News & Announcements
Market Overview – July 2015
The AMM Shredded Scrap Index for Chicago increased to $275/GT as of early July ’15, up from a 2015 low of $235/GT achieved in early Mar ‘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. Cheap Chinese produced billets are weakening scrap prices in some countries, like Turkey, which represents a significant export market for the US. Market signals have been somewhat muted recently with some participants calling for minor price changes in the coming 30 days.
Mill lead times are roughly 6-7 weeks for delivery from the Midwest with 3-4 week lead times from the West Coast. Domestic plate mills announced $50/ton price increases for West Coast delivery in the past two months based on rising scrap prices. Large service center inventories, slow mill shipments, and continued imports have not allowed for the full increase to be implemented. Demand from the energy sector, primarily oil-related products, remains depressed.
Mill lead times are roughly 5-7 weeks for delivery from the Midwest with 4-5 week lead times from the West Coast. Domestic sheet mills announced price increases of roughly $40/ton in the past two months based on seeing an uptick in orders and on the heels of higher scrap prices. Market price signals are mixed with higher scrap prices and the possibility of US trade action that may result in antidumping penalties for some flat rolled segments have strengthened mills positions, whereas, a seasonal automotive slow down, continued imports, and service center inventories are detractors.
Tube mill rolling cycles are roughly 4-5 weeks for West Coast tube mills. Domestic tube mills announced a price increase of $30/ton largely based on flat roll price increases. Although tube demand remains stable, imports and domestic flat roll pricing softness is preventing tube mills from gaining all of the announced price increase.
Lead times remain at roughly 4-7 weeks for most production runs on the West Coast. Gerdau, one of the primary merchant bar suppliers in the US, announced a price increase of $25/ton for June based on rising scrap prices. However, the other primary merchant bar supplier, Nucor, did not raise prices based on imports and overall backlog. Gerdau rescinded its price increase providing another flat month for merchant bars. Merchant bar prices are not expected to increase in the coming month.
Lead times are roughly 6-7 weeks for West Coast delivery. Import beams are available at a discount from domestic prices which have partially prevented domestic mills to pass the scrap price increase through to service centers and fabricators. It has been reported that domestic and import prices are starting to narrow. Beam prices are not expected to increase in the coming month.
Scrap prices increased by $40/ton over the past month after a steep decrease in Q1 ’15. Domestic steel producers have issued price increase announcements but imports, service center inventories, and less than optimal mill back logs have prevented some or all of the price increases from being accepted. According to the Institute of Supply Management (ISM), the overall economy grew for the 73rd consecutive month. ISM indicates domestic manufacturing expanded with a reading of 53.5 for Jun ‘15, which is up from May ‘15. The ISM New Orders and Production Index also reported readings of 56 and 54 in Jun ’15 changing from 55.8 and 54.5 in May ’15 respectively. ISM readings greater than 50 signal expansion. The US Labor Department showed non-farm payrolls increasing in Jun ‘15 by 223,000 jobs with an unemployment rate of 5.3%. Updated figures from the US Department of Commerce indicates that GDP was 5.0% in Q3 ’14, 2.2% in Q4 ’14, but shrank at an annual rate of .2% in Q1 ’15.
Sources include: AMM, ISM, Bloomberg, AP, US Labor & Commerce Departments, Domestic Steel Mills