| USA Components of IDX | ||||||||||||
| Indicator | ||||||||||||
| Jan | July | Mar | Jan | Apr | Oct | Mar | May | July | %Change | |||
| 2008 | 2008 | 2009 | 2020 | 2020 | 2020 | 2021 | 2021 | 2021 | July-21/Jan-08 | |||
| CES : Short-Lead-Time Capital Goods | ||||||||||||
| Oil & Gas Well Drilling | 3.8 | 4.0 | 2.5 | 1.6 | 1.2 | 0.7 | 1.0 | 1.1 | 1.2 | -69.6% | ||
| Railroad Rail & Miscellaneous | 3.7 | 3.5 | 2.6 | 4.4 | 4.3 | 5.3 | 5.6 | 5.5 | 5.5 | 47.1% | ||
| Business Equipment | 6.7 | 6.6 | 5.7 | 8.4 | 5.8 | 8.0 | 8.3 | 8.3 | 8.5 | 27.0% | ||
| Trucks (Not Seasonally Adjusted) | 4.4 | 3.5 | 2.9 | 6.0 | 0.5 | 6.5 | 7.1 | 5.2 | 5.2 | 19.2% | ||
| Fabricated Metals | 13.2 | 12.8 | 10.6 | 15.3 | 13.2 | 14.3 | 14.8 | 14.7 | 14.6 | 10.8% | ||
| Non-Electrical Machinery | 12.4 | 10.9 | 7.3 | 16.8 | 14.8 | 17.2 | 19.1 | 19.2 | 19.3 | 55.3% | ||
| Total | 44.2 | 41.4 | 31.6 | 52.5 | 39.7 | 52.0 | 56.0 | 53.9 | 54.3 | 22.7% | ||
| CEL : Long-Lead-Time Capital Goods | ||||||||||||
| Ships & Boats Construction | 1.1 | 1.0 | 0.8 | 1.0 | 0.8 | 1.0 | 1.0 | 1.0 | 0.9 | -19.3% | ||
| Electrical Equipment | 6.1 | 6.1 | 5.3 | 6.8 | 6.3 | 6.3 | 6.7 | 6.8 | 6.8 | 11.3% | ||
| Non-Residential Construction (NSA) | 26.1 | 27.1 | 23.6 | 20.3 | 21.5 | 22.1 | 18.9 | 19.4 | 20.9 | -20.2% | ||
| Total | 33.4 | 34.2 | 29.7 | 28.1 | 28.6 | 29.4 | 26.6 | 27.1 | 28.6 | -14.4% | ||
| CDIDX : Consumer Goods | ||||||||||||
| Residential Housing (Not Seas. Adj.) | 1.6 | 1.7 | 1.1 | 1.5 | 1.8 | 2.2 | 2.1 | 2.2 | 2.5 | 59.5% | ||
| Household Appliance | 3.8 | 3.7 | 3.2 | 3.9 | 3.4 | 4.6 | 4.5 | 4.4 | 4.4 | 15.9% | ||
| Automobiles (Not Seasonally Adj.) | 13.6 | 9.2 | 7.5 | 14.4 | 0.1 | 15.4 | 15.0 | 12.1 | 10.8 | -20.4% | ||
| Total | 18.9 | 14.7 | 11.8 | 19.8 | 5.3 | 22.2 | 21.7 | 18.7 | 17.7 | -6.4% | ||
| MIDX : Miscellaneous Industries | ||||||||||||
| Defense & Space Equipment | 1.2 | 1.2 | 1.2 | 1.4 | 1.3 | 1.5 | 1.6 | 1.6 | 1.6 | 35.9% | ||
| Farm Equipment | 2.1 | 2.2 | 1.9 | 2.1 | 1.0 | 1.9 | 2.1 | 2.1 | 2.1 | 2.1% | ||
| Metal Cans | 2.8 | 3.6 | 1.8 | 1.4 | 1.3 | 1.5 | 1.6 | 1.6 | 1.5 | -47.6% | ||
| Total | 6.1 | 6.9 | 4.9 | 4.9 | 3.6 | 4.9 | 5.2 | 5.3 | 5.2 | -14.1% | ||
| Total | 102.59 | 97.24 | 77.98 | ##### | 77.17 | 108.49 | 109.47 | 104.98 | 105.75 | 3.1% | ||
| Monthly Apparent Steel Consumption(ASC) | 10.9 | 10.8 | 4.7 | 11.0 | 8.0 | 7.6 | 9.6 | 9.8 | - | -10.1% | ||
| ASC/IDX Ratio | 0.106 | 0.111 | 0.060 | 0.105 | 0.104 | 0.070 | 0.088 | 0.093 | - | -12.1% | ||
| World Export HRB Price | $653 | $1,113 | $406 | $505 | $390 | $524 | $838 | $1,100 | $980 | 50.1% | ||
| USA HRB Price | $659 | $1,203 | $515 | $659 | $543 | $727 | $1,417 | $1,680 | $2,060 | 212.6% | ||
| USA Real GDP (billions annualized) | 15.702 | 15.709 | 15.187 | 18.951 | 17.258 | 18.560 | 19.055 | 19.358 | 19.358 | |||
| Q1-08 | Q3-08 | Q1-09 | Q1-20 | Q2-20 | Q4-20 | Q1-21 | Q2-21 | Q2-21 | ||||
| Source: WSD Estimates, WSA, AISI, Steelbenchmarker | ||||||||||||
For selected months in 2008-09 and 2020-21, we have compared the results of our IDX (weighted index of activity for 15 United States steel-consuming industries or sectors). The figures, of course, come from different times in the steel cycle. The first half of 2008 was an “end-of-cycle” period, with major economic problems already on the horizon. The current year, in contrast, is probably an “early-in-cycle” time in which the global economy is likely to be booming well in 2022.
Each of the periods included: a) a price run-up of hot-rolled band prices on the world market, and in selected home markets, to “extreme” steel shortage levels; and b) an episode of sharply declining activity – in 2008-09 due to the global financial crisis sparked in part by the Lehman Bros. bankruptcy on September 15, 2008; and, in 2020-2021 a sizable fall of economic activity in the second quarter of 2020 due to the impact of the devastating Covid-19 pandemic.
Regarding the specific monthly figures for July 2021 and January 2008:
- Over the 13-year time frame, IDX was up 3.1%. This gain was composed of a 22.7% rise for the Short-Lead-Time Capital Goods (CES) component of the index; a 14.4% decline in the Long-Lead-Times Capital Goods (CEL) component (including a 20.2% fall in non-residential construction activity), and a 6.4% drop in the Consumer Goods (CDIDX) component. (Note: Non-residential construction activity has a 23% weighting in the total index.)
- Monthly apparent steel demand (ASC) was 9.8 million tons in May 2021 versus 10.9 million tons in January 2008 – for a drop of 10.1%. This decline occurred despite the moderate 3.1% rise in the IDX and a 23.3% rise in real USA GDP. Hence, ASC/IDX, that is a measure of steel intensity, was only 0.093 million tons per point of IDX in May 2021 versus 0.106 million tonnes per point of IDX in January 2008.
There was a fairly similar hot-rolled band export price run-up in the first halves of 2008 and 2021.
- In January 2008, the HRB export price, FOB the port of export, was $653 per tonne, before rising to $1,113 per tonne in July 2008; and then, falling back to $406 per tonne in March 2009. The figures for the USA hot-rolled band price, ex-works, were $659, $1,283 and $515 per tonne, respectively.
- In October 2020, the HRB export price, FOB the port of export, was $524 per tonne, before rising to $1,100 in May 2021 (and declining in August 2021 to about $970 per tonne). For the USA, the prices were $727 per tonne in October 2020, $1,680 per tonne in May 2021, and still rising at $2,100 per tonne in August 2021, respectively.
Regarding the sharp temporary decline in IDX in these periods:
- In March 2009, IDX at 78.0 was down 18.8% from 97.2 in July 2008.
- In April 2020, IDX at 77.2 was down 27.7% from 105.3 in January 2020. This decline was more severe and occurred over a shorter period of time.
Looking ahead to the remainder of 2021 and 2022, if interest and inflation rates stay low and the new “Delta strain” Covid virus impact is largely contained, WSD thinks that global capital spending and construction spending may rise substantially – along with recovering automotive production. Hence, 2022 could be a rare year in which ASC/IDX has some increase.
This report includes forward-looking statements that are based on current expectations about future events and are subject to uncertainties and factors relating to operations and the business environment, all of which are difficult to predict. Although we believe that the expectations reflected in our forward-looking statements are reasonable, they can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties, including among other things, changes in prices, shifts in demand, variations in supply, movements in international currency, developments in technology, actions by governments and/or other factors.
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