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US Steel Demand Could Moderate in Q4—How Steel Companies Reacted

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Steel demand

In the US steel sector, the demand for steel drives US steelmakers’ (SLX) revenues. As a result, investors who are interested in Cleveland-Cliffs (CLF) track US steel demand.

In this article, we’ll see how investors can track the demand for US steel by monitoring demand indicators. The construction and automotive sectors are the two largest steel end consumers.

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Demand indicators

US housing starts rebounded in August compared to the last few months. These starts came in at 1.282 million units, which implies a rise of 9.2% YoY (year-over-year). Analysts expected the figure to come in at 1.235 million units. The US Commerce Department also upwardly revised July’s housing starts data.

While housing starts rose last month, building permits fell 5.7% to 1.229 million units. Leading indicators show a rebound in nonresidential construction activity. The Architectural Billing Index came in at 54.2 in August compared to 50.7 in July. The index has been above 50 for 11 consecutive months. An ABI above 50 signifies an increase in billing.

While the construction activity rebounded in August, there could still be weakness ahead for the sector due to rising interest rates. According to Reuters, “the underlying trend still pointed to a weakening housing market against the backdrop of rising mortgage rates and higher home prices.”

Companies’ takes on steel demand

US steelmakers and Cleveland-Cliffs remain upbeat about US steel demand. Cleveland-Cliffs’ CEO, Lourenco Goncalves, mentioned during the company’s second-quarter earnings call that the steel market in the United States (DIA)(SPY) was in great shape.

He added, “Every single subsector is showing year-over-year growth, in some cases substantial growth.” Nucor (NUE) and Steel Dynamics (STLD) have also indicated strong underlying steel demand in the United States.

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