We’re in the salad days for the U.S. construction sector, at least as far as 2017 is concerned. According to the Associated General Contractors’ analysis, “Construction spending is at record levels for the second straight month in March [in spite of the month’s slip] and is up 4.9% for the first three months of year compared to the same period in 2016,” as quoted by ForConstructionPros.com.
Better days for Chinese construction markets may be coming down the pike as well. Beijing recently announced plans to build a new megacity “the size of New England,” which should result in quite the appetite for industrial-grade steel, aluminum and other materials. For example, the government approved $36 billion to build 700 miles of rail within the next three years, according to this article. More salad days for the global construction industry to come, perhaps?
What Metal Buyers Should Look Out For
The latest drops in Chinese steel prices may have a knock-on effect on U.S. and other Western steel, which make the latter “pricier,” comparatively. This could lead to lower prices on both sides of the ocean hanging around for a while.
We’ll see if President Trump’s 232 investigation begins to have any medium-term effect on steel once the determinations come down on whether imports constitute a threat to national security. In the meantime, “iron ore and Chinese steel prices could recover if China cuts overcapacity later this year,” as we write in our latest Monthly Outlook Report. (Free two-month trial here.)
Key Price Movers and Shakers
The China rebar price plummeted 8.1% over the month, ending at $507.94 per metric ton.
U.S. shredded scrap price fell below $300 per short ton to start the month for the third time this year.
Weekly U.S. bar fuel surcharges for the Midwest, Gulf Coast and Rocky Mountain regions all fell slightly from April to May.