News & Announcements
Market Overview – January 2015
The AMM Shredded Scrap Index for Chicago has increased and stands at $326.8/GT as of mid Jan ’15, up a mere $1.80/GT from early Dec ‘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. After expecting a modest increase for early Jan ’15 typically supported by seasonal factors, the market sentiment has reversed course and is forecasting a flat to decrease for scrap prices in the coming 30 days based on a strong USD, scrap imports, and weaker domestic mill demand.
Mill lead times are roughly 8-11 weeks for delivery from the Midwest with 4-5 week lead times from the West Coast. Domestic plate mill prices for West Coast delivery have eased by roughly $20-$40/ton in the past month. Even though end user demand is stable, with the exception of energy, import volumes are increasing resulting in short domestic lead times. Prices are not expected to increase in the next 30 days.
Mill lead times are roughly 5-6 weeks from the West Coast and 8-10 weeks for West Coast delivery from the Midwest. Domestic sheet mills have decreased prices by $20-$40/ton in the past month. Sheet capacity is becoming more available as energy related consumption is weakening due to the recent fall in oil prices. Like last month, competitively priced sheet imports are also receiving a boost by a stronger USD contributing to short domestic lead times and price erosion.
Tube mill rolling cycles are holding at roughly 5-6 weeks for West Coast tube mills. Overall demand for tube on the West Coast is stable but imports and recent downward price pressure on sheet has contributed to modest tube price declines by roughly $20/ton in the past month.Domestic price increases were announced in Dec ’14, but had no support as sheet prices softened.
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 eleven months. Scrap price declines and lower cost imports are putting pressure on domestic prices. 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 $40/ton price decrease in Dec ’14 after a seven month stretch of flat prices. Lower input costs and a seasonal slowdown in construction contributed to lower domestic prices. Prices are not expected to increase in the coming month.
Scrap prices increased $1.80/GT in the past month, but are not expected to increase further in the coming 30 days. Domestic steel prices seasonally increase in the early part of a new year but decreases are occurring across most product lines resulting from lower cost raw material including scrap and iron ore, a five and a half year low for oil, US dollar strength at a nine year high, and increasing imports. According to the Institute of Supply Management (ISM), the overall economy grew for the 67th consecutive month. ISM indicates domestic manufacturing expanded with a reading of 55.5 for Dec ‘14, which is down from a Nov ’14 reading of 58.7. The ISM New Orders and Production Index also reported readings of 57.3 and 58.8 in Dec ’14 changing from 66 and 64.4 in Nov ’14 respectively. ISM readings greater than 50 signal expansion. The US Labor Department showed non-farm payrolls increasing in Dec ‘14 by 252,000 jobs with an unemployment rate of 5.6%. Updated figures from the US Department of Commerce indicates that GDP grew at an annual rate of 5.0% in Q3 ’14 and 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.