News & Announcements
Market Overview – December 2013
The AMM Shredded Scrap Index for Chicago increased by $59/GT and now stands at $415/GT as of early Dec ’13 from early Nov ‘13. AMM Shredded Chicago scrap is the principle index used by most domestic electric arc furnace mills to help determine price changes for finished steel products. Even though domestic scrap demand has been relatively stable, prices have increased twice in the past month primarily due to lower mill inventory levels, increased export sale prices, and winter weather hampering scrap collection.
Mill lead times are roughly 7-8 weeks for delivery from the Midwest with shorter lead times from the West Coast. Domestic plate mills ArcelorMittal, SSAB, and Nucor have announced price increases of $30/ton in mid Dec ’13 which has followed cumulative increases of $70/ton in Oct ’13 and Nov ‘13. Plate mills are not providing a lot of clarity to the reasons for the increases, but it is assumed increases are based on higher raw material prices along with reduced supply from the idling of the Evraz Claymont facility.
Mill lead times are roughly 5-6 weeks from the West Coast and 7-8 weeks from the Midwest. Domestic sheet mills including ArcelorMittal and Nucor announced a cumulative $70/ton price increase from early Oct ’13 through Nov ’13. Price increases appear to be based on rising raw material inputs along with domestic capacity consolidation from the sale of Thyssenkrupp’s Calvert facility to ArcelorMittal and Nippon Steel.
Tube mill rolling cycles are holding at roughly 4-5 weeks for West Coast tube mills. Midwest and West Coast tube mills announced a $40/ton price increase in early Oct ’13 followed by an additional $20/ton price increase from Midwest mills in mid Nov ‘13. The basis for price increases was due to domestic sheet mill price increases. West Coast tube mills will most likely follow with a second price increase assuming the West Coast sheet announced price increases stick.
Lead times remain at roughly 4-7 weeks for most production runs on the West Coast. After holding prices for five consecutive months, domestic mills announced a $20/ton price increase in early Nov ’13. Some mills have followed the Nov ’13 price increase with an additional $10/ton price increase announced in mid Dec ’13.
Lead times are roughly 5-7 weeks for West Coast delivery. Like merchant bars, domestic beam mills had left prices unchanged for several months, but changed direction based on raw material price increases. Domestic mills announced a $20/ton price increase in mid Nov ’13 and a $10/ton price increase in Dec ‘13.
Carbon price announcements made by domestic mills were comprehensively up since Oct ’13 through Dec ’13. Scrap prices increased significantly by $59/ton through early Dec ’13 from the past month. According to the Institute of Supply Management (ISM), the overall economy grew for the 54th consecutive month. ISM indicates domestic manufacturing expanded with a reading of 57.3 for Nov ‘13, which is up from a reading of 56.4 in Oct ‘13. The ISM New Orders and Production Index also reported an expansion with readings of 63.6 and 62.8 in Nov ’13 up from 60.6 and 60.8 in Oct ’13 respectively. ISM readings greater than 50 signal expansion. The US Labor Department showed payrolls increasing in Nov ‘13 by 203,000 jobs with an unemployment rate of 7.0%. The US Department of Commerce revised report indicates that GDP grew at an annual rate of 3.6% in Q3 ’13, up from 2.5% growth in Q2 ‘13, and 1.8% growth in Q1 ’13.
Sources include: AMM, ISM, Bloomberg, AP, US Labor & Commerce Departments, Domestic Steel Mills