AISI Reports Steel Shipment Data
This May, the American Iron and Steel Institute (AISI) reported that U.S.-based mills shipped more than 7.7 million tons of products, a 3 percent increase from shipments totaling 7.5 million tons in April.
Despite some signs of recovery, this May’s numbers for steel shipments are still lower than last year. More specifically, the figures fell by 2.4 percent when compared with the 7.9 million tons that were shipped in May of 2022.
Throughout the first five months of 2023, year-to-date freight has reached 36.6 million tons, illustrating an overall decrease of 4.4 percent compared to the 38.3-million-ton figure from January through May of 2022.
May proves to be a month of conflicting signals for nonresidential construction spending. It saw an uplifting 3 percent increase in steel shipments, but despite this boost, an evaluation of data from the U.S. Census Bureau, conducted by Associated Builders and Contractors (ABC), also uncovered a 0.2 percent dip in the nation’s nonresidential construction spending.
Additionally, seasonally adjusted annualized nonresidential expenditures were recorded at $1.06 trillion.
Anirban Basu Weighs In
Nine of the 16 nonresidential subcategories saw spending drop over the course of the month. Private nonresidential outlays dipped by 0.3 percent, yet public nonresidential construction expenditure grew by 0.1 percent in May.
“Nonresidential construction spending declined in May, ending a streak of 11 consecutive monthly increases,” chief economist of the Washington-based Associated Builders and Contractors (ABC), Anirban Basu, stated. “While spending is up more than 17 percent over that span, manufacturing-related construction has accounted for the majority of that increase,” He adds. “Excluding the manufacturing segment, nonresidential construction spending is barely outpacing inflation, up just 6 percent over the past year.”
He continued that, “Unfortunately, conditions may prove challenging in other segments over the next few quarters.” Adding, “Interest rates remain elevated and are likely to rise at least once more over the second half of 2023, exacerbating already tight credit conditions and ultimately limiting construction activity.”
Contractors Remain “Mildly Optimistic”
Outside of labor concerns, ABC’s Construction Confidence Index reveals a moderate level of optimism among contractors. This sentiment is supported by the ongoing support of manufacturing and publicly funded projects, notes Basu.
“It appears that the optimism that ABC contractors have been expressing about their prospects is proving justified,” Basu stated. “Backlog is stable, and there is still evidence of significant pricing power, helping to support contractor profit margins. Moreover, public construction spending stands to remain strong even if the economy enters recession later this year with considerable sums of money lined up to drive road, bridge and other work during the years ahead.”
Pricing Drops in July
U.S.-based mill companies and scrap processing firms appear to be making decisions for the July buying period based on the demand for both steel domestically and ferrous scrap internationally. Reports suggest that these considerations are having a major impact on negotiations currently underway.
Early July bids for ferrous scrap have been reported by the Davis Index, a metals information services provider, to be lower than in June, with drops ranging from $20 to $30 per ton.
Regarding exports, the Davis Index also states that Turkish buyers are offering and approving mildly lower prices for overseas heavy melting steel. Fortunately, July could present an opportunity for American exporters as prices for imported scrap have been increasing in India, according to the metals pricing service.
