The US economy continues to recover from the spring and summer, which has been unsettling due to the coronavirus pandemic. Residential home sales are hot and home construction is doing well. Gasoline prices remain low. Steel mill output crossed the 70% milestone and continues to gain. The auto industry in the US continues to play both ends of the spectrum as some companies push towards electric drivetrains and others continue to refine gas powered offerings.

-Bill Feier, Manager of World Sourcing

+ Business inventories rose 0.7% in September after gaining 0.3% in August. Wholesalers and businesses stocked up for the holiday season, which could help to support economic growth in the fourth quarter.

+ Industrial Production jumped 1.1% in October, driven by a 3.9% rise in Utilities output. Total capacity utilization in the entire USA was 72.8%.

+ U.S. homebuilding increased more than expected in October as the housing market continues to be driven by record low mortgage rates. The report from the Commerce Department last Wednesday also showed building permits unchanged at a 13-1/2-year high. Housing starts rose 4.9% to a seasonally adjusted annual rate of 1.530 million units last month. That lifted homebuilding closer to its pace of 1.567 million units in February. Economists polled by Reuters had forecast starts would rise to a rate of 1.460 million units in October. Permits for future homebuilding were unchanged at a rate of 1.545 million units in October, the highest since March 2007.

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+ Existing Home Sales jumped 4.3% in October, the 5th consecutive increase. The average price of a used home is up to $313,000 and inventory is down to a record low of 2.5 months’ worth. More than 7 in 10 homes sold in October 2020 – 72% – were on the market for less than a month.

+ Gasoline prices ticked up slightly due to increased demand, but remain cheaper than the last few years. Oil refineries operated at 77.4% of capacity. West Texas crude oil is trading at $40 per barrel.

– #1 heavy melt scrap is at $249 per ton and #1 busheling scrap is at $300 per ton.

+ Raw steel production in the United States totaled 1,580,000 net tons for the week ended Saturday November 14, up by 0.4% from 1,573,000 tons the previous week, with mills operating at an average capacity utilization rate of 71.4%.

– Iron ore is steady at $121 per dry metric ton.

– Zinc prices recovered totally (and more) from the low point in March.

+ The United States has been experiencing a steel boom. U.S. Steel Corporation produced the first ton of steel at a brand-new facility in Fairfield, Alabama. Their new plant uses an electric arc furnace (EAF) and will produce 1.6 million tons of steel a year. At the same time, Nucor Steel has started building a new steel plate mill in Brandenburg, Kentucky, that will employ 400 workers at an average annual salary of $72,800. And earlier this summer, Commercial Metals Company announced plans to build a second rebar steel mill in Mesa, Arizona, that will employ 185 workers. For those who understand the steel industry, steel tariffs have generated a boom in steel investment and a shift to newer technologies that are creating jobs for new steelworkers. The major concern, of course, was China. The Chinese steel industry dominates global industry, and accounted for 53% of worldwide production in 2019. Much of this has been driven by massive government subsidization. The end result is millions of tons of steel being dumped in foreign markets. That has depressed global steel prices and made it difficult for U.S. producers to compete. The steel tariffs have succeeded by reducing the level of these imports in the U.S. This has allowed domestic steel producers to make needed investments. AISI steel trade association data shows that steel imports in the first nine months of 2020 accounted for just 18% of the U.S. market, down from the 25% to 35% range before the tariffs. America’s steelmakers have started investing at home. In addition to Nucor and US Steel, companies like Cleveland-Cliffs, Steel Dynamics, CMC, and AK Steel have invested billions of dollars in at least 16 major new projects throughout the nation. The top five US steel companies more than doubled their total annual investments between 2017 to 2019, from $1.5 billion to $4.2 billion.

– ThyssenKrupp will cut 11,000 jobs, roughly 10% of its workforce, as the conglomerate’s beleaguered steel business hemorrhages cash. The steel and materials group almost doubled the number of positions it plans to eliminate after recording a $6.5 billion net loss for the year that ended in September. ThyssenKrupp is now fighting for survival. Its steel division faces severe problems with pension deficits and cheap imports from Asia. The end game for the company is likely to involve a mix of asset sales, restructuring and a taxpayer bailout.

ThyssenKrupp + California Steel announced another price increase, adding $70 per ton to their cold rolled and coated products.
+ Honda is getting back to its leaner-operating roots by consolidating U.S. manufacturing oversight into a single unit and creating regional field manager positions that will better respond to dealer needs, the company’s sales chief told Automotive News. The hoped-for result, said Dave Gardner, general manager of sales at American Honda Motor Co., will be the ability to get new and redesigned vehicles to market faster and take care of retailers who have specific local needs on products and marketing. “We’re setting up the company for the future, to make sure we go back to our Honda roots, focusing on things like speed, simplicity, agility, flexibility that are all long-term traditional Honda DNA,” Gardner said. Included in the consolidation are several Honda auto companies, including Honda of America Manufacturing, Honda Transmission Manufacturing of America, Honda Accessory America, Honda Precision Parts of Georgia and assembly plants in Alabama and Indiana, Honda said. The new unit, HDMA for short, will be based in Marysville, Ohio, where Honda has extensive manufacturing operations. – General Motors has become the latest automaker to face the need to recall a battery-electric vehicle due to the risk of fires, the move announced this weekend impacting more than 68,000 of its Chevrolet Bolt EVs. “During our initial investigation we have identified at least five confirmed instances of fire that could be related to the high-voltage battery,” announced Jesse Ortega, the EV’s executive chief engineer, in a video news release. At least two injuries have occurred due to smoke inhalation. Several other manufacturers, including Tesla, Ford, Audi and China’s NIO, have had to address fire problems on their vehicles during the last several years. GM has developed a temporary software fix it plans to start distributing this week, but it will negatively impact range by reducing the amount of energy the Bolt’s battery pack can store. A more definitive solution is under development, according to the automaker, but won’t be ready until sometime next year. The bowtie brand is advising Bolt owners to immediately change the charge settings for their vehicles. For 2017 and 2018 model year vehicles that means switching to the “Hilltop Reserve” setting, and to the “Target Charge Level”. For those motorists who cannot make the changes, Chevy is advising them to park their vehicles on the street where the risk of damage in the event of a fire is reduced. GM said its updated software will be available starting Tuesday, Nov. 17. The Bolt is not capable of using over-the-air updates to install it, however, and owners will have to visit a dealer. + Jeep is adding more power and capability to the Wrangler, the off-road brand’s model that will be heading to showrooms about the same time as the Ford Bronco. The Wrangler Rubicon 392 is loaded with a V-8 engine that will deliver 470 hp and 470 pound-feet of torque, while jetting from 0 to 60 in 4.5 seconds. Fiat Chrysler Automobiles said it’s the first time in nearly 40 years that a V-8 has been a factory option on the Wrangler. The Wrangler’s predecessor, the CJ, was the last to have a V-8, in 1981.  

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