U.S. raw steel production rose to 1.856 million tons this week. That is up 0.6% from last week and up 6.0% year to date. Capacity utilization came in at 78.9%. The 50% tariff protection remains the backbone of domestic output. Demand growth is slow but the tariff floor is holding production firm.
Ceasefire Declared Over — But Talks Resume
WTI crude rose to $71.41/barrel this week. The U.S. declared the Middle East ceasefire is over. That sent oil prices higher immediately. But peace talks restarted even as cross-border strikes continued. The situation remains deeply unstable. Markets are pricing in renewed uncertainty about oil supply. Any further escalation could push prices significantly higher. Any breakthrough in talks could send them lower. This is the dominant risk factor for energy markets right now. U.S. crude production rose slightly to 13.86 thousand barrels per day on good domestic and export demand. The rig count held steady at 445 — near a one-year high — reflecting the same positive demand backdrop.
Scrap Dips, Steel Holds Near Highs
Scrap steel #1 HMS composite fell slightly to $363.67/gross ton. Slow demand growth and good supply are applying modest downward pressure. Hot-rolled coil steel edged up slightly to $58.70/cwt ($1,174/ton). That is up an extraordinary 34% in the past twelve months. The 50% tariff is the primary driver of that gain. Steel company profits remain excellent. But a 34% increase in steel prices flows directly into the cost of everything built from steel — cars, appliances, buildings, and infrastructure.
Copper and Aluminum Both Rise
Copper climbed to $6.28/lb. Two forces are driving the move. AI data center demand for copper continues to surge. And the resumption of Middle East peace talks is providing cautious optimism about global economic recovery. More economic activity means more copper consumption. Aluminum rose to $1.43/lb ($3,146/MT). Declining global inventories and growing expectations of a supply shortage are supporting prices. The Hormuz disruption earlier this year drew down stockpiles significantly. Rebuilding those inventories will take time.
The May balance of trade worsened to -$77.6 billion. Imports rose 3.3% while exports fell 3.2%. Consumer goods and car imports drove the increase in imports. Pharmaceutical exports fell sharply driving the export decline. A widening trade deficit is a direct drag on GDP. It also reflects the reality that despite broad tariffs American consumers are still buying imported goods in significant volumes.
Mortgage Rates Rise as Inflation Concerns Mount
The 30-year mortgage rate rose to 6.64% this week. Higher inflation is pushing interest rates up as the Federal Reserve signals its intent to slow the economy. That rate increase is hitting the housing market directly. June existing home sales fell 2.4% from May to an annualized rate of 4.09 million. High prices combined with a 6.64% mortgage rate are keeping many potential buyers on the sideline. The housing market needs meaningfully lower rates to recover. Right now rates are moving in the wrong direction.
Consumer Optimism Improving
The July Real Clear/TIPP economic optimism index rose to 45.5. That is a positive move. Consumers are feeling better about the economic outlook for the next six months. The index is still below 50 — technically pessimistic. But the direction of travel is encouraging. Two consecutive months of improvement reflects the positive impact of lower gasoline prices earlier in the period.
Business Activity Expanding
The June S&P composite purchasing managers index rose to 51.9. Manufacturing output continued to expand strongly. Services grew as well. Business confidence improved across both sectors. The one soft spot within the report is employment. Headcount declined even as output expanded. Companies are getting more productive output from existing workers rather than adding new ones. That is a caution sign for the labor market even within an otherwise positive activity reading.
Wall Street Pulls Back on Rate Fears
The Dow Jones Industrial Average fell 196 points to close at 52,637. The index remains near its all-time highs. But markets are increasingly concerned about the possibility of a Federal Reserve interest rate increase to combat persistent inflation. Higher rates slow the economy, reduce corporate earnings, and compress stock valuations. That concern is creating a ceiling on further market gains even as underlying business conditions remain solid.
This weekly report is produced by BENLEE Roll-off Trailers and Roll off truck parts and roll off trailer parts store to support our customers, suppliers, and partners. We serve the recycling, scrap metal, and waste management industries. Questions? Call or email us anytime. Have a safe and profitable week.
— Greg Brown, President & CEO, BENLEE Roll-off Trailers
greg.brown@benlee.com
734-722-8100
