Market Update - February 2025

US ISM (Institute for Supply Management) Manufacturing PMI came in at 50.9 in January. Below is ISMs most current manufacturing index breakdown:

University of Michigan’s consumer sentiment was 67.8 for February – its second month of decline. News of possible rising inflation and increased layoffs may further dampen consumer sentiment in the near term. Below outlines consumer sentiment trends by political party affiliation:

Annual U.S. inflation rate rose for the fourth straight month to 3.0% for January. The annual core CPI inflation also rose 0.1% to 3.3%. Recently applied tariffs by the Trump Administration and hints of reciprocation from other countries may hinder efforts to lower inflation in 2025.

Federal Reserve Chair Jerome Powell indicated this month that the Fed will take its time to make any additional rate cuts. They want to see more progress on inflation, and they believe the economy is strong enough to hold firm in the short term.

The U.S. economy added 143,000 jobs in January, and the unemployment rate edged down to 4.0%, showing cooling but still solid gains for the labor market. Job gains in November & December were revised upward.

Although hiring and job-quitting have both slowed, layoffs remain near long-time lows.

Companies are more focused on controlling salary costs, with some planning layoffs and investing in automation to reduce the need for additional head count.

Current Economist forecasts still expect a low 4% unemployment rate number by the end of 2025.

The Trump Administration has imposed 25% tariffs all steel & aluminum imports, effective March 12th. More importantly, the Administration announced that there will be no exemptions or product exclusions, and more downstream products would be included.

Domestic steel and aluminum makers will benefit from these tariffs on imported metal. But manufacturers who buy metal abroad will certainly take a hit. Steel indicators show upward trajectory since Trump took office.

The U.S. imports about 25% of the steel in uses, and about 60% of its aluminum.

China exported about 508,000 metric tons of steel last year, about 1.8% of all steel imported into the U.S. About 2-3% of these total tons are stainless -- approximately 12,700 metric tons.

The Trump Administration also imposed 25% tariffs on imports from Canada & Mexico that was set to go in effect February 4th. The Administration paused them until March 4th pending further negotiations with the two nations. Just this week Trump has been reported saying the 25% tariffs for goods from Canada and Mexico are expected to begin next week.

The Trump Administration imposed an additional 10% tariff on imports from China.

The Trump Administration is also troubled by the EU’s trade surpluses with the United States. They are threatening tariffs or demanding they buy more oil & gas from the U.S.

(Kiplinger) -- 2025 will be another down year for farmers. Farm income is expected to decline for the third year in a row, with lower prices for crops and poultry outweighing higher livestock prices and a moderation in production expenses, such as fertilizer, etc. Plus, the industry faces numerous risks, particularly in the areas of trade and immigration.

Net farm income could fall to $129 billion in 2025, down 6% from last year and 29% from 2022’s record of $182 billion.

Factory activity grew in January for the first time in 26 months – with new orders rising notably. But a sustained recovery could be vulnerable if a full-blown trade war erupts.

House prices are now 7% higher than at their 2022 peak. Buyer demand has remained steady, despite elevated mortgage rates and tight inventory levels. However, unsold inventory is up 16% from a year ago, a sign price appreciation may soften in the coming months. Plus, mortgage rates will probably not change much in 2025 given the current Fed’s position on cutting the Fed Fund Rate & mortgage rates link with Treasuries.

Hot Rolled Coil for February is $760 up $70 from January’s $690/ton. (SMU).

Nucor has increased spot buy pricing for four consecutive weeks. As of February 24, it is at $860/ton.

The lead time range on Hot Rolled Coil shifted modestly from 4-6 weeks to 5-7 weeks on average.

February winter weather and Illinois river lock issues have pushed #1 Bush Scrap values up $30-50. January was at $390/ton. Tightness is expected to continue into March.

Hollow Structural Steel mills announced the first of three 2025 increases in late January. This week we saw the third increase announcement with a sum of $15/cwt of increases.

Gerdau a long bar producer is reconsidering a planned 600,000-ton capacity investment in Mexico and is reconsidering the investment in the US. Gerdau is a Brazil based company with several US sites.

President Trump is involved with negotiations regarding the proposed shift from Nippon, a Japanese steel company, buying US Steel, to instead invest in US Steel.

Domestic steel production capacity utilization, according to AISI (American Iron and Steel Institute), closed week ending February 22 at 1.659 million net tons and 74.5% utilization, weekly production was down .7% compared to prior week. Year to date overall production is 1% behind the same period of 2024 which was at 75.4%.

Nickel closed trading on February 20th at $15,613/ton, up slightly from last month.

Stainless pipe surcharges for March are $1.08/lb. for 304 & $1.76/lb. for 316.

January Midwest Premium was at $1.408/lb., up about 2.3% from December. (Kaiser)

Demand for aluminum in the U.S. is higher than the amount produced by its domestic smelters. According to data from the Aluminum Association, imported aluminum accounts for nearly 60% of all aluminum used in the U.S., while the total amount of aluminum produced in the U.S. continues to dwindle. The 25% tariff will quickly have a huge cost impact for aluminum users.

Happy St. Patrick’s Day!

St. Patrick’s birth name was Maewyn Succat. He was born in the late 4th century in Britain.

When he was 16 years old, Irish raiders attacked Patrick’s family’s estate and took him prisoner. They transported him to Ireland where he was held captive for six years.

During his captivity, St. Patrick began to have dreams of and visions of angels and the voice of God, telling him to convert Irish people to Christianity.

Patrick used the shamrock to preach about the Holy Trinity. He explained how just like the three leaves of the shamrock, the Father, the Son, and the Holy Spirit could be separate entities, yet they are one in the same.

Patrick’s color is blue, not green. There are several artworks depicting the saint in blue robes.

There are more than 100 St. Patrick’s Day parades held in the United States; the biggest celebrations are in New York City and Boston.

Chicago began the annual tradition of dyeing the Chicago River green on Saint Patrick’s Day in 1962.

There are 34.7 million U.S. residents with Irish ancestry which is more than seven times the population of Ireland itself.

The first St. Patrick’s Day parade took place in New York City when Irish soldiers serving in the English military on March 17, 1762.

There is no such thing as a female leprechaun, according to Irish folklore.

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