Ulbrich Economic Update - Number 69 (February 2026)

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 for the Executive Summary.

The U.S. Economy

MANUFACTURING REENTERED EXPANSION EARLY IN 2026, while consumer and labor signals continued to soften, as the ISM Manufacturing PMI rose to 52.6 in January from 47.9 in December, ending a year-long contraction. New orders climbed to 57.1, production increased to 55.9, backlogs moved into expansion at 51.6, and prices rose further to 59.0, while employment remained in contraction at 48.1. Hard data remained supportive: factory orders rebounded 2.7% in November, durable goods demand was driven by a 97.6% surge in commercial aircraft orders, and core capital goods orders increased 0.7% with shipments up 0.4%, signaling continued equipment spending.

Inflation stayed elevated, with CPI up 0.3% in December and 2.7% over the past year, while core CPI rose 2.6% and producer prices advanced 0.5% on the month, led by services and metals. Consumer conditions weakened as Conference Board Consumer Confidence fell sharply to 84.5 in January, with expectations dropping to 65.1, well below recession-signal territory. Housing activity cooled, with pending home sales down 9.3% in December, while construction spending rose 0.5% in October, driven by renovation activity rather than new single-family starts. Labor demand softened further, as job openings declined to 6.5 million in December, the lowest level in more than five years, and the January employment report was delayed amid a partial government shutdown.

Steel Industry Updates

BIG-TICKET DEALS AND DECARBONIZATION MOVES STACKED UP, as Worthington Steel agreed to buy Kloeckner in a $2.4B all-cash deal (targeting ~$150M in synergies) while Algoma permanently shut Blast Furnace No. 7 to complete its shift toward an all-EAF future. In the U.S., Hyundai Steel’s Louisiana plans advanced via a proposed $2.9B capital raise for a 2.7M-ton plant, even as Alton Steel announced it will close its Illinois facility amid competition and consolidation.

Energy Sector News

LNG BUILDOUT AND GRID STRAIN LED THE STORYLINES, as Cheniere filed for a major Corpus Christi Stage 4 expansion and Mitsubishi agreed to buy $7.53B of Haynesville shale gas assets to strengthen Gulf Coast-linked supply. Reliability risks also jumped into view—PJM forecast record winter demand with congestion pushing wholesale prices above $1,000/MWh in constrained zones—while policy moved in parallel with the U.S. proposing a March 9 lease sale across 5.5M acres of Alaska’s NPR-A and Treasury rolling out draft rules for the 45Z clean fuel tax credit.

Automotive Trends

EV POLICY SWUNG WHILE THE SUPPLY CHAIN RE-SORTED, with Canada moving to reopen Chinese EV imports under a quota system at a 6.1% tariff and California floating a $200M incentive program that requires automaker matching funds. At the same time, OEMs and suppliers adjusted to demand and risk—GM Canada cut about 500 jobs at Oshawa, Toyota recalled ~162,000 Tundra/Tundra Hybrid vehicles for a faulty multimedia display, and Indonesia signed a framework for a $6B battery ecosystem buildout as Asia’s battery footprint keeps expanding.

Medical Insights

DRUG PRICING PRESSURE AND BIG-PIPELINE BETS ACCELERATED, with the White House launching TrumpRx.gov as a discount access portal tied to “most-favored nation” agreements and Johnson & Johnson signing on for price cuts in exchange for tariff exemptions. Competitive heat in obesity care stayed intense—AstraZeneca struck an up-to-$18.5B licensing deal with China’s CSPC, while Hims introduced a $49 compounded GLP-1 pill that sharpened the pricing fight—and public health policy tensions rose as the U.S. tied future Gavi funding to removing thimerosal-containing vaccines despite longstanding safety evidence.

Aerospace Developments

DEFENSE MODERNIZATION AND SPACE SCALE KEPT MOMENTUM, highlighted by the UK’s £453M radar upgrade contract for Typhoon jets and Taiwan completing its first underwater sea trial of an indigenous submarine as it pushes an eight-boat program. In the commercial/space arena, Starlink’s growth narrative expanded with SpaceX signaling new offerings (direct-to-device connectivity and space-tracking services), continuing to position Starlink as a central driver ahead of future IPO discussions.

Commodities

CRITICAL MINERALS AND SANCTIONED FLOWS SHAPED MARKETS, as the U.S. announced “Project Vault,” a $12B critical-minerals stockpile effort aimed at stabilizing supply for manufacturers and countering perceived price pressure. Supply-chain diversification efforts showed up in dealmaking and financing too—Serra Verde secured $565M in U.S.-backed financing to expand rare earths output—and in oil, Chinese independent refiners pivoted toward discounted Iranian barrels as Venezuelan flows tightened under U.S. pressure.

Overseas

TRADE REALIGNMENT AND THE ENERGY TRANSITION DOMINATED CROSS-BORDER MOVES, with EU power shifting to a 2025 milestone where wind + solar (30%) edged past fossil fuels (29%) and Brussels approving a €3.1B (~$3.4B) Spanish CHP support scheme that requires hydrogen-ready capability for gas projects. China-EU friction rose on the bloc’s Goldwind probe under the Foreign Subsidies Regulation, while sourcing patterns kept evolving—U.S. imports from China fell to $287B (Jan–Oct 2025) but other Pacific Rim suppliers rose to ~$599B, leaving total U.S. imports higher overall at ~$3.1T.

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