Contributor: Brett Linton

An analysis of the North American energy market in May.

SMU’s Buyers’ Sentiment Indices resumed their downward trend this week, erasing the modest recovery seen two weeks ago.

Manufacturing activity in New York state declined for the third consecutive month, according to the May Empire State Manufacturing Survey from the Federal Reserve Bank of New York. Responding firms continue to forecast weaker business conditions in the coming months.

Sheet and plate lead times declined across the board this week, according to buyers responding to the latest SMU market survey. While our lead time ranges were unchanged compared to mid-April levels, average production times for each steel product we measure have declined from they were two weeks ago.

Domestic mills are largely negotiable on spot prices, according to the majority of steel buyers responding to our latest market survey.

All of SMU’s sheet and plate steel price indices declined this week, easing by $30-40 per short ton (st) on average since early May. Prices continue to slide lower as buyers remain on the sidelines, wary of holding much excess inventory and expecting further declines.

Domestic mill output continues to grow, with raw steel production rising last week to the highest rate recorded since last September, according to the American Iron and Steel Institute (AISI).

The volume of finished steel entering the US market rebounded in March, according to our analysis of US Department of Commerce and American Iron and Steel Institute (AISI) data.

Shipments of water heaters, air conditioner/heat pumps, and warm-air furnaces all increased from February to March. Total monthly shipments are now at a seven-month high.

Oil and gas drilling activity declined again this week in the US and Canada, according to Baker Hughes.

The volume of steel exported from the US marginally increased from February to March, according to the latest US Department of Commerce figures. Although up month over month (m/m), export levels have generally trended downward over the past year.  

US steel imports rebounded from February to March, rising to the second-highest monthly rate witnessed in the past ten months, according to final data recently released by the US Commerce Department. April license data shows that gain has likely been erased, with trade falling to the lowest rate of the year and several product categories hitting multi-year lows.

SMU polled steel buyers on an array of topics earlier this week, including market prices and demand, tariffs and reshoring, inventories and imports, and evolving market trends.

Steel buyers said Nucor’s price decrease was a public acknowledgement of what most of the market had already known - that sheet prices were moving lower in a more significant way. The question now is whether mills and service centers will manage the decline or whether prices might fall rapidly, they said.

Raw steel mill output ticked higher last week, now up to the highest weekly rate recorded in over seven months, according to the American Iron and Steel Institute (AISI).

SMU’s Monthly Review provides a summary of our key steel market metrics for the previous month, with the latest data updated through April 30.

Oil and gas drilling activity eased in both the US and Canada this week, according to Baker Hughes. US rig counts remain near multi-year lows, and Canadian activity continues its seasonal slowdown.

SMU’s Buyers’ Sentiment Indices both improved this week, reversing the decline seen two weeks ago.

Sheet and plate lead times held steady this week, according to buyers responding to the latest SMU market survey. This week we saw little change from mid-April levels, with just one product (Galvalume) showing any significant movement.

Nearly two thirds of the steel buyers who responded to this week’s SMU survey say domestic mills are negotiable on spot prices. This increasing flexibility marks a significant shift from the firmer stance mills held in recent months.

The Chicago Business Barometer declined in April, reversing March’s gains, according to Market News International (MNI) and the Institute for Supply Management (ISM).

Most sheet and plate steel prices declined yet again this week, with four of SMU’s five indices moving lower.

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US steel mills produced more raw steel last week than they have over the past seven months, according to the American Iron and Steel Institute.

Nucor’s weekly consumer spot price (CSP) for hot-rolled (HR) coil remained unchanged this week.

Recent Federal Reserve data paints a positive picture of the US manufacturing sector. Manufacturing indicators remained strong through February and March figures

Earlier this week, SMU polled steel buyers on an array of topics, ranging from market prices, demand, and inventories to tariffs, imports, and evolving market events.

SMU’s flat-rolled steel prices were flat or lower as tariff-related uncertainty continued to drag on the market.

The volume of raw steel produced by US mills remained relatively flat last week, maintaining the rebound seen one week prior, according to the American Iron and Steel Institute (AISI). Previously at the second-highest rate of the year, production continues to hold at one the strongest levels recorded over the last six months.

In this Premium analysis we examine North American oil and natural gas prices, drill rig activity, and crude oil stocks. Trends in energy prices and rig counts serve as leading indicators for oil country tubular goods (OCTG) and line pipe demand.