June Market Minute 2022

Sub-$1,000 Steel by Late Summer?

For the first time since March, the price of hot-rolled carbon has dipped below $1,200/ton. Since a run-up earlier in the year, sheet prices are now down for seven consecutive weeks as of June 8.

The spread between sheet and plate prices, however, remains high. The spread, which has historically been in the range of $100-$150/ton, is well over $600/ton. This is the highest spread between the two products ever.

Could the price of steel be poised to move below $1,000/ton by the end of summer? Check out this futures chart from Bloomberg, which projects the futures curve for the price of hot-rolled carbon. By Bloomberg’s projection, prices could dip below $1,000 by August and remain there for quite some time.

Projected prices for hot rolled carbon steel showing estimated prices from July 2022 until April 2024. Projected price trend overall is decreasing from a start of $1,007 to $905.

Source: Bloomberg

Texas Manufacturing: Strong, But Slowing

Factory activity in Texas expanded at a robust pace in May, according to business executives who responded to the Texas Manufacturing Outlook Survey from the Federal Reserve Bank of Dallas.

But a closer look at numbers related to future activity and demand shows that weakness could be on the horizon.

Metrics for May 2022 in Texas Manufacturing facilities. Production and capacity utilization are up but new orders and estimated outlook is decreasing, suggesting more supply than demand.

Natural Gas Impacts Stainless Surcharges

Natural gas prices are up roughly 90% since March. This has had a ripple effect across nearly every market, including metals, due to the energy intensive nature of producing these materials.

For stainless steel, the cost of natural gas has reached a point where stainless mills are beginning to factor it into the cost of surcharges. Typically, surcharges are primarily comprised of the cost of alloying elements like nickel.

In May this added only about a half cent to the surcharge, but market experts say it could be slightly higher going forward.

Pump the Brakes on EVs?

Did you know that the average cost of making lithium-ion batteries used for electric vehicles is increasing for the first time in roughly a decade? According to S&P Global Platts, which tracks commodities, this is due in large part to rising cost of key metals like lithium, cobalt, and nickel.

According to S&P Global Commodity Insights senior analyst Alice Yu, sales of EVs dropped 35.6% in April month-on-month in China, the U.S., and Europe's top four markets.

July Market Minute 2022

May Market Minute 2022