Commercial construction may take a pause, and Citi says Amazon is reason why
Amazon recently told investors it now has more than enough warehouse and distribution space, raising a "red flag" and signaling a future slowdown in non-residential construction, and maybe even the steel market. Citigroup analyst Alexander Hacking said in a report that Amazon added a total of about 200 million square feet of warehouse and data center space in 2020/2021, making it a key cog in the entire commercial construction market. That influence extends to the demand for steel, where Amazon lately accounted for as much as 15% of the domestic market for structural steel. U.S. steel production has bounced back to levels last seen before the onset of Covid, "with no sign of new capacity in the weekly data." Eventually, higher infrastructure spending "should more than pick up the slack but a gap year could easily emerge in 2023," Hacking wrote. Until then, Citi's optimistic on the steel industry, seeing more consolidation, limited increases in supply, manufacturing moving back to the U.S., the impact of the war in Ukraine and demand for infrastructure construction. Hacking's top pick? Steel Dynamics . —With reporting by Michael Bloom

An Amazon employee prepares an order during a tour of the advanced robotics facility fulfillment centre, YHM1, in Hamilton, Ontario, Canada April 19, 2022. Nick Iwanyshyn | Reuters