In its January Newsletter the American Institute for International Steel (AIIS) reports that the steel market in the USA for both domestic and import suppliers is improving now that the uncertainty that burdened corporate decision makers in late 2012 has ended.
While the hangover from that uncertainty may have a negative impact early in the year, low inventory levels and optimism stemming from the fact that the fiscal cliff has been avoided should result in market prices stabilising in the near term and improving later in Q1 2013.
For the steel intensive sectors, construction continued to advance from the lows of the recession. The government reported that in November, total construction spending for the year-to-date period in 2012 compared to 2011 was up 9.2%, but spending in November 2012 compared to October showed a small decline of 0.3%. Breaking down the two major sectors of construction – residential and non-residential – show that the sectors’ results were consistent with the total this month; with small month-to-month declines while the year-to-date increases remained healthy. AIIS are optimistic that the construction sector will respond positively to the end of the uncertainty related to the fiscal cliff and that construction spending will continue to advance in 2013.
For steel, especially long products, this would be a welcome relief from the prolonged depressed conditions endured since the beginning of the recession in late 2008.
For the auto sector 2012 was a strong year. Analysts expect that sales will top 14.5 million cars and light trucks. US built vehicles all experienced strong growth for the year, along with imports too. Due to slow sales at the bottom of the recession, the age of the fleet increased to unsustainable levels and so there is some catching up in demand. Analysts believe that the 2013 market will experience another solid year with growth to 15.9 million units. At the top of the market prior to the recession, sales topped 17 million units.
The US unemployment rate held at 7.8% in December after declining from 7.9% in October to 7.8% in November. The manufacturing sector added 25000 jobs in December, a good sign.