October Market Minute 2024

“Recently, metal buyers I've spoken with have started to see jobs trickle in, a positive shift from earlier this summer. It's an encouraging sign.”

This observation from Jonathan Dunnam, SteelNow’s customer service specialist, highlights a trend he noticed in late September when existing customers began ramping up for October. We'll continue to monitor whether this uptick persists.

But which industries are showing growth?

According to the US Census Bureau, HVAC and non-residential construction are performing well nationally, with HVAC forecasts expected to rise 5-15% next year. Aircraft shipments have surged in recent months, signaling a strong aerospace market, while farm machinery shipments have also ticked upward.

In contrast, sectors like motor vehicles, household appliances, ship and boat manufacturing, and mining and energy are experiencing softer demand. Some, like boat manufacturing, are seeing particularly low demand.

Does this mean manufacturing is rebounding?

Manufacturing activity remains uncertain. According to the Institute for Supply Management’s Purchasing Managers' Index (PMI), U.S. manufacturing is still contracting, with the latest PMI sitting at 47.3.

However, the broader economy, driven by the services sector, remains strong. Unemployment figures are being closely watched as they influence the Federal Reserve's interest rate policies. The Fed has already begun cutting rates to support growth, with further reductions possible by early 2025. Additionally, federal funds from the Infrastructure Investment and Jobs Act are expected to boost manufacturing projects in 2025 and 2026, fueling optimism for the future.

What are other economic indicators telling us?

Freight availability often acts as a leading indicator for broader economic and manufacturing trends. According to Bloomberg, the freight market is showing early signs of improvement, with truck capacity utilization in North America rising slightly in recent months.

This uptick in freight utilization suggests manufacturing activity could pick up heading into 2025. For metal buyers, increased manufacturing could lead to improved supply chain conditions, with freight becoming more accessible and reducing potential transportation delays. However, it's important to stay alert to potential cost impacts as freight availability can affect logistics expenses.

Speaking of metal buyers …

Steel prices are showing mixed trends. Flat-rolled prices have stabilized after a year-long decline, supported by reduced capacity due to year-end outages.

However, plate prices continue to fall with no recovery in sight, and index prices have dropped by over $500/ton YTD, now below $1,000/ton for the first time since early 2021.

On the steel bar front, MBQ (merchant bar quality) prices have declined by $90 per ton YTD, with a steady outlook for Q4 unless shredded scrap prices increase. HR and CF SBQ prices remain soft, with surcharges down $43 per ton compared to Q2 2024 averages. October HR and CF surcharges are flat compared to August levels.

Stainless steel surcharges on the rise

On the stainless steel front, November surcharges are projected to increase. While not yet official, as of October 21, the averaging period for surcharges is complete. Early forecasts suggest 304 surcharges will rise by 4.8 cents, 316 by 6.3 cents, and 430 by 0.75 cents.