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March 2019 Insight Guide: Market Indicators

The U.S. economy matched its best performance since the Great Recession of 2007-2009 last year. The nation’s GDP increased at a rate of 2.6% in the October-December period. That followed an average of 3.7% the prior two quarters. For the year, the economy grew 2.9%. This is the highest performance since 2015.

U.S. job growth almost stalled in February, with the economy creating only 20,000 jobs. The unemployment rate fell back to below 4% and annual wage growth was at the best since 2009.

The January Architecture Billings Index climbed to 55.3, up 4.9 points from the previous month. This is also the highest score in more than two years.

The February Purchasing Managers Index registered at 54.2%, a decrease of 2.4 points from the January reading. The New Orders Index registered 55.5%, down 2.7 points from the previous month. The Production Index registered at 54.8%, a 5.7-point decrease over January.

Zinc treatment charges and spot premiums are expected to increase for 2019. The International Zinc Association conference took place earlier this week in Scottsdale, Ariz. The topic of prices in the zinc market was main takeaway from those in attendance at the conference.

U.S. Agriculture Secretary Sonny Perdue said he is working to persuade President Donald Trump that the U.S. steel industry can be protected by tariff rate quotas, rather than plain tariffs, on imports from Canada and Mexico.

The three countries signed the United States-Mexico-Canada Agreement (USMCA) on Nov. 30 to replace the North American Free Trade Agreement (NAFTA). Perdue has been advocating for the removal of tariffs since the signing of the USMCA.

For more information, view the March 2019 Insight Guide below, or contact your local sales representative.

Metalwest Market Insight - March 2019
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February 2019 Market Insight – Market Indicators

Economic News

President Trump delivered his State of the Union address Tuesday night. And while reviews were mixed, the facts on the U.S. economy speak for themselves. According to CBS News, some key measures of the economy’s performance for 2018, include:

  • The economy grew at its fastest rate in 13 years
  • Job creation has been strong by nearly any metric
  • Wage growth has picked up
  • U.S. trade deficit with China surges
  • America’s total debt keeps climbing

Employers added 304,000 jobs in January, marking the 100th consecutive month of employment gains. The unemployment rate rose to 4% from 3.9%, largely because of the government shutdown. Average hourly earnings rose 3 cents to $27.58.

The Architecture Billings Index score for December was 50.4 compared to 54.7 in November. While the score is down month-over-month, this still indicates an increase in billings as any score above 50 indicates an increase.

The January Purchasing Managers Index registered at 56.6%, an increase of 2.3 percentage points from the previous month. The New Orders Index registered at 58.2%, an increase of 6.96 percentage points from December. The Production Index registered 60.5%, 6.4 percentage points above the previous months’ reading.

Metals Market News

Hot-rolled prices continue to edge higher in the U.S. following mill price increases, while average lead times are three to five weeks.

The Midwest aluminum premium range narrowed with more buyers pursuing spot material. U.S. market participants claimed that spot activity accelerated slightly, with buyers appearing to be short on supply needs.

Prices for U.S. stainless steel sheet and plate declined in January, extending a downward trend mainly due to lower alloy surcharges. Lead times for stainless are around four weeks, which is considered short as average lead times are eight to 10 weeks.

Figureheads of the U.S. steel industry are providing plenty of positive feedback about President Trump’s ‘Buy American, Hire American’ executive order, stating that it will support American businesses and create good paying jobs for American workers.

For more information, download the February 2019 Metalwest Market Insight below or contact your local sales representative.

Metalwest Market Insight - February 2019
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January 2019 Market Insight – Market Indicators

Economic News

President Trump threatened to keep the federal government partly closed for “months or even years” if he does not get the funding for his wall at the U.S.-Mexico border, warning he may declare a national emergency to build it without congressional approval.

The partial shutdown also halted reviews of Section 232 exclusion requests, potentially prolonging a process that has already drawn much criticism from steel market participants.

The U.S. economy added 312,000 jobs in December, easing fears of recession amid the stock market turmoil. The unemployment rate rose from a 50-year low of 3.7% to 3.9%.

U.S. employers added the most workers in 10 months as wage gains and labor-force participation both increased. This reflects a robust job market that may still face mounting risks in 2019.

President Trump’s trade war is negatively effecting Americans more than Chinese consumers. Signs of threatened growth have arose across the global economy after tariffs were placed on hundreds of billions of dollars’ worth of products between the U.S. and China.

Economic Indicators

The November Architecture Billings Index registered 54.7, up compared to the October reading of 50.4. This is the strongest billings growth since January 2018. A score above 50 indicates an increase in billings.

The December Purchasing Managers Index registered 54.1%, down 5.2 percentage points from the November reading of 59.3%. The New Orders Index registered 51.1%, a decrease of 11 percentage points from the previous month. The Production Index registered at 54.3%, 6.3 percentage point decrease compared to November.

For more information, download the January 2019 Metalwest Market Insight below or contact your local sales representative.

Metalwest Market Insight - January 2019
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November 2018 Market Insight

Economic Indicators

The U.S. economy added 250,000 jobs in October while the unemployment rate was unchanged at a near 50-year low of 3.7%. Wages and salaries jumped by 3.1%, the highest level in 10 years.

September’s Architecture Billings Index score was 51.1. The pace of growth slowed a bit from August. However, any score above 50 indicates an increase in billings.

The October Purchasing Managers Index registered 57.7%, a decrease of 2.1 percentage points from the September reading of 59.8%. The New Orders Index registered 57.4%, a decrease of 4.4 percentage points from the previous month. The Production Index registered 59.9%, a 4.0 percentage point decrease compared to the September reading.

Imports

The American Iron and Steel Institute reported that the U.S. imported 2.2 million tons of steel, including 1.9 million tons of finished steel, in September. Overall, steel imports for the month were down 25.9% and finished steel imports decreased 8.6% from August.

Trade

The Trump administration remains committed to continued talks with the Canadian and Mexican governments regarding its Section 232 tariffs on steel and aluminum. U.S. and European Union officials met in Washington, D.C. last week to discuss regulatory issues that eventually could be part of a transatlantic trade deal. Talks with China, however, are still off the table.

The Trump administration officially notified Congress that it will start trade negotiations with Japan, the European Union and the U.K. as soon as three months from October 16. The notification is a procedural step under U.S. trade law that is required 90 days before the U.S. enters into negotiations with other countries. The White House cannot engage in official talks before the three-month window is over and needs to consult with Congress during that period to ensure it’s fulfilling the objectives laid out in the law.

Canada is applying quotas and a 25% tariff on steel imports from China and other countries to avoid becoming a dumping ground for steel in the face of metal levies imposed by U.S. President Donald Trump. Prime Minister Justin Trudeau’s government faces continuing trade tensions with the U.S., which hit Canada, the European Union and other nations with tariffs of 25% on steel and 10% on aluminum this summer.

For more information, contact your local sales representative or view the November 2018 Insight Guide below.

OFR Insight November 2018
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October 2018 Market Insight

Economic Indicators

The U.S. economy added 134,000 jobs in September, extending the record run of hiring to eight full years. The unemployment rate fell to 3.7%, the lowest since 1969.

The Federal Reserve raised interest rates and cemented expectations for another hike this year as they reaffirmed that a strong U.S. economy will probably warrant further gradual increases well into 2019. The quarter-point hike boosted the benchmark federal funds rate to a target range of 2%-2.25%.

The Architectural Billings Index score for August was 54.2 compared to the 50.7 reading in July. Any score above 50 represents an increase in billings.

The September Purchasing Managers Index registered at 59.8%, a decrease of 1.5 percentage points from the August reading of 61.3%. The New Orders Index registered 61.8%, a decrease of 3.3 percentage points from the previous month. The Production Index registered 63.9%, a 0.6 percentage point increase compared to the August reading.

Gas prices are creeping up nationally, now pennies a gallon away from their highest level since 2014. Average prices topped $2.90 a gallon for unleaded October 3 for the first time since June, having risen about 6 cents a gallon in the past month. If they rise by about another eight cents, they will be the highest in four years.

Steel Industry News

U.S. service center steel shipments increased 6.7% year-over-year. Aluminum shipments increased 4.1% during the month, compared with August 2017. Total shipments of sheet and plate products were up 4% year-over-year and 4.9% over July.

Aluminum touched its highest price in more than three months on October 4 supported by worries over potential shortages after the world’s biggest producer of alumina announced a shutdown. The gains could be overdone because Norsk Hydro’s closure of the Alunorte alumina refinery in Brazil may be temporary. Gains were stretching into a fifth session after a 4.2% jump in October for its largest one-day gain since April.

Trade

U.S. Trade Representative Robert Lighthizer, European Union Commissioner for Trade Cecilia Malmström, and Japanese Minister of Economy, Trade, and Industry Hiroshige Seko met to discuss trade policy in late September. After the meeting, the three leaders released a joint statement that outlined efforts to address non-market oriented policies in third world countries, subsidies and state-owned entities, technology transfer, digital trade, and World Trade Organization (WTO) reform. To read more, this article can be found on page 6 of the below October 2018 OFR Insight Guide.

To learn more, view the October 2018 Insight Guide below or contact your local sales representative.

OFR Insight October 2018
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September 2018 Insight: Market Indicators

The U.S. economy added 201,000 jobs in August. This is slightly above analysts’ expectations. Meanwhile, the unemployment rate remained at 3.9%.

Real U.S. gross domestic product grew at an annualized rate of 4.2% last quarter, the Bureau of Economic Analysis reported August 29. That is up from 4.1% in its first estimate. Economists expect growth to slow in the coming months, to round out the year at about 3%.

The Architectural Billings Index for July registered at 50.7. While any score above 50 indicates an increase in billings, July’s growth was nearly flat.

The August Purchasing Managers Index registered at 61.3%, an increase of 3.2 percentage points from the July reading of 58.1%. The New Orders Index registered 65.1%, an increase of 4.9 percentage points from the July reading. The Production Index registered 63.3%, a 4.8-percentage point increase compared to the previous month.

President Donald Trump’s proposed tariffs on $200 billion of Chinese goods could go into effect as soon as a public comment period on the taxes concludes this month. It’s unclear whether the new tariffs will be set at 10% or 25%. It could be the most painful round of tariffs the U.S. has imposed on Chinese products this year.

The U.S. and Mexico reached an agreement on overhauling NAFTA in late August, turning up the pressure on Canada to agree to new terms. September 5 was the first day that negotiations between the U.S. and Canada resumed after four intensive days of talks ended without a deal on August 31.

For more information, contact your local sales representative or view the September 2018 Insight Guide below.

ONI Insight September 2018
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August 2018 Insight: Market Indicators

The U.S. economy added 157,000 jobs in July while the unemployment rate fell to 3.9%, close to its 18-year low. Meanwhile, consumer confidence rose above expectations in July. The Confidence Board’s index increased to 127.4 in July.

The Architectural Billings Index score for June was 51.3 compared to 52.8 in May. Any score above 50 indicates billings growth.

The July Purchasing Managers Index registered at 58.1%, a decrease of 2.1 percentage points from the June reading of 60.2%. The New Orders Index registered at 60.2%, a decrease of 3.3 percentage points from the June reading of 63.5%. The Production Index registered at 58.5%, a 3.8 percentage point decrease compared to the previous month.

President Donald Trump has indicated that his administration may pursue a bilateral deal with Mexico first before negotiating separately with Canada. Such a move would upend the decades-old trilateral NAFTA deal and likely stretch out negotiations far longer.

China said on August 1 that “blackmail” wouldn’t work and that it would hit back if the U.S. takes further steps hindering trade, as the Trump administration considers slapping a 25% tariff on $200 billion worth of Chinese goods. The proposal would increase the potential tariff rate from the 10% the administration had initially put forward on July 10. The tariffs target thousands of Chinese imports, including food products, chemicals, steel and aluminum and consumer goods.

For more information, view the August 2018 Insight Guide below or contact your local sales representative.

ONI Insight August 2018
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July 2018 Insight: Market Indicators

The U.S. economy added 213,000 jobs in June despite the mounting trade tensions with China. The unemployment rate rose to 4.0%, from 3.8% the previous month.

Consumer sentiment in the U.S. rose slightly in June. The index increased to 98.2, below an expected 99.2 by economists surveyed by Thomson Reuters. The primary concerns for consumers were a down pace in economic growth and rising inflation.

The Architecture Billings Index for May was 52.8, which shows that demand for services from architectural firms continues to be healthy as any score above 50 indicates an increase in billings.

The June Purchasing Managers Index registered 60.2%, an increase of 1.5 percentage points from the May reading of 58.7%. The New Orders Index registered at 63.5%, a decrease of 0.2 percentage point from May’s reading. The Production Index registered at 62.3%, a 0.8 percentage point increase compared to May.

President Donald Trump fired the biggest shot yet in the global trade war by imposing tariffs on $34 billion of Chinese imports and China retaliated. Duties on Chinese goods started on July 6 in Washington, just after midday in China. Another $16 billion of goods could follow in two weeks, Trump earlier told reporters, before suggesting the final total could eventually reach $550 billion, a figure that exceeds all of U.S. goods imports from China in 2017.

U.S. customs officials will begin collecting an additional 25% tariff on a range of imports from China. China has said it would respond by imposing higher levies on an equivalent amount of goods from America, which may in turn prompt Trump to raise trade barriers even higher.

For more information, contact your local sales representative or view the July 2018 Insight Guide below.

ONI Insight July 2018
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June 2018 Insight: Market Indicators

The U.S. unemployment rate fell to 3.8% as employers added 223,000 jobs in May – this is after two months of lackluster gains.

The consumer confidence index rose to 128 from a revised 125.6 in April, close to an 18-year high. The present situation index climbed to a 17-year high of 161.7 from 157.5 in the prior month. The high level of confidence reflects a sturdy economic expansion in the U.S.

April’s Architectural Billings Index registered at 52.0, which indicates an increase in firm billings from the previous month.

The May Purchasing Managers Index registered at 58.7%, an increase of 1.4 percentage points from the April reading of 57.3%. The New Orders Index registered at 63.7%, up 2.5 percentage points from April. The Production Index registered 61.5%, a 4.3 percentage point increase compared to April.

The Trump administration announced on May 31 that it would impose tariffs on metals imported from its closest allies, a measure that could provoke retaliation against American businesses. A 25% tariff on steel and a 10% tariff on aluminum from the European Union, Canada, and Mexico, which supply nearly half of America’s imported metal, went into effect on June 1.

The Trump administration had decided to move ahead with tough trade measures on China. On May 29, the White House said that it would proceed with its plan to levy 25% tariffs on $50 billion of imported Chinese goods, despite recent remarks by administration officials that the tariffs would be suspended while the countries continued their negotiations.

For more information, contact your local sales representative or view the June 2018 Insight Guide below.

ONI Insight June 2018