Research Report – Supply Tracker

Key Takeaway:

The current supply situation has tracked us into the High Imports, Low Domestic Production (highlighted) quadrant, suggesting from supply alone a neutral to bullish market.

Current Situation:

Domestic production, after four weeks of consecutive growth from previously subdued levels, has since slightly pulled back and overall has not reached or surpassed the historical average since August 2023. Meanwhile, imports in January reached their highest point since August 2022. Preliminary data for February suggests a slight reduction, likely reflecting the supply chain disruptions and shipping delays. This dynamic could be causing a constraint on buyers’ willingness to rush towards domestic supply just as the influx of imports enter the market – positioning us in the highlighted quadrant.

However, despite last week’s tick lower in domestic production, the trend higher over the past month appears intact and will require further softening before we are confident that it has ended.

Key Assumptions:

*Imports are delayed, with expectations that they will arrive 1-2 months late, pushing our expected peak impact on supply to late-March well into the summer.

**Maintenance outages are expected to be more significant than recent years, this spring (currently estimated around 330k).

***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.