News & Announcements
Market Overview – October 2014
The AMM Shredded Scrap Index for Chicago has remained flat and still stands at $375/GT as of early Oct ’14 from mid Aug ‘14. AMM Shredded Chicago scrap is generally used as an indicator by most domestic electric arc furnace mills to help determine price changes for finished steel products. Market participants are forecasting a decline in scrap prices over the coming month as export prices have already started to slide modestly due to cheap Chinese billets that are impacting Asian scrap demand. A stronger USD will also have a damping effect on globally traded commodities including scrap.
Mill lead times are roughly 10-13 weeks for delivery from the Midwest with 6-7 week lead times from the West Coast. Domestic plate mills announced several increases earlier in the year, but plate prices have remained steady over the past month. Prices are not expected to increase in the coming month as imports have not abated, mill lead times are reducing, and scrap prices are not expected to climb.
Mill lead times are roughly 6-7 weeks from the West Coast and 8-11 weeks for delivery from the Midwest. Midwest sheet prices have recently softened modestly. Domestic sheet prices are not expected to increase in the coming month and could be at risk of declining based on increased supply coupled with a softening expectation for demand in the 4th quarter.
Tube mill rolling cycles are holding at roughly 5-6 weeks for West Coast tube mills. After a series of prices increases from Midwest and West Coast tube mills in the 2nd quarter, prices have been relatively flat throughout the 3rd quarter. Prices are not expected to increase in the coming month since coil/sheet prices, tubing’s raw material, is expected to remain flat or decrease in the coming month.
Lead times remain at roughly 4-7 weeks for most production runs on the West Coast. After domestic mills raised prices in Jan ’14, the domestic market has been flat for the past eight months. Future price changes appear to be dependent on more significant changes to the domestic scrap market and/or changes to import volumes. Prices are not expected to increase in the coming month.
Lead times are roughly 6-8 weeks for West Coast delivery. Gerdau and Nucor announced a $20/ton price increase in Mar ’14, but prices have remained unchanged for six months. Beam mills are signaling that nonresidential building continues to improve from recession lows. Prices are not expected to increase in the coming month.
Scrap prices remained flat from mid Aug ’14 to early Oct ‘14, but are expected to soften modestly in the coming 30 days. Domestic steel prices are not expected to increase in the coming month and may soften in some product lines based on a mix of increased supply and lower input costs. According to the Institute of Supply Management (ISM), the overall economy grew for the 64th consecutive month. ISM indicates domestic manufacturing expanded with a reading of 56.6 for Sep ‘14, which is down from an Aug ’14 reading of 59. The ISM New Orders and Production Index also reported readings of 60 and 64.6 in Sep ’14 changing from 66.7 and 64.5 in Aug ’14 respectively. ISM readings greater than 50 signal expansion. The US Labor Department showed non-farm payrolls increasing in Sep ‘14 by 248,000 jobs with an unemployment rate of 5.9%. Updated figures from the US Department of Commerce indicates that GDP grew at an annual rate of 4.6% in Q2 ’14, which was up from a revised 2.1% decrease in Q1 ‘14.
Sources include: AMM, ISM, Bloomberg, AP, US Labor & Commerce Departments, Domestic Steel Mills.