February 20, 2024
February Market Minute 2024
Texas Manufacturing Faces Contraction
The manufacturing economy in Texas faced contraction in January, according to the Dallas Fed's Texas Manufacturing Outlook Survey. Key indicators:
The production index dropped significantly by 17 points to -15.4, marking its lowest level since mid-2020.
New orders, growth rate of orders, capacity utilization, and shipments, also pointed toward contraction.
The general business activity index fell to -27.4
The company outlook index dropped to -18.2
Labor market measures indicated employment declines and shorter workweeks, with the employment index at its lowest since mid-2020
While wage and input costs continued to rise, selling prices remained flat. Future expectations for manufacturing activity improved in January, with the future production index increasing. Still, the future general business activity index remained negative at -10.4, showing a cautious outlook for the coming months.
Shifting Metals Market Impacts Texas Buyers
Metal plate prices, though historically high compared to sheet prices, are gradually returning to normalcy. The current spread stands at plate prices being $298/ton above sheet prices, a notable drop from the peak of $700/ton early last year.
On the other hand, sheet prices continue their downward trajectory, currently at approximately $900, marking a $170 decrease from the previous year's figures.
Hot-rolled prices are experiencing the most significant declines. In February, busheling scrap prices (a key ingredient in steel production) took a hit, declining by $30/ton.
Meanwhile, mill capacity utilization rates persist in the mid-70% range. Stay tuned for further updates on the dynamic metal market landscape affecting buyers in Texas.
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Product | Lead Time from Mills |
|---|---|
HR | ~4 weeks |
CR | ~8 weeks |
HDG | ~4 weeks |
Plate | ~8 weeks |
On the aluminum front, the Department of Commerce has postponed by 50 days the deadline for a preliminary antidumping duty decision on aluminum extrusions from 14 countries.
A preliminary decision on antidumping duties is now expected by May 1, 2024, while the preliminary countervailing duties deadline remains for March 24.
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A Strengthening US Dollar?
Metal buyers face the impact of a robust U.S. economy and stable labor market. With indications that the Federal Reserve is unlikely to cut rates soon, the U.S. Dollar has strengthened, driven by a "higher for longer" rate policy.
This trend has spurred demand for secure, high-yielding assets, creating a potential challenge for regional industrial metal prices. Stay tuned for updates on how this dynamic could affect your metal purchasing decisions.