Q2 Steel Update/Midqtr Preview: Nearer a Steel Price Summit

研报英文原文证据摘录

Q2 Steel Update/Midqtr Preview: Nearer a Steel Price Summit

~10Mst/yr rebar

market. While some of that could include other kinds of bar, we think most will focus on rebar. Hybar

was already ramping its 700Kst/yr minimill in Arkansas and seeking financing for a second mill, while

construction is well underway at Pacific Steel’s 380Kst/yr micromill. Imports historically tracked at

1-1.5Mst/yr, so even assuming imports fall to zero, new supply will likely more than fill in the gap.

On the demand side, we see persistent medium-term headwinds from: 1) elevated interest rates

weighing on residential demand (~20% of rebar use) and 2) surface transportation uncertainty (rebar is

~35-40% infrastructure use, with highways and streets the most rebar-intensive). High fuel costs have

increased the popularity of gas tax holidays in certain states and potential at the federal government

level, which could hurt road spending. The initial U.S. surface transportation draft disappointed, with

year-one road spending lagging inflation. U.S. highway awards by dollar value rose 2% y/y in April,

per ARTBA, while monthly data remained volatile. Trailing 12-month awards fell 3% y/y, suggesting

nominal activity continued to lag building materials cost inflation. We also track awards by project

count: April rose 9% y/y, but TTM was flat, pointing to stagnant underlying demand. Longer term,

Exxon’s Proxima and other substitutes could pose incremental risk to rebar.

Where could we be wrong? Residential demand could inflect positively, IIJA's replacement could end

up with a material step-up in highway spending, planned domestic capacity could be constrained or

face delays, and/or further anti-dumping cases could curb the recent spike in imports. Data centers