TRG | The Bottom Line – 6/19

TRG recently wrote about cold-form steel being one of the best early-cycle tells on reindustrialization. This week we looked at the divergence of structural and nonstructural steel and our view on why that is a direct read on the pace of the reindustrialization build out. Structural and nonstructural steel largely tracked one another from 2017 through 2023. Starting in 2023, the two diverged, and the gap has widened over time. What is causing this divergence? Structural and nonstructural steel attach to different phases of a project and different end markets. They historically move in sync because most construction projects consume both in a roughly fixed ratio: you put up the frame (structural), then fit out the building (nonstructural). A divergence in which structural outpaces nonstructural therefore means one of two things: either the mix of what's being built has shifted toward structures that are steel-frame-heavy but light on fit-out, or frames are going up while interiors aren't being completed at the same pace. We believe this is the reshoring trade at work.

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