April Market Minute 2024

Supply Chain Disruptions for Aluminum

Did you know that approximately 22% of aluminum imports that enter the United States are routed via Baltimore annually? That means the recent collapse of Baltimore’s Key Bridge has had a resounding impact on the aluminum market, among others.

Almost immediately, the supply chain disruption led to a sharp increase in Midwest aluminum premiums. As of late April, Midwest premiums on aluminum have reached a high of .19/lb. in just a few weeks.

As a reminder, the Midwest Premium is a key pricing indicator for the overall price of aluminum. It is the cost to transport aluminum to the Midwest.

Experts believe this increase could be temporary, but in the near term it has placed pressure on the supply of aluminum.

Galvanized Premiums on the Rise

Are you a buyer of coated steel? If so, you could be in for a near-term price increase. Current premiums for galvanized steel are approximately $400 over hot roll coil prices—a significant departure from historical norms. This shift underscores a substantial market evolution, emphasizing the growing demand for value-added steel products.

Contributing to this increase is the recent price surge in zinc, a key component used in galvanization. Zinc prices spiked by 6 to 8% in early April alone, suggesting potential cost pressures on coating extras for steel products.

Will Job Growth Buoy the Region?

According to data from the Dallas Fed, robust job growth of 2.3% has occurred thus far in 2024, amounting to 329,400 new jobs. This forecast, backed by four models incorporating national GDP projections, oil futures prices, and leading indexes, carries a high level of confidence, with an 80% band ranging from 1.7% to 3.0%.

Recent employment data indicates promising trends, with Texas experiencing a 1.6% job growth in March, adding 18,400 jobs. However, February's growth was revised downward to 4.1%. These figures highlight a positive trajectory for job creation, suggesting employment in December 2024 will reach approximately 14.4 million, with continued growth throughout the year projected at 2.3%.

However, this trend hasn’t necessarily taken hold with metal buyers across Texas. From conversations with customers, Jonathan Dunnam, SteelNow’s customer operations manager, many seem to be tackling a recent influx of orders with their core team. Customers are either doing the work themselves and keeping their team to the usual two to three members, or just hiring one or two new employees for extra support.

Read more about this trend and others in the latest edition of Jonathan’s Journal.