Prices
CRU: North American zinc supply at increased risk of disruption
Written by Helen O’Cleary
September 27, 2024
Refined output will decline y/y in H2
North America’s refined zinc output was flat y/y in H1 2024, but we estimate it will decline 3.0% y/y in H2. This is due mainly to a sizeable disruption allowance to cover the planned maintenance closure at Glencore’s Valleyfield smelter (305,000 mt/y) in Quebec. Assuming the cell house replacement and post-maintenance ramp-up go according to plan, we expect North American refined zinc output to fall 1.5% y/y in 2024.
We understand that contingency planning means output losses will be covered, and no impact on the market balance as a result of the closure is envisaged. However, given the complexities of ramping up a smelting operation after a maintenance closure, there are potential downside risks to supply. With no news yet on the reopening of Nyrstar’s Middle Tennessee mines in the US, which were put on care and maintenance in November 2023, there is also the potential for lower output from the Clarksville, Tenn., smelter (125,000 mt/y).
North American steel mill demand has waned
The first US interest rate cut in four years came earlier this month, with the Fed announcing a 50-bps cut. However, no immediate relief is expected for US steel mills, which continue to struggle with weak end-use demand. Although automotive demand is stable, orders from some other sectors have weakened further. The pressure from low-priced imports of coated sheet prompted four US steel mills to launch a petition for import duties on coated sheet from 10 countries. The petition covers around 77% of total US imports of these products in 2023, so it could have a significant impact on the market if duties are imposed on all the countries.
Demand is also lackluster in other sectors, with diecast alloyers reporting weakness and oxide demand still slow. General galvanizing demand has held up a little better, although there has also been some competition from imports.
US housing starts and permits ticked up m/m in August, with starts up 3.9% y/y but permits down by 6.5%. Meanwhile, the forward-looking AIA/Deltek Architect Billings Index signaled that business conditions remained soft for non-residential projects and inquiries in August.
US spot premia unchanged
The US spot market has remained stable over the past month, with little on either the demand or supply side to move the needle on premia. We are rolling over our assessment at 15.5 ¢/lb.
Learn more about CRU’s services at www.crugroup.com.
Helen O’Cleary
Read more from Helen O’ClearyLatest in Prices
SMU Survey: Mills less negotiable on spot prices
Most steel buyers responding to our market survey this week reported that domestic mills are considerably less willing to talk price on sheet and plate products than they were in recent weeks.
Price gap between US HRC, most imports narrows slightly
In dollar-per-ton terms, US product is on average $141/st less than landed import prices (inclusive of the 50% tariff). That’s down from $148/st last week.
SMU price ranges: Sheet ticks higher, plate stable
Sheet steel indices increased across the board this week, while plate prices held steady. All five of SMU’s price indices are higher than they were two weeks ago, and all but one are above levels recorded four weeks ago.
Nucor lifts HR spot price by $10/ton
Nucor has raised its weekly spot list price on hot-rolled coil by $10 per short ton (st) after keeping it unchanged since Aug. 25.
Atlas Tube up $50/ton following NLMK USA sheet price hike
Atlas Tube, in a leading move, said it aims to increase prices for mechanical tubing, hollow structural sections (HSS), and piling products by at least $50 per short ton (st).