News & Announcements
Market Overview – May 2015
The AMM Shredded Scrap Index for Chicago has remained at a reduced level of $235/GT as of late April ’15, down from a 2015 high of $334/GT achieved in mid-Jan ‘15. 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 experiencing a steep price drop in Q1 ’15, market sentiment is scrap prices are not expected to change significantly in the coming month.
Mill lead times are roughly 6-8 weeks for delivery from the Midwest with 3-5 week lead times from the West Coast. Domestic plate mill replacement costs for West Coast delivery have decreased by roughly $50/ton in the past month. A strong USD, available imports, and lower input costs have contributed to plate price decreases. Demand from the energy sector, primarily oil related products, remains depressed but other industries continue to be stable. Prices are not expected to increase in the next 30 days.
Mill lead times are roughly 6-8 weeks for delivery from the Midwest with 4-5 week lead times from the West Coast. Domestic sheet mills have decreased prices by $20/ton in the past month. Sheet mills’ order books are starting to build, encouraging at least four domestic mills to announce price increases of $20/ton in the last week of April ’15. Demand remains firm with the exception of sluggish demand from the energy related sector.
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 from sheet has contributed to tube price declines by roughly $60/ton in the past month. Domestic tube prices are not expected to increase until sheet prices firm and start to increase.
Lead times remain at roughly 4-7 weeks for most production runs on the West Coast. After domestic mills decreased prices in early 2015, the domestic market has been flat for the past two months. Scrap price declines and lower cost imports contributed to domestic price decreases in Q1 ‘15. Merchant bar prices are not expected to increase in the coming month.
Lead times are roughly 6-8 weeks for West Coast delivery. After dropping prices by $30/ton in mid Feb ’15 the domestic market has been flat for the last two months. Import volumes are building which are blunting domestic mills ability to raise prices. Beam prices are not expected to increase in the coming month.
Scrap prices remain flat over the past month after a steep decrease in Q1 ‘15 but are not expected to change significantly in the coming month. Domestic steel prices decreased significantly in Q1 ’15 for most product groups with decreases continuing into April for plate, sheet, and tube. Steel price decreases resulted from a combination of lower cost raw materials, higher import volumes, destocking of distributors, and a strong USD. According to the Institute of Supply Management (ISM), the overall economy grew for the 71st consecutive month. ISM indicates domestic manufacturing expanded with a reading of 51.5 for Apr ‘15, which is flat from Mar ‘15. The ISM New Orders and Production Index also reported readings of 53.5 and 56 in Apr ’15 increasing from 51.8 and 53.8 in Mar ’15, respectively. ISM readings greater than 50 signal expansion. The US Labor Department showed non-farm payrolls increasing in Mar ‘15 by 126,000 jobs with an unemployment rate of 5.5%. Updated figures from the US Department of Commerce indicate that GDP grew at an annual rate of 2.2% in Q4 ’14 and 5.0% in Q3 ’14. Early indicators reflect GDP figures for Q1 ’15 are a mere .2% but will undoubtedly be revised in the coming 30-60 days.
Sources include: AMM, ISM, Bloomberg, AP, US Labor & Commerce Departments, Domestic Steel Mills