There are those that believe we may be heading into slower times within the construction industry. The reasoning is based on current third quarter indicators. The Non-Residential construction index dropped four points in the third quarter to 57.3, this score is well within the growth range which is anything above 50. Some economists who have kept a close eye on the past four quarters are seeing greater variability than in the last few years, which could ultimately lead us into slower times.
In a recent poll, responders indicated downward movement in the following segments: Overall Economy, Construction, Backlog, and Productivity. The majority of the responders don’t expect another recession for the next couple of years, specifically not before late 2018. Most seem to think the next recession will not be the Great Recession revisited, but rather the recessions we have experienced over the years, which are not uncommon.
In the last 90 days, we have seen scrap prices drop approximately 12.5%. This proved to not be in alignment with some earlier industry predictions back in June, that scrap may remain flat for the near future. Transactions within the past week are trending downward on export shipments; this does not look favorable for the domestic market as these export prices will ultimately affect the domestic prices as well. There are those that predict what may or may not take place with the scrap industry on a short and long term. Getting those predictions correct is sometimes very challenging. Just when you think you have a good handle on the situation something unexpected happens, throwing your prediction off.
U.S. Raw Steel Production
In the week ending September 24, 2016 mills recorded their worst steel output in eight months. This seems to fall in line with some of the scenarios previously mentioned, possible slowing off the economy. Mills produced 1,605,000 tons last week, down 1.7% from the previous week of 1,632,000 tons. Year to date, mills have produced 1.4% less steel than in the same period last year.
As always we will attempt to keep our customers up to date on the latest developments within the steel industry. If we can assist in explaining further on the current steel industry, contact our HarMac office at (207)-935-3531.