News & Announcements
Market Overview – Early January 2016
After continued price erosion in 2015, the AMM Shredded Scrap Index for Chicago increased to $190/GT as of early Jan ’16, up $30/GT from early Nov ‘15. AMM Shredded Chicago scrap pricing changes are used as an indicator by many domestic electric arc furnace mills to help determine price changes for finished steel products. Lower Q4 ’15 prices slowed scrap flows and decreased on-hand inventory which may have sparked a temporary price bump as domestic mills returned to buying in Dec ’15. Scrap export volumes decreased in 2015 to their lowest levels since 2008.
Mill lead times increased to roughly 6-7 weeks for delivery from the Midwest with 4-5 week lead times from the West Coast. After plate prices decreased in early Q4 ’15, domestic plate mills announced price increases of $30/ton in Dec ’15 and $30/ton in early Jan ‘16. Some mill buyers have interpreted the price announcements as a way to stem the 2015 price declines and may not be fully collectible. Preliminary plate import figures show an increasing trend over Q4 ’15.
Mill lead times increased to roughly 6-7 weeks for delivery from the Midwest with 4-5 week lead times from the West Coast producers. After sheet prices decreased throughout much of 2015, domestic sheet mills announced price increases of $40/ton in Dec ’15 and $20/ton in Jan ’16. Domestic sheet mills filed trade cases in Aug ‘15 for hot roll, cold roll, and coated coil targeting several countries. In Jan ’16 the US Department of Commerce imposed a 7.42% preliminary countervailing duty on hot rolled steel imports from Brazil but did not find substantial import subsidizations for South Korea or Turkey.
Tube mill rolling cycles are roughly 4-5 weeks for West Coast tube mills. Domestic tube mills announced a price increase of $30/ton in mid Dec ’15 primarily based on announced sheet price increases. Tube mills’ ability to hold price increases will largely be dependent upon strength in sheet prices and the momentum of cheaply priced tube imports.
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 $25/ton in mid Oct ’15 and $70/ton in early Dec ’15 based on lower scrap prices and continued pressure from imports. Merchant bar prices may increase should scrap prices hold or continue to strengthen.
Lead times are roughly 6-7 weeks for West Coast delivery. Domestic beam producers SDI, Nucor, and Gerdau have held prices flat over the last two months. There is no indication of changing beam prices in the coming month. Demand remains stable while cheaper beam import prices continue to be available.
Domestic scrap prices increased by $30/GT in early Jan ’16 after achieving a 2015 bottom in Oct ’15. Domestic steel producers for plate, sheet, and tube have announced price increases, merchant bar mills announced a price decrease, and beams remained flat since Dec ‘15. A strong US dollar and China’s decreasing appetite for raw materials has led to price declines among most globally traded commodities. Oil prices dropped over 30% year over year and briefly touched prices below $30/barrel, reaching 12 year lows. According to the Institute of Supply Management (ISM), the overall economy grew for the 79th consecutive month. ISM indicates domestic manufacturing contracted with a reading of 48.2 for Dec ‘15, down from 48.8 in Nov ‘15. The ISM New Orders and Production Index also declined to 49.2 from 49.8 in Dec ’15. ISM readings greater than 50 signal expansion. The US Labor Dept. showed non-farm payrolls increasing in Dec ‘15 by 292,000 jobs with an unemployment rate of 5.0%. Updated figures from the US Dept. of Commerce indicates that GDP expanded at an annual rate of 2.0% in Q3 ’15, 3.9% in Q2 ’15, and .6% in Q1 ‘15.
Sources include: AMM, ISM, Bloomberg, AP, US Labor & Commerce Departments, Domestic Steel Mills