Supply Tracker

Key Takeaway: The upcoming supply dynamics have pushed us into the Low Imports, High Domestic Production quadrant, implying that from supply alone, there will likely be additional downward pressure in the near term.

Current Situation: From May to June, domestic production ramped up, with the three-month moving average of AISI domestic production data reaching its highest level since September 2023. In July, these figures eased but remained elevated compared to the levels observed from October 2023 to February 2024. Recently, domestic production has increased again, hitting its highest point since early April.

Preliminary figures for June and July import arrivals show a decline from the peak in May, which was the highest level in nearly two years. However, July’s import estimate indicates an uptick as a consequence of early Q2 carry trade opportunities. This dynamic has placed the market into a surplus, where both imports and domestic production are somewhat elevated.

 

Looking Forward: Our import forecast model indicates continued easing of imports, providing upward pressure on prices as we enter September and October, pushing us into the highlighted quadrant below. However, our view is that the risk is to the downside for import arrivals and production.

*Note: The impact on the market is subject to the magnitude in which these scenarios would occur, as well as the fact that domestic production is the majority of US steel supply.