The July rate marked a 0.3% increase from the previous month. Furthermore, the July figure jumped by 9.0% compared with July 2020.
During the first seven months of the year, construction spending totaled $883.2 billion, up 6.2% year over year.
Private construction spending reached a rate of $1,231.0 billion, or up 0.3%. Within private construction, residential construction reached an annual rate of $773.0 billion in July, up 0.5% from June. Nonresidential construction came in at $458.0 billion in July, or down 0.2%.
Meanwhile, public construction reached $337.8 billion, up 0.7%. Educational construction checked in at $79.7 billion, down 0.5%. Highway construction rose by 1.9% to a rate of $94.5 billion.
The Raw Steels Monthly Metals Index (MMI) dropped by 1.4%, as Chinese steel and U.S. scrap prices declined.
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Chinese steel merger to form third-largest steel producer
On Aug. 20, Chinese steelmakers Ansteel Group and Ben Gangformally began the process of merging their operations. If the process is completed, this will create the world’s third-largest steelmaker, behind China Baowu Group and ArcelorMittal.
Since both companies are state-owned, there will be no money changed in the transaction. Instead, the merger will be a government-backed restructuring in an effort to consolidate production in China’s bloated steel sector. Ansteel will be taking a 51% stake in Ben Gang.
The merged entity will keep the Ansteel name. Its annual production capacity will reach 63 million metric tons of crude steel.
With volatile steel markets, knowing which strategy to execute and when can make all the difference between saving and losing money. See how MetalMiner looks at different market scenarios.
Global crude steel production drops
Global crude steel production totaled 161.7 million metric tons in July, the World Steel Association reported.
The total marked a decline from 168 million metric tons in June. Furthermore, production totaled 175 million metric tons in May.
Meanwhile, July production jumped 3.3% on a year-over-year basis.
Chinese steel production curbs take hold
Beijing’s efforts to curb steel production might not have been particularly successful during the first half of the year, as Chinese steel production surged. Chinese steel production from January through June totaled 563.3 million tons, or up 11.8% year over year.
However, the country’s steel output has declined in each of the last two months.
Global steel production totaled 161.7 million tons in July, down from 168 million tons the previous month. Meanwhile, May production totaled 175 million tons.
Furthermore, Beijing’s efforts to curb steel production appear to be taking hold. China’s steel production also declined for a second straight month, totaling 86.8 million tons in July (down from 93.9 million tons in June.
In the U.S., buyers are vying for limited supply, whether domestically or in the form of steel imports, amid an unprecedented ascent of steel prices over the last year.
Some relief is coming in the form of Steel Dynamics, Inc.’s (SDI) new electric arc furnace (EAF) flat rolled mill in Sinton, Texas. In its Q2 investor report, the steelmaker said it plans to start production at the mill in mid-Q4 2021. The company estimated an investment price tag of $1.9 billion for the new mill.
SDI estimates the mill will add 3 million tons in annual production, bringing its total annual capacity to nearly 14 million tons.
This morning in metals news: U.S. steel imports are up by 17.4% in the year to date, the American Iron and Steel Institute reported; meanwhile, Toyota Motor is imposing its biggest price hike on steel materials in over a decade, according to Nikkei Asia; and, lastly, the WTI crude oil price has ticked up this week.
U.S. steel capacity utilization picked back up to 85.0% for the week ending Aug. 21, the American Iron and Steel Institute (AISI) reported.
Receive the latest short-term and long-term outlook for the full range of industrial metals (base and ferrous) at the annual MetalMiner Forecasting Workshop on Aug. 25.
Steel capacity rises
U.S. steel capacity utilization rose to 85.0% from 84.7% the previous week. Steel output reached 1,877,000 net tons last week, up 0.4% from the previous week.
Meanwhile, steel output for the week ending Aug. 21 increased by 27.2% from the same week in 2020, when the capacity utilization rate reached 65.9%.
For the year to date, U.S. steel production totaled 60,173,000 net tons, at a capacity utilization rate of 80.4%. The year-to-date production total increased by 19.8% from 2020, when the rate reached 66.6% for the equivalent period.
Steel prices continue to gain
U.S. steel prices have embarked on an essentially uninterrupted rise over the last year.
While recent month-over-month gains are not hitting the double-digit marks we’ve seen over the last year, prices are still moving upward.
U.S. hot rolled coil closed Monday at $1,883 per short ton, or up 3.98% month over month. Meanwhile, U.S. cold-rolled coil closed at $2,088 per short ton, or up 4.56%.
Meanwhile, hot dipped galvanized rose by 2.97% to $2,184 per short ton.
Nucor acquires steel rack solutions provider for $370M
“We are excited to officially welcome our Hannibal teammates as part of the Nucor team,” said Giff Daughtridge, president of Nucor’s sheet and tubular products division. “Adding steel racking solutions to our product portfolio expands our ability to serve our customers in the fast-growing warehouse and distribution market. This acquisition complements our existing product capabilities in this area.”
Hannibal Industries, Inc., is headquartered in Los Angeles and produces 150,000 tons of steel products annually, according to information on its website.
Unusually, the global steel market is diverging in the opposite direction from “normal.”
Historically, China would show signs of strength driven by robust construction activity while Europe and the U.S. struggled, facing more mature markets and relatively higher levels of foreign penetration.
The U.S. continues to power ahead. There, mill lead times remain stubbornly protracted.
Meanwhile, China is showing all kinds of uncertainty — much of it self-inflicted.
Although much was made of China’s ambitions to reduce emissions over the coming decade, after an initial flurry of anxiety the industry settled back to assume changes would be eased in gradually.
Indeed, Beijing even sought to play down the rate at which changes would be imposed following a sudden spike in prices as expectations of steel shortages took hold.
But over the last couple of weeks, it is becoming clear that cutbacks are happening. Output in the second half of the year is expected to be considerably less than the record first half.
Iron ore has taken a cue from both the message and the reality of cooling demand. Prices for 62% iron ore has dropped from the low 1,500s RMB/metric ton in early July to the mid-1,100s today on the Dalian exchange.
Executive order on zero emissions, electric vehicles
On Thursday, Aug. 5, President Joe Biden’s office announced its intention to sign an executive order that sets a “new target to make half of all new vehicles sold in 2030 zero-emissions vehicles, including battery electric, plug-in hybrid electric or fuel cell electric vehicles.”
The announcement was well-received by the American Iron and Steel Institute (AISI), as this executive order will boost domestic demand for steel. AISI CEO Kevin Dempsey said “the use of American-made steel, which is the cleanest in the world, will be key in the transition to EVs.”
As for the bipartisan infrastructure deal, the Senate voted 69-30 on Tuesday to pass a $1 trillion infrastructure package.
The world’s largest steel producer and exporter, China, is actively contemplating adding more curbs to halt environment pollution which, most likely, will reduce its steel output and dampen exports.
That’s good news for some of China’s neighbors steel-producing rivals, India and Japan.
Stop obsessing about the actual forecasted steel price. It’s more important to spot the trend.
The China Iron and Steel Association (CISA) warned on its Wechat channel last Sunday of impending cuts in crude steel output along with government-led environmental checks.
Daily crude-steel output at major mills fell 5.6% in the first 10 days of July from June, Bloomberg reported. These were at steel plants in Shanxi, Hubei and Hebei provinces, and mills including China Baowu Steel Group and HBIS Group.