical portfolio lead for Point Source Carbon Capture, said in a statement from U.S. Steel on Wednesday.

U.S. Steel said the unit is scheduled to be installed at the Edgar Thomson Plant, part of its Mon Valley Works, in early 2025. The field test is set to run for approximately six months.

North American auto assemblies saw their best total year to date in August, and the best mark in nearly five years, according to LMC Automotive data. The result was driven by a 32.8% jump in total assemblies vs. July’s output.

The month-on-month assembly output surge was impacted by seasonal factors. The typically slower summer ended with a strong recovery from lower monthly outputs in June and July. The production recovery so far has allowed the days’ supply of light vehicles to rise to 38 last month. This is slightly higher than July but still about 40% below the pre-pandemic average.

Rising inventory levels should continue to restore balance to the market and boost vehicle availability, but the UAW strike action against Detroit’s Big Three – Ford, General Motors, and Stellantis may create some near-term turbulence.     

North American vehicle production, including personal and commercial vehicles, totaled 1.5 million units in August, up from 1.13 million units in July, and was 7.3% ahead of the 1.1.39 million produced one year ago.

Below in Figure 1 is North American light-vehicle production since 2013 on a rolling 12-month basis with a YoY growth rate. Also included is the average monthly production, which includes seasonality since 2013.

A short-term snapshot of assembly by nation and vehicle type is shown in the table below. It breaks down total North American personal and commercial vehicle production into US, Canadian, and Mexican components. It also includes the three- and 12-month growth rates for each and their momentum change.

For the three months and 12 months through August, the growth rate for total personal and commercial vehicle assemblies in the USMCA region is up by double-digits. The momentum change, however, is well behind.

Personal Vehicle Production

The longer-term picture of personal vehicle production across North America is shown below. The charts in Figure 2 show the total personal vehicle production for North America and the total for the US, Canada, and Mexico.

In terms of personal vehicle production, the region saw a 35% boost month over month (MoM) in August, after declining by 17% the month prior. The result was also a 10.3% boost vs. the period one year ago.

The US saw the largest increase in both units produced and percentage gain in August vs. July, up 235,960 units (+45.3%). It was followed by Mexico, up 31,542 units (+14.8%), while Canada produced 24,513 more units (+24.5%) MoM.

Production share across the region was largely unchanged. The US saw personal vehicle production share of the North American market edge up marginally to 64.7%. Both Mexico and Canada saw its share slip to 23.2% and 12.1%, respectively.

Commercial Vehicle Production

Total commercial vehicle production for North America and the total for each nation within the region are shown in the first chart in Figure 3 on a rolling three-month basis. Commercial vehicle production in the US and Mexico and their YoY growth rates, as well as the production share for each nation in North America, are also shown.

North American commercial vehicle production was up 26.4% in August with a total of 374,694 units produced during the month, an increase of 78,308 units MoM. The gain was driven by the US, which saw a 27.8% boost in commercial vehicle assemblies in August, producing 56,934 more vehicles MoM.

Canada produced 18,380 light commercial vehicles in August, a 43.7% increase from July’s 12,789 total units. August marked Canada’s 22nd straight month of commercial vehicle assemblies after ceasing production for nearly two years from Jan. 2020 through Oct. 2021.

Mexico also reported a double-digit production growth in August vs. July, up 20% and producing 15,783 more vehicles over the same period.

The overall increase put the commercial production growth rate at 4.6% for the region last month, down from 9% in July.

The market share across the region was largely unchanged. The US was up four percentage points, with a total share of 69.2%, followed by Mexico with a 26.2% share, and Canada with at 4.5% share in May.

Presently, Mexico exports just under 80% of its light-vehicle production, with the US and Canada the highest-volume destinations.

Editor’s Note: This report is based on data from LMC Automotive for automotive assemblies in the US, Canada, and Mexico. The breakdown of assemblies is “Personal” (cars for personal use) and “Commercial” (light vehicles less than 6.0 metric tons gross vehicle weight rating; heavy trucks and buses are not included).

Ken Simonson, chief economist for The Associated General Contractors of America (AGC), will be the featured speaker on the next SMU Community Chat webinar on Wednesday, Oct. 4, at 11 a.m. ET.

The live webinar is free. A recording will be available free to SMU members. You can register here.

We’ll talk about the outlook for construction, a key end market for steel. We’ll discuss how changing material costs, including for steel, might affect that outlook.

We’ll in addition dive into the impact of higher interest rates, the Inflation Reduction Act, and infrastructure spending. To what extent might higher rates slow construction activity? And to what extent might the IRA and infrastructure help to offset that?

Another important topic: labor. We’ve seen labor shortages and widespread strikes – not only at the UAW but across other industries as well. Does that mean skilled workers will remain hard to find for longer than anticipated?

And we’ll of course take your questions too.

Simonson is in a good position to answer them because AGC is the leading association for the construction industry, with more than 27,000 member firms across a range of markets. Also, Simonson has been chief economist at AGC since 2001 – so he’s seen more than a few construction market cycles.

As always, we’ll keep it to about 45 minutes. You can drop in, learn something – and then get on with your day.

PS – If you’d like to see past Community Chat webinars, you can find those here.

United Auto Workers (UAW) union members have gone on strike against at a parts supplier to Mercedes-Benz in Tuscaloosa, Ala.

In a post on X, formerly Twitter, UAW said on Wednesday that “190 workers at ZF in Tuscaloosa are now on strike for a fair contract.”

A global auto supplier, ZF is based in Friedrichshafen, Germany. It has locations around the world, including in the US.

The UAW said workers at ZF, members of UAW Local 2083, supply front axles to a Mercedes plant located nearby. It said they “have been fighting for a fair contract that ends tiers, raises wages, and provides decent health care.”

Workers voted down a contract from ZF on Tuesday, according to a UAW statement.

ZF said the plant in Tuscaloosa would operate while talks with the union continue, according to a report at Reuters.

The strike at ZF comes as the UAW is also on strike against all of the Detroit Three automakers in actions that targets specific plants across Ford, General Motors, and Stellantis. The union said the strike could expand on Friday at noon if a new labor deal is not reached with the auto companies.

Mercedes-Benz USA did not return a request for comment by time of publication.

US light-vehicle (LV) sales rose to an unadjusted 1.33 million units in August, up 12.8% vs. year-ago levels, the US Bureau of Economic Analysis (BEA) reported. Despite the year-on-year (YoY) boost, domestic LV sales fell 4.5% month on month (MoM).

On an annualized basis, LV sales were 15 million units in August, down from 15.7 million units the month prior, and below the consensus forecast which called for a more modest decline to 15.4 million units.

Auto sales continue to be impacted by higher financing rates and high-priced inventory. And while production levels are roughly back at pre-pandemic levels, delivery rates are still running roughly two months – from the production line to dealers.

Production recovery continues to build, pushing days’ supply of light vehicles to rise to 38 in August, slightly higher than last month but still about 40% below the pre-pandemic average.

Retail incentives, though being pressured higher, up 96% YoY in August, are still just about half of what they were in August 2019 – before the global pandemic and semiconductor shortage cut auto assemblies.

Despite that, the average daily selling rate (DSR) was 49,205 – calculated over 27 days – up from August 2022’s 43,626 daily rate. And passenger vehicle sales increased YoY while sales of light-trucks ticked up by 18.4% over the same period. Light-trucks accounted for 80% of last month’s sales, roughly the same to its share of sales in August 2022. 

Below in Figure 1 is the long-term picture of sales of autos and lightweight trucks in the US from 2013 through August 2023. Additionally, it includes the market share sales breakdown of last month’s 15 million vehicles at a seasonally adjusted annual rate.

The new-vehicle average transaction price (ATP) was $48,451 in August, up just 0.2% from July. Last month’s ATP was also up 0.3% (+$150) above the year-ago period, according to Cox Automotive data.

Incentives increased again for the 10th straight month. Last month’s incentives were $1,902, up from $1,820 in July, and the highest total since June 2021. With the MoM increase, incentives are roughly 4% of the average transaction price. Incentives are up 96.3%, or $933 YoY.

In August, the annualized selling rate of light trucks was 11.988 million units, down 4.9% vs. the prior month but still nearly 14.8% better YoY. Auto annualized selling rates saw similar dynamics, down 3.1% but up 9.3%, respectively, in the same comparisons.

Figure 2 details the US auto and light-truck market share since 2013 and the divergence between average transaction prices and incentives in the US market since 2020.

Editor’s Note: This report is based on data from the US Bureau of Economic Analysis (BEA), LMC Automotive, JD Power, and Cox Automotive for automotive sales in the US, Canada, and Mexico. Specifically, the report describes light vehicle sales in the US.

Ford’s Canadian subsidiary and auto workers represented by Unifor – roughly the Canadian equivalent of the UAW – have reached a new, tentative labor agreement.

The three-year national labor contract covers more than 5,000 unionized employees in Canada, Ford said in a statement released late on Tuesday. It does not take effect until it has been ratified by Unifor members.

“To respect the ratification process, Ford of Canada will not discuss the specifics of the tentative agreement,” the company said.

Unifor said its bargaining committee unanimously recommended that union members ratify the tentative pact. It said the new deal addressed “core” priorities: pensions, wages, and the transition to electric vehicles.

The union did not provide dates for ratification votes. It said those would be released in the coming days after members had been provided with details of the proposed new contract.

“We leveraged our union’s most powerful weapon: the right to strike,” Unifor leaders said in a statement on Tuesday night. “Having so many union members working together to support their bargaining team on the shop floor and online was incredible to see.”


Unifor’s contract with Ford was scheduled to expire on Monday at 11:59 pm ET. A strike was averted after the union said it received a last-minute offer from Ford that met many of its demands.

The union then extended negotiations by 24 hours, during which time it agreed to accept Ford’s offer.

The situation in Canada stands in stark contrast to that in the US.

The United Auto Workers (UAW) union, which represents US auto workers, and the “Big Three” remain deadlocked. And the UAW has threatened to expand its strike against Ford, General Motors, and Stellantis on Friday at noon.

Another big difference: Unifor took the more traditional approach of targeting all the plants at one automaker. The UAW has chosen a different tactic, targeting individual plants across all three union-represented auto companies.

Also, the UAW represents approximately 150,000 workers at the “Big Three” in the US, far more than the 5,600 represented by Unifor at Ford’s Canadian operations.

Sheet prices fell again this week, this time not on fears of a United Auto Workers (UAW) union strike but on the actual thing.

And, yes, there is a chance that the strike will be expanded again this week, with the UAW setting a new deadline of noon on Friday for a new deal.

Might the UAW take aim at that the most profitable pickup platforms of the Detroit Three – the Ford F-150, the Chey Silverado, and the Dodge Ram?

I’ll leave that for the automotive press to cover. By the way, hats off to Automotive News for putting together a good map of where the strike is and a table of where negotiations stand. You can find that here.

Talks of a Bottom? Yes, Really.

I realize it’s hard to look past the UAW strike now, especially with the issue becoming a political hot potato. That said, it’s worth considering what the steel market might look like once a deal is reached. I say that because I’ve heard from a surprising number of you this week that you think a price bottom is closer than might be assumed.

A quick recap of where things stand. Our average hot-rolled coil price is at $660 per ton. The top end of our range is $700 per ton, where smaller spot buyers are. The lower end is in the low $600s per ton, where large buyers and some Canadian mills are.

Our average HRC price bottomed out last year at $615 per ton just before Thanksgiving, according to our pricing tool. The low end dipped into the high $580s per ton. I’ve heard some very large deals might have already happened in that range, perhaps as mills looked to secure volumes ahead of the strike. I’ve also heard those deals might be gone from the market now.

Why might that be? Industry sources will tell you that nearly 1 million tons of capacity were slated to come out of the market as a result of planned fall maintenance outages. The amount of capacity that will be out of the market is higher now with Granite City’s sole active furnace being temporarily idled. I’m also told that some of those planned fall maintenance outages have been extended.

Does that mean that 1.5 million tons are now out of the market? I’m not sure. But it’s safe to assume that it’s a higher figure than previously estimated.

Could prices nonetheless drift lower next week? I wouldn’t be shocked if they did. But as we saw last year, domestic mills aren’t keen to let prices slide much lower than $600 per ton. That’s especially true if it looks like scrap prices might increase next month.

The Prices Hikes Might Already Be Written

It’s also worth noting that mills have made no secret that they intend to announce price increases of as much as $75-100 per ton as soon as there is an inkling of the UAW strike being over.

Is it possible we’d then see a sharp rebound in prices? I think there is some logic to that position.

We won’t have September service center inventory data available until next month. But it’s already clear from our latest survey results that buyers have been reducing inventories.

Let’s say an end to the UAW strike is negotiated and automotive production has to catch up for lost time. Let’s also assume that buyers come back into the market all at once, as sometimes happens.

How far might prices go up and lead times move out? I don’t know the answer to that. But it’s worth thinking about as the drama in Detroit plays out.

Sheet prices slipped again this week on news of the United Auto Workers (UAW) strike and continued caution among some consumers.

Some market participants said prices would continue to drift lower given the uncertainty as to when the strike might end and the potential for more strikes to be announced as soon as Friday.

But opinion was mixed as to whether prices would continue to go down. Some buyers reasoned that there was more upside risk to prices than downside risk – meaning that now might be the time to lock in lower prices.

SMU’s average hot-rolled coil price has in the meantime slipped to $660 per ton ($33 per cwt), down $30 per ton from last week and down $105 per ton from this time last month. HRC prices now stand at their lowest point since mid-December 2022.

It was a similar story for cold-rolled, which dropped $25 per ton, and galvanized base prices, which lost $15 per ton. Both now stand at $875 per ton. Galvalume base prices slipped $20 per ton to $900 per ton on average. Plate prices were unchanged at $1,465 per ton on average.

We acknowledge that some market participants think sheet prices are at or near a bottom. That said, our sheet momentum indicators remain pointed toward lower until more solid evidence of that bottom emerges.

Our plate price momentum indicators also remain at lower following a plate price decrease announced by Nucor earlier this month.

Hot-Rolled Coil

The SMU price range is $620–700 per net ton ($31.00–35.00 per cwt), with an average of $660 per ton ($33.00 per cwt) FOB mill, east of the Rockies. Both the bottom end of our range and the top end of our range declined $30 per ton vs. one week ago. As a result, our overall average is $30 per ton lower compared to the prior week. Our price momentum indicator for hot-rolled coil is still pointing lower, meaning SMU expects prices will decline more over the next 30 days.

Hot-Rolled Lead Times: 3–7 weeks

Cold-Rolled Coil

The SMU price range is $830–920 per net ton ($41.50–46.00 per cwt), with an average of $875 per ton ($43.75 per cwt) FOB mill, east of the Rockies. The lower end of our range was down $50 per ton week-on-week (WoW), while the top end was unchanged compared to a week ago. Our overall average is down $25 per ton WoW. Our price momentum indicator on cold-rolled coil is still pointing lower, meaning SMU expects prices will decline more over the next 30 days.

Cold-Rolled Lead Times: 5–8 weeks

Galvanized Coil

The SMU price range is $840–910 per net ton ($42.00–45.50 per cwt), with an average of $875 per ton ($43.75 per cwt) FOB mill, east of the Rockies. The lower end of our range was down $20 per ton vs. last week, while the top end of our range was down $10 per ton compared to one week ago. Our overall average is down $15 per ton vs. the prior week. Our price momentum indicator on galvanized steel is pointing lower, meaning SMU expects prices will decline more over the next 30 days.

Galvanized .060” G90 Benchmark: SMU price range is $937–1,007 per ton with an average of $972 per ton FOB mill, east of the Rockies.

Galvanized Lead Times: 4-9 weeks

Galvalume Coil

The SMU price range is $860–940 per net ton ($43.00–47.00 per cwt), with an average of $900 per ton ($45.00 per cwt) FOB mill, east of the Rockies. The lower end of our range was unchanged vs. last week, while the top end of the range was $40 per ton lower WoW. Our overall average was down $20 per ton compared to one week ago. Our price momentum indicator on Galvalume steel is still pointing lower, meaning SMU expects prices will decline more over the next 30 days.

Galvalume .0142” AZ50, Grade 80 Benchmark: SMU price range is $1,154–1,234 per ton with an average of $1,194 per ton FOB mill, east of the Rockies.

Galvalume Lead Times: 6–8 weeks


The SMU price range is $1,400–1,530 per net ton ($70.00–76.50 per cwt), with an average of $1,465 per ton ($73.25 per cwt) FOB mill. Both the lower end of our range and the top end of our range were sideways compared to the week prior. Thus, our overall average is unchanged WoW. Our price momentum indicator on steel plate remains at neutral, meaning we are unsure of what direction prices will go over the next 30 days.

Plate Lead Times: 3–8 weeks

SMU Note: Below is a graphic showing our hot rolled, cold rolled, galvanized, Galvalume, and plate price history. This data is available here on our website with our interactive pricing tool. If you need help navigating the website or need to know your login information, contact us at

US housing starts slipped in August, according to the latest estimates from the US Census Bureau.

The total privately owned housing starts were at a seasonally adjusted annual rate of (SAAR) of 1,283,000 in August, Census said. August starts are down 11.3% from the revised July estimate of 1,447,000. Year over year, single-family housing starts are down 14.8% from 1,505,000 in August 2022.   

Higher mortgage rates and higher construction costs have slowed single-family housing production, the National Association of Home Builders (NAHB) said.

“High mortgage rates above 7% combined with low resale inventory and higher home prices are slowing housing production, as many first-time home buyers and younger households are struggling to purchase an affordable home,” Alicia Huey, NAHB chairman, said in a statement.

Huey added that there’s currently a nationwide shortage of 1.5 million units in addition to elevated mortgage rates. “We need to increase the housing supply to get this market back into balance to meet the pent-up demand for when market conditions improve,” she said.

NAHB anticipates that mortgage rates will remain elevated. The association expects the Federal Reserve to increase rates one more time later this quarter, according to Danushka Nanayakkara-Skillington, NAHB’s assistant VP for forecasting and analysis.

Regionally, combined single-family and multi-family starts are down in all four regions, with the largest decline being the Northeast and the lowest in the South.

United Auto Workers (UAW) union president Shawn Fain has announced a new deadline: Friday, Sept. 22, at noon, after which point the union could expand its strike.

“If Ford, General Motors, or Stellantis have not made substantial progress toward a fair agreement, the UAW will call on more members to join the ‘Stand Up Strike,’” the union said in statement on Monday. The statement references a video made by Fain and posted on several of the union’s social media sites.

The UAW launched a strike on Sept. 15 against all three Detroit-area automakers when a labor agreement was not reached. The union is targeting specific plants across all three companies. That’s a departure from the standard practice of targeting all the plants at one automaker.

So far, the union has aimed the strike at GM’s Wentzville Assembly Plant in Missouri; the Stellantis Toledo Assembly Complex in Ohio; and Ford’s Michigan Assembly Plant in Wayne, Mich. (but only the final assembly and paint shops there).

“We’ve been available 24/7 to bargain a deal that recognizes our members’ sacrifices and contributions to these record profits. Still, the ‘Big Three’ failed to get down to business,” Fain said in the video.

“If we don’t make serious progress by noon on Friday, Sept. 22, more locals will be called on to stand up and join the strike,” Fain added.

The union resumed talks with the automakers on Saturday, according to a report in the New York Times.

When contacted by SMU, spokespersons for GM, Ford, and Stellantis pointed to statements referencing that the automakers continue to bargain in good faith and seek an agreement.

Ford and General Motors have announced temporary layoffs in the wake of the United Auto Workers (UAW) union strike.

Shortly after the strike began on Sept, 15, the automakers made the announcements for Ford’s Michigan Assembly Plant in Wayne, Mich., and GM’s Fairfax Assembly and Stamping Plant in Kansas City, Kan.


“Our production system is highly interconnected, which means the UAW’s targeted strike strategy will have knock-on effects for facilities that are not directly targeted for a work stoppage,” a spokeswoman for Ford told SMU on Monday.

On Sept. 15, approximately 600 employees at the Michigan plant were told not to report to work, according to the spokeswoman. Only the final assembly and paint shops at the plant are on strike.

However, the spokeswoman noted: “This is not a lockout.” She added that this layoff is a consequence of the strike at the Michigan Assembly Plant’s final assembly and paint departments.

The components built by these 600 employees use materials that must be e-coated for protection. E-coating is completed in the paint department, “which is on strike,” the spokeswoman said.

The plant makes the Ford Bronco SUV and the Ford Ranger pickup truck.

Before the strike occurred, the Dearborn, Mich.-based automaker said in a Sept. 14 update that it “remains committed to reaching an agreement that rewards our employees and protects Ford’s ability to invest in the future.”

General Motors

GM announced that 2,000 workers would be temporarily laid off.

“It is unfortunate that the UAW leadership’s decision to call a strike at Wentzville, (Mo.), assembly has already had a negative ripple effect, with GM’s Fairfax assembly plant in Kansas and its 2,000 team members expected to be idled as soon as early this week,” a spokesman for GM told SMU on Sept. 18.

A shortage of critical stampings supplied by Wentzville led to the furlough, the spokesman said.

“We are working under an expired agreement at Fairfax. Unfortunately, there are no provisions that allow for company-provided SUB-pay in this circumstance,” the spokesman added.

The spokesman noted that the effects of a strike negatively impact customers, suppliers, and the surrounding communities.

The spokesman continued that the automaker will continue to bargain in good faith with the union to reach an agreement. Meanwhile, the Detroit-based manufacturer said its priority is the safety of its workforce.

For Netherlands-based Stellantis, the UAW has targeted the Stellantis Toledo Assembly Complex in Ohio. Toledo Assembly makes the Jeep Gladiator and the Jeep Wrangler.

Unifor, which represents union auto workers in Canada, has extended negotiations with Ford, thus delaying a potential strike.

The deadline for contract talks – Monday, Sept. 18, at 11:59 pm — has passed. But Unifor said it was continuing discussions with Ford for another day.

“The union received a substantive offer from the employer minutes before the deadline and bargaining is continuing throughout the night,” Unifor said in a statement.

However, the union also noted that its members would remain ready to strike.

Separately, Ford issued a press release on Tuesday regarding the deadline extension.

“We will continue to work collaboratively with Unifor to create a blueprint for the automotive industry that supports a vibrant and sustainable future in Canada,” Steven Majer, VP of human resources of Ford Motor Co, of Canada, said in the statement.

Unifor’s counterpart in the US, the United Auto Workers (UAW) union, is currently on strike against all “Detroit Three” automakers — Ford, General Motors, and Stellantis.

Unifor took a more traditional approached. It selected one automaker, Ford, as the targeted automaker in labor negotiations.

The Canadian union’s membership is smaller than that of the UAW. So is the number of workers that it could call on to go on strike.

Unifor represents approximately 5,680 auto workers at Ford in Canada. The UAW represents roughly 150,000 across the Big Three, according to the Detroit Free Press.

U.S. Steel expects earnings to drop in the third quarter vs. the prior quarter and the same period a year earlier.

The company said the United Auto Workers (UAW) union strike was partly to blame.

The Pittsburgh-based steelmaker reported Q3’23 earnings guidance of $1.10 to $1.15 for adjusted net earnings per diluted share. This is down from $1.92 in Q2’23 and $1.95 in Q3’22.

The company’s Q3 adjusted ebitda is expected to be ~$550 million.

“We are on track to safely deliver a strong third quarter,” U.S. Steel president and CEO David B. Burritt said in a statement.

“Today’s guidance also reflects the expected impact on third-quarter financial results from the United Autoworkers union strike announced earlier this month,” Burritt added.

U.S. Steel on Monday announced the temporarily idling of blast furnace ‘B’ at its Granite City Works near St. Louis. The company has said the move was because of the UAW strike.

Meanwhile, the start-up this quarter of the non-grain oriented electrical steel line at Big River Steel, U.S. Steel’s EAF mill in Arkansas, continues as planned “with first coil expected by the end of the month,” Burritt said.

Also, U.S. Steel recently completed the pig iron caster at its Gary Works in Indiana. The plant is “consistently delivering low-cost pig iron to our electric arc furnaces at Big River Steel,” he continued.

Burritt said he expects the company to end the third quarter with cash on hand of ~$3 billion.

Q3 guidance for U.S. Steel’s individual segments is below:

Flat Rolled

The company said adjusted ebitda is expected to be “broadly in line with the second quarter.”

Despite falling spot prices, “average selling prices are expected to be slightly higher than previously anticipated on our July earnings call.”

U.S. Steel said that trend was a “key driver to the better-than-expected performance” in the segment. Also, its broad customer base has “kept its order book resilient.”

Mini Mill

Q3 adjusted ebitda for the segment – which is comprised of Big River Steel – was forecast to be lower than Q2 on lower selling prices.

But Big River Steel did benefit from better-than-anticipated volumes as well as lower raw material costs, U.S. Steel said.


Q3 adjusted ebitda for this segment – comprised of U.S. Steel’s mill in Kosice, Slovakia – is also expected to be down from Q2.

“Economic headwinds in the region and typical seasonal slowdowns are expected to result in lower average selling prices and a decline in shipment volumes,” U.S. Steel said.

“These headwinds are expected to be partially offset by lower raw material costs in the quarter,” the company added.


Adjusted ebitda is expected to be down from Q2 in this segment. But the company said it nonetheless remains “well above historical levels.”

“Softer market prices and demand as distributor inventory rebalances are expected to be the primary drivers of sequentially weaker ebitda,” U.S. Steel said.

Correction: Due to an editorial error, an earlier version of this story mistakenly listed “Q2” earnings guidance in the headline. That has been corrected to reflect that guidance was for the third quarter.