Research Report

Key Takeaway:

The current supply dynamics have pushed us into the High Imports, High Domestic Production quadrant, implying that from supply alone, there will likely be additional downward pressure, and a more bearish market as we head into the summer months.

Current Situation:

Sine late January, domestic production has been ramping up and recently surged to its highest point since August 2023, now aligning more with it’s historical averages. Meanwhile, preliminary figures for March and April import arrivals are pointing to levels not seen in nearly two years, as delays from the supply chain disruptions continue to roll over. This dynamic has shifted the market into the highlighted quadrant below, where imports are elevated, and domestic production is out of its previously subdued levels.

Looking Forward:

It is important to also consider that the last leg of the surge in domestic production may have been an attempt to get ahead of the upcoming gap from outages, and thus, be short-lived. However, our view is that the risk remains to the upside for overall supply.

Key Assumptions:

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

**Maintenance outages are expected to be in line with last springs level (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.