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United States

There has been more good news on the inflation front. The most recent CPI report for June showed the inflation rate at 0.2% for the month, which annualizes to 3% and is slightly better than expectations. This is the slowest increase in more than two years and is approaching the Federal Reserve target of 2% annualized inflation. It seems likely that the Fed will not have to increase its rates at the next meetings, which should make the financial markets happy. 

At the time of the previous Mirror report, there were more concerns about the health of the banking industry as the USA had suffered several large failures; however, it has been quiet on this front over the last couple of months, with no further news to report.

The climate of steadily-increasing interest rates has slowed manufacturing activity in the USA and the indices have been contracting since the end of 2022. Most sectors are slow, other than automotive manufacturing which is expected to grow this year but is still far behind pre-COVID build rates. The housing market is still subject to high interest rates, high values and lower inventories; housing affordability is becoming an issue in many cities owing to the above factors although new home construction is showing strong growth and may give the market some relief. The US jobs market remains healthy, with ample open positions and low unemployment. 

In the metals sector, terminal markets continue to drift lower owing to reduced demand and ongoing concerns about near-term economic slowness. The all-in primary aluminium price has fallen almost 10% in the last two months and some weakness is finally beginning to emerge in the Midwest premium as demand is weak. Secondary ingot prices are also starting to fall but remain above primary levels, which is where they have been for more than a year. There has been a slight uptick in rolling mill demand as most mills seem to have reduced their inventories in the first quarter and need to replenish. Billet and extrusion plants remain very slow, with billet upcharges on a downslide and production off more than 10% at some mills. Secondary aluminium smelters are less aggressive on scrap pricing with the summer shutdown in force. 

Domestic copper spreads have widened slightly since the previous Mirror report. Demand for domestic brass ingot makers is still healthy but pricing is coming down with one fewer ingot maker in the marketplace.