News & Announcements
Market Overview – Early October 2015
The AMM Shredded Scrap Index for Chicago decreased to $230/GT as of early Aug ’15 and has remained at that level through Sep ‘15, which is down $45/GT from early Jul ‘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. Global oversupply and declining demand have been the primary reason for the price deterioration. US scrap consumption is down and export opportunities remain sluggish making some market participants pessimistic regarding prices with forecasts of further deterioration in the coming 30 days.
Mill lead times are roughly 5-6 weeks for delivery from the Midwest with 3-4 week lead times from the West Coast. Domestic plate mills’ announced price increases in Q2 ’15 did not materialize.In addition, domestic plate prices declined up to $40/ton over Aug and Sep ’15. A strong dollar and continued imports have put downward pressure on plate prices. Demand for plate has also softened in oil and gas, mining, and large agricultural equipment manufacturers. Plate prices are not expected to increase in the coming month.
Mill lead times are roughly 5-6 weeks for delivery from the Midwest with 4-5 week lead times from the West Coast. Domestic sheet mills have decreased prices by nearly $40/ton over Aug and Sep ’15 as the market digested scrap price declines and sheet continues to be oversupplied with imports and domestic capacity. In an attempt to stem sheet oversupply, domestic sheet mills have filed three trade cases in the past two months for hot roll, cold roll, and coated coil targeting several countries currently exporting to the US including South Korea, New Zealand, and Australia.
Tube mill rolling cycles are roughly 4-5 weeks for West Coast tube mills. Domestic tube mills’ announced price increase of $30/ton in Q2 ‘15 did not materialize and prices have subsequently decreased by roughly $40/ton.Although tube demand remains stable, imports and domestic flat roll pricing have contributed to downward price pressure for domestic tube mills.
Lead times remain at roughly 4-7 weeks for most production runs on the West Coast. Nucor and Gerdau, the largest domestic producers of merchant bars, decreased prices by a cumulative $55/ton over Aug and Sep ’15 due to lower scrap prices and competitively priced imports. Merchant bar prices are not expected to increase in the coming month.
Lead times are roughly 6-7 weeks for West Coast delivery.Domestic beam producers SDI, Nucor, and Gerdau decreased prices by at least $40/ton in late Sep ’15 due to lower scrap prices and competitively priced imports.
Scrap prices decreased by $45/GT over the past two months after a $35/GT increase in Q2 ’15. Domestic steel producers have decreased prices among all product groups due to a strong US dollar and global oversupply of raw material commodities including scrap, iron ore, and coal, as well as, finished steel products. According to the Institute of Supply Management (ISM), the overall economy grew for the 76th consecutive month. ISM indicates domestic manufacturing expanded with a reading of 50.2 for Sep ‘15, which is down from 51.5 in Aug ‘15. The ISM New Orders and Production Index also reported readings of 50.1 and 51.8 in Sep ’15 down from 51.7 and 53.6 in Aug ’15 respectively. ISM readings greater than 50 signal expansion. The US Labor Department showed non-farm payrolls increasing in Aug ‘15 by 173,000 jobs with an unemployment rate of 5.1%. Updated figures from the US Department of Commerce indicates that GDP expanded at an annual rate of 3.9% in Q2 ’15 after expanding at .6% in Q1 ‘15.
Sources include: AMM, ISM, Bloomberg, AP, US Labor & Commerce Departments, Domestic Steel Mills