Week in review: An eerie calm, trade protectionism and more

RMU’s Stephen Miller pointed out that pig iron markets have held their ground. The last rounds of buying for the U.S. resulted in a modest drop for Brazilian pig iron. The current pricing is $465/mt CFR for Hi Phos (0.15% max) and $475/mt for Lo Phos (0.10 max). These prices were only down $5-10/mt from previous bookings. The U.S. buyers do not want to pay these prices for the next round of buying since the U.S. domestic scrap market continues to be weak. But the Brazilian producers have the rainy season with which to contend. Also, there may be competition from new buyers abroad.

Our parent company, CRU Group, wrote that continued highly competitive steel exports from China, amid weakening global demand, have triggered a wave of trade protectionism across major markets. Prices remain on a decline, deteriorating market confidence for steel and metallics.

In a highly anticipated move, the Federal Reserve on Wednesday cut its benchmark interest rate by a half-point, an unusually large drop after two years of higher rates aimed at combating inflation. The decision is meant to bolster job growth, which, while slowing, is still strong. Net growth in job creation correlates to increased steel consumption, and of course, more scrap demand as recycled metals serve as the primary feedstock for steel production. Construction activity, a key sector to watch for steel demand, showed overall job gains were partly driven by construction hiring. The Fed also found a healthy and stable manufacturing sector. U.S. industrial production, capacity utilization, new factory orders, and inventories remained steady through July and August. A strong manufacturing base is good news for steel.

This week, RMU is attending the Recycled Materials Association‘s 2024 Roundtable in Chicago. There’s sure to be discussion of the supply for ferrous recycled metals, the state of dealmaking, upstream smelting and refining capacity, and much more.

Economic calendar highlights this week: