US light vehicle sales hit 6-month high in Oct

Spanish Market: Metals
04/11/24

Domestic sales of light vehicles climbed in October, rising to a seasonally adjusted rate of 16mn on the back of greater truck purchases.

Sales of light vehicles — trucks and cars — increased from a seasonally adjusted annual rate of 15.8mn in September, the Bureau of Economic Analysis reported today. Last month's rate was the highest since 16.1mn in April and greater than the 15.3mn unit rate in October 2023.

US consumers, boosted by solid hiring and salary gains, stepped up purchases as borrowing costs have started to come down in the wake of the Federal Reserve's half point cut in its target rate in September, the first cut since Covid-19 struck in early 2020. With inflation nearing the central bank's 2pc target, the Fed has signaled another 200 basis points of rate cuts are likely into 2026.

Sales of light truck sales increased by 1.6pc to just under a 13mn unit rate in October, while sales of cars rose by 2.2pc to a 3.1mn unit rate in the same timeframe.

Domestic auto production rose to a seasonally adjusted rate of 123,900 in September from 121,500 in August. That compared with 143,400 in September 2023. Auto assemblies are reported with a one-month lag to sales.

By Alex Nicoll

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26/12/24

Japan’s crude steel output to recover in FY2025: IEEJ

Tokyo, 26 December (Argus) — Japan's crude steel output is expected to recover during April 2025-March 2026, given higher output in wider domestic industries, according to government affiliated think-tank the Institution of Energy Economy Japan (IEEJ). The country's crude steel output will increase by 4.1pc on the year to 86.5mn t in 2024-25, according to the IEEJ's projection on 24 December. This will mark the first year-on-year growth in four years. A recovery is mostly attributed to an uptrend in wider domestic industrial sectors including automobile, electric and industrial machinery, IEEJ said. It sees domestic car output increasing by 1.8pc to 8.9mn units from a year earlier. IEEJ did not provide further details, but it suggested that expanding investment for digital and green transformation will underpin the steel demand throughout the period. The think-tank also predicts that the country's steel product exports will increase by 1.2pc on the year following an upward trend in the global manufacturing sectors. Japan delivered around 32mn t of steel products overseas during 2023-24, according to the industry group the Japan Iron and Steel Federation (JISF). The country's crude steel output has been sluggish throughout 2024, partly owing to weak demand from the construction and automobile sectors. Rising material costs and labour shortages have led to fewer construction projects in the country, weighing on steel demand. Operational suspensions at major auto manufacturers including Toyota and Daihatsu, following alleged false reporting on safety test results, also pressured steel demand. This partially led to the tenth consecutive month of year-on-year decline in booked orders of ordinary steel for car use in October, according to JISF. By Yusuke Maekawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: US tariffs, new EAFs may alter scrap flows

24/12/24

Viewpoint: US tariffs, new EAFs may alter scrap flows

Pittsburgh, 24 December (Argus) — A wave of new electric arc furnace steel mills coming on line next year could transform scrap flows in North America, while looming US import tariffs could stunt cross-border trade. Six steel mills in the US and Canada, accounting for about 9.9mn short tons (st)/yr of electric arc furnace (EAF) production, are ramping up from late this year or scheduled to start up in 2025. The new EAFs, mostly along the Mississippi River and in Ontario, could be magnets for scrap and reshape flows across the southeast, Midwest and Canada, as scrap-fed EAF steelmakers continue to expand their role in North America, which was historically dominated by coal and iron ore-fed blast furnaces. Although some scrap dealers are optimistic about markets in the new year, market participants are carefully monitoring the effect president-elect Donald Trump's hawkish trade policies could have on scrap trading. Trump has pledged to impose 25pc tariffs on US imports from Canada and Mexico that could further shift North American scrap flows. Canada is the largest shipper of ferrous scrap into the US at an average of 3mn metric tonnes (t)/yr since 2021. Prime scrap imports between January and October this year averaged 47,000t/month, while shred imports averaged 70,000t/month, US customs data shows. The import tax would drive up the cost of Canadian scrap for US buyers and potentially reduce supply available to steel mills in the Midwest. Scrap traders noted that Trump can be unpredictable and may be using the threat of tariffs as leverage. "I'm pretty tepid on the first quarter," one Midwest dealer said. "People are trying to figure out how serious Trump is on tariffs." New EAFs to drive scrap demand The new scrap-fed EAFs in North America include Algoma Steel in Ontario, Hybar in Arkansas, and Nippon Steel's and ArcelorMittal's joint venture in Alabama. US Steel's Big River Steel began melting scrap at its second Arkansas EAF in October. EAF steelmaker Hybar plans to open its 630,000 st/yr reinforcing bar mill in northeast Arkansas in the summer of 2025. Hybar, along with Big River Steel and three Nucor mills already in the region, could further bolster the lower Mississippi River basin as a major scrap market. "I'm looking forward to next year because of the increased competition," a Midwestern scrap dealer said. "It's always good to have options." The new consumption could position northeast Arkansas and Tennessee as perhaps the top scrap consuming region, making it an industry barometer in 2025. Chicago has historically held that position and has been the benchmark region in contracts. Shifting flows in Canada Algoma Steel plans to begin ramping up two new EAFs in Sault Ste Marie, Ontario, in March next year to continue making hot-rolled coil and steel plate. The EAFs could eventually bring that facility's maximum steel production levels to 3.7mn st/yr once they fully replace Algoma's blast furnaces. The steelmaker will likely focus on low-copper shred and prime scrap grades to keep up the iron content in its melt mix as it transitions to EAF steelmaking, one Canadian scrap consumer said. Algoma may also continue to rely on raw inputs like direct reduced iron and hot briquetted iron as it ramps up its scrap buying to feed the EAFs. Market participants in Canada expect the mill to buy scrap from the prairies west of Sault Ste Marie, as well as from the greater Toronto area to the mill's east, though Algoma will face competition to pull scrap from the latter region. Scrap dealers in the upper Midwest are also keen to supply Algoma Steel because buyers in that region are scarce. A Midwest dealer noted that Algoma may ship in scrap from US ports on the Great Lakes. Algoma did not respond to requests for comment on its raw material plans. In 2021, the company set up a joint venture with Triple M Metal, a Canadian scrap dealer with 45 yards, that will likely supply scrap for Algoma Steel in Sault Ste Marie. By James Marshall and Brad MacAulay US steel mill capacity additions Million short tons/yr Company Location Product type Capacity added Start date US Steel/Big River Steel Osceola, AR Sheet 3.00 RAMPING ArcelorMittal/Nippon Steel Calvert, AL Sheet 1.65 2H 2024 Algoma Steel Sault Ste. Marie, ON Sheet 3.70 1Q 2025 Nucor Lexington, NC Bar 0.43 1Q 2025 Hybar Osceola, AR Bar 0.63 2Q 2025 CMC Berkeley, WV Bar 0.50 4Q 2025 Total 9.91 Argus reporting & public statements Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: FeV demand may grow next year

24/12/24

Viewpoint: FeV demand may grow next year

London, 24 December (Argus) — Ferro-vanadium (FeV) demand, which is closely tied to the carbon steel sector, has the potential to grow next year after a sluggish 2024, but economic and geopolitical uncertainties make conditions difficult to forecast. The outlook suggests FeV consumption will increase, driven by global steel production growth, particularly in countries such as India, as well as a potential rebound in key markets such as the US and Europe. The World Steel Association (Worldsteel) sees 2025 demand rising by 1.2pc to 1.772bn t, after a slight contraction this year. Most of the major economies, including China, are likely to record lower steel demand this year, although India bucks the trend, with robust demand growth expected throughout 2025. In developed economies, steel demand could grow by 1.9pc next year, driven by a recovery in the EU and, to a lesser extent, in the US and Japan. Buyers in Europe have been wary about purchasing large volumes of FeV in recent weeks, with fewer volumes expected in next year's long-term contracts as steel plants are looking for more flexibility and are "afraid of buying material that in the end they might not need", a trading firm said. Construction The construction sector remains a crucial driver of FeV consumption, primarily because of its dependence on steel for infrastructure projects. But the construction industry's challenges, particularly residential construction in developed economies, have dampened overall steel demand. High borrowing costs have stifled housing activity, with interest rate hikes slowing building projects. "A meaningful recovery in residential construction (in the EU, US and South Korea) is expected to begin from 2025 onwards with the expected easing of financing conditions," Worldsteel said. Rebar production also has faced challenges, with Chinese steel mills reducing output on lower demand from the real-estate sector up to September, when new rebar standards were introduced by China's government. The new standards were intended to encourage higher vanadium content in steel, but the anticipated FeV demand boost has not yet materialised because overall appetite for the alloy remains suppressed by ongoing struggles in China's real-estate sector. China's rebar output fell by 1.9pc on the year to 17.7mn t in October , with January-October output showing a 14pc drop from the same period a year earlier, according to data from the National Bureau of Statistics. Without any lift from China, European FeV prices remain driven primarily by weakness in the continent's own construction sector, which continues to limit steel rebar trading volumes. Argus' weekly Italian domestic rebar assessment was at €550/t ex-works on 11 December, marking an 11pc drop from the start of this year. Automotive The automotive sector, particularly the electric vehicles (EV) market, will be a key driver of FeV demand next year. High-strength low-alloy (HSLA) steel — a type of carbon steel known for its superior strength-to-weight ratio — is crucial for light vehicles and EVs. While light vehicles and EV manufacturing has slowed this year, with factory closures and inventory reductions by major carmakers such as Volkswagen and Stellantis , the industry is expected to recover next year as the push towards sustainability continues. The green transition, which includes renewable energy projects and electric grid expansions, will further contribute to the demand for HSLA steel and, by extension, FeV. But EV growth is likely to slow in the short term under the administration of US president-elect Donald Trump, who could prioritise traditional energy sectors, potentially limiting support for renewables, industry participants said. By Roxana Lazar Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: US steel glut may dampen prices, profit

23/12/24

Viewpoint: US steel glut may dampen prices, profit

Houston, 23 December (Argus) — Persistent steel oversupply in the US may continue to dampen domestic steel prices and steel mill earnings as the market faces weak demand and rising import volumes. Buyers told Argus the market remains oversupplied and has been for most of 2024, despite US steelmakers lowering production through the first three quarters of 2024. Raw steel production was 66.21mn short tons (st) this year through 28 September, a 1.11mn st decline from the first three quarters of 2023, according to weekly data published by the American Iron and Steel Institute (AISI). While steel production is lower, many US buyers believe steelmakers are still producing too much material, making it easy to buy spot tons. The Argus US hot-rolled coil (HRC) lead time crossed into 2025 in mid-December, and HRC lead times have averaged 4.3 weeks in 2024, down from six weeks in 2023. Facing these factors, US steelmakers see lower profits or even losses during the final quarter of 2024 and potentially into 2025. The five largest steelmakers by production capacity — Cleveland-Cliffs, Commercial Metals (CMC), Nucor, SDI and US Steel — reported combined profits of $3.55bn for the first three quarters of 2024 — $4.35bn lower than the same period of 2023. In recent fourth quarter earnings guidance, Nucor and US Steel said they could post a profit and loss, respectively, at levels not seen since the third quarter of 2020. Demand pressured by high rates A decline in demand has been the fundamental issue this year and is expected to continue to be moving into 2025. Many service centers reported lower steel consumption forecasts for 2025 compared to this year, outpacing any decline in US steel production. Automotive production and steel consumption from automaker Stellantis is said to have sagged recently as that company struggles to tamp down high vehicle inventories . High interest rates constrained demand and put pressure on buying trends. The Associated General Contractors of America's (AGC) chief economist Ken Simonson said recently that increased federal government project announcements have not led to more construction contracts, and that spending for major private construction categories are flat or shrinking. Nonresidential construction is one of the largest consumers of steel products. That lower trend in nonresidential spending is being masked by higher residential investment, with construction spending at $2.17 trillion on a seasonally adjusted annual rate in October, 5pc above the same period the prior year and up by 0.4pc sequentially. Much of the increase was from higher spending in residential projects. Coupled with this lower demand, new and better operating steel mills could intensify the supply overhang. US Steel recently started up its new 3mn st/yr Big River 2 flat steel mill in northeast Arkansas and after years of production issues, Steel Dynamics' (SDI) 3mn st/yr Sinton, Texas, mill is operating at higher rates. Australian steelmaker BlueScope also reported that it is continuing to work on improving efficiency at its Ohio-based North Star flat steel mill, which it completed an expansion to last year. Farm tractor sales, another consumer of flat steel, stood at 196,000 units through November, down by 30,900 units from the same period the prior year. The higher production is coming online as steel prices are falling. The Argus US HRC Midwest assessment had a third quarter average of $680/st ex-works, down by 27pc since the first quarter average. Import volumes adding to oversupply Lower global steel costs have led to stubbornly elevated import volumes, despite persistent US oversupply and short lead times. Import volumes rose to 22.3mn st in the first three quarters of 2024, up by 431,000st from the same period prior year, according to data from the US Department of Commerce. By Rye Druzchetta US steel mill profits, production, steel imports and prices Through 3Q 2024 Through 3Q 2023 Difference US steel mill profits ($mn) Nucor 1,740 3,739 -(1,999) US Steel 473 975 -(502) Cleveland-Cliffs -(307) 554 -(861) SDI 1,330 2,027 -(697) CMC 309 598 -(289) US production US steel mill utilization rate (%) 76.7 76.9 -(0.2) Raw steel production ('000st) 66,212 67,325 -(1,113) Imports Quarterly steel product imports ('000st) 22,301 21,870 431 Argus-assessed pricing ($st) US HRC MW ex-works $796 $911 -($115) US rebar MW ex-works $809 $904 -($95) Company filings; AISI; US Department of Commerce; Argus CMC fiscal quarters adjusted to most relevant calendar year quarter. Utilization percentage rate and production tonnage estimates based on AISI data through 28 September. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: China SiMn prices face pressure in 2025

23/12/24

Viewpoint: China SiMn prices face pressure in 2025

Beijing, 23 December (Argus) — Chinese silico-manganese (SiMn) alloy prices are expected to face downward pressure in 2025, as unpromising steel outlooks may outpace potential further output curbs at most Chinese alloy smelters. Argus -assessed prices for 65/17-grade alloy fell to 6,000-6,150 yuan/t ($822-842/t) ex-works on 19 December, down from Yn8,200-8,500/t ex-works on 30 May, when prices rose to a multi-year high after Australia-based South32's output suspension at its Gemco mine sharply lifted manganese ore feedstock prices. A sustained decline in steel demand and mounting inventories at many alloy plants forced alloy spot prices downwards from June onwards, although more suppliers started to hold offers firm in the past few weeks on the back of higher ore costs and restocking purchases from steel mills before the end of this year. Slowing steel demand China's crude steel output in January-November fell by 2.7pc from a year earlier to 929.19mn t, according to data from China's National Bureau of Statistics. Steel production in November fell by 4.3pc from 81.88mn t in October. China's crude steel output is expected to have inched down further in December, as more domestic mills will conduct annual equipment maintenance before the end of this year, according to market participants. The output decline was attributed primarily to the weakening domestic real-estate sector, a major consumer of crude steel, in which investment from January-November fell by 10pc on the year. Domestic steel consumption has shown no signs of picking up, with regional steel prices having fallen in November. Shanghai's mainstream hot-rolled coil ex-warehouse prices assessed by Argus fell to Yn3,470/t on 29 November, down by Yn50 from 30 October. China's real-estate industry is still facing challenges, although the government has introduced fiscal policies that support the slowing construction sector. There remains the likelihood of a decline in sales and housing prices in 2025, according to market participants, given the current scale of unfinished projects and unsold house inventories. Reduced alloy output Lower steel demand during the economic slowdown and a squeeze in profit margins at most alloy plants caused by higher ore feedstock costs and lower bid prices caused Chinese Simn production to fall this year. Domestic output of the alloy is unlikely to recover in 2025 because of unprofitable margins and shrinking steel consumption. China's production of the bulk alloy is estimated to have fallen to about 10.45mn t this year, down from about 11.8mn t in 2023 and 9.85mn t in 2022, some market participants told Argus . More alloy plants in China's Inner Mongolia and Ningxia province were forced to cut or suspend operations in the first half of this year, particularly over March-May, when China's output fell by nearly 20pc on the year to about 2.34mn t. Inner Mongolia and Ningxia are China's key producing hubs for SiMn, accounting for 60-70pc of China's total production. Reduced alloy demand, falling alloy prices and lower shipments from South32 weighed on China's imports of manganese ore feedstock from main suppliers. China's manganese ore imports declined by 7.8pc on the year to 26.79mn t in January-November, customs data show. The average import price was $152/t for January-November, down by 3.7pc on the year. China's ore imports from Australia decreased by 55pc on the year to 2.11mn t in January-November, while China imported more ores from South Africa and Ghana to make up for the loss. Argus expects China's ore imports to rise next year as South32 restarted mining activity at its Gemco unit in June and is considering resuming exports next year. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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