Ulbrich Economic Update - Number 28 (September 2022)

View the September 2022 Economic Update

Get the Full September Issue:

Click here to download the 16 page Economic Update for the full details of recent economic trends impacting the steel and commodities markets, as well as the associated industries across the globe. Continue reading below for the Executive Summary.

September 2022 Economic Update Executive Summary

American Production

The Americas

PRODUCTION AT U.S. FACTORIES REBOUNDED 0.7% IN JULY after declining 0.4% the prior month. Output at auto plants surged 6.6%. Other July data showed: Durable goods orders were unchanged after increasing 2.2% in June. Industrial output climbed 0.6%, driven by gains in manufacturing and mining. The trade deficit narrowed by 12.6% as exports hit a record high. Import prices fell 1.4%, the first drop in seven months, helped by a strong dollar. Producer prices fell 0.5%, the first negative reading since April 2020. Consumer prices were unchanged, as inflationary pressures eased mainly due to lower gasoline prices. Retail sales held constant even as falling gasoline prices lowered receipts at service stations. Existing home sales fell to a two-year low and have now plunged 20.2% on a YOY basis.

Manufacturing activity grew steadily in August as employment and new orders rebounded, while a further easing in price pressures strengthened expectations that inflation has peaked. Other August data showed: The services industry picked up again amid stronger order growth and employment, while supply bottlenecks and price pressures eased. Employers added 315,000 jobs, a slower but still solid pace in a tight labor market. The jobless rate rose to 3.7% as more people entered the job market. Consumer sentiment rose more than expected, suggesting Americans are growing more optimistic as gas prices continue to drop. U.S. worker productivity in the 2nd Qtr fell at its steepest pace on an annual basis since 1948, while growth in unit labor costs accelerated 10.8%. Hundreds of thousands of manufacturing jobs returned to the U.S. last year. The push for domestic supply of essential goods propelled reshoring and foreign direct investment (FDI) jobs to a record 261,000, bringing the total jobs announced since 2010 to over 1.3mn.

Overseas Recession Warning


CHINA’S ECONOMY STUMBLED IN JULY AS A BOOST FROM EASING LOCKDOWNS FADED. Economic activity slowed across the board, including factory output, investment, consumer spending, youth hiring and real estate. Eurozone business activity in August suffered its biggest contraction in 18 months as a result of higher prices, falling demand and rising inventories, adding to fears of an impending recession. Russia’s war in Ukraine looks set to trigger a recession in Eastern Europe later this year.

Steel Industry Updates

STAINLESS SURCHARGES REDUCED MILL PRICES IN AUGUST FOR THE THIRD-CONSECUTIVE MONTH. August nickel prices held steady, so September surcharge declines will be limited, with most of the change attributed to ferrous scrap. Hot-rolled coil prices in late August were 47% lower than their peak of $75/cwt in April. The USW reached a tentative deal on a new, four-year contract on behalf of roughly 12,000 members at 13 Cleveland-Cliffs locations ahead of the September 1st expiration of the current contract.

Boom Supersonic American Airlines

Aerospace Developments

AMERICAN HAS AGREED TO PURCHASE 20 SUPERSONIC OVERTURE PLANES from Boom Supersonic. The deal is the second firm order for Boom, still years from building its first commercial airplane. United made a commitment last year to buy 15 Overture jets. Boeing jetliner deliveries fell to a five-month low of 26 airplanes in July, highlighting pressure on global supply chains.

Medical Insights

MEDICARE WILL HAVE THE POWER TO NEGOTIATE DRUG PRICES UNDER NEW LEGISLATION, which is expected to save $265bn. U.S. residents are paying twice as much or even more for their prescription drugs. Research by Rand Corporation found that U.S. prescription drug prices surpass those in 32 other countries by around 150% on average. The path for over-the-counter sales of hearing aids was cleared by the FDA, and a mix of new entrants is expected to shake up the sector and drive down prices.

No Gas Only EV

Automotive Trends

CALIFORNIA WILL HALT SALES OF GASOLINE-POWERED VEHICLES BY 2035. Starting in 2026, 35% of the new vehicles sold in California must not emit tailpipe pollution. U.S. new vehicle prices were expected to hit a record high of $46,259 in August (an 11.5% increase YOY) on the back of strong demand despite rising interest rates. Retail sales of new vehicles were expected to reach 980k in August, a 2.6% decrease from a year ago. Honda and LG Energy Solution plan to build a $4.4bn EV battery factory in Ohio.

Energy Sector News

JAPAN PLANS TO RETURN NUCLEAR ENERGY TO A CENTRAL PLACE IN THE COUNTRY’S ELECTRIC GRID. Tokyo aims to bring seven reactors back into service, for a total of 17, and will invest in developing and installing next-generation reactors. The droughts hitting Europe are impacting its energy production. Hydroelectric power has fallen some 20% since 2021. Germany plans to postpone the closure of the country’s last three nuclear power plants as it braces for a possible shortage of energy this winter.

Lithium - ion batteries

Metals & Commodities

SLOWING ECONOMIC GROWTH IS WEIGHING ON INDUSTRIAL METALS PRICES but zinc and aluminum are likely to rebound if sky-high energy prices force European smelters to cut output further. Stockpiles of both metals are low, adding to supply fears. Miners will struggle to expand operations in the U.S. to meet a deadline for sourcing key minerals domestically or from select countries as set out by the new IRA legislation. The guidelines exclude Indonesia and Argentina, major providers of nickel and lithium.

Stay Up to Date:

Stay up to date on the latest state of the markets and ecosystems fueled by stainless steel and other key manufacturing materials by subscribing to get the Ulbrich Economic Update delivered to your inbox monthly. Subscribe to our newsletter.

All articles

Related Posts