News & Announcements
Market Overview – Late March 2016
The AMM Shredded Scrap Index for Chicago increased to $210/GT as of early Mar ’16 which is up $20/GT from early Jan ‘16. AMM Shredded Chicago scrap is generally used as an indicator by many domestic electric arc furnace mills to help determine price changes for finished steel products. Low prices in 2015 contributed to slower scrap flows and a reduction of scrap inventory throughout the channel. With export activity increasing there appears to be a temporary shortage of readily available shredded scrap.Scrap prices are expected to increase in the coming 30 days.
Mill lead times are roughly 6-7 weeks for delivery from the Midwest with 4-5 week lead times from the West Coast. Domestic plate mills announced price increases of $30/ton in Dec ’15, $30/ton in early Jan ’16, $40/ton in late Feb ’16, and $30/ton in mid Mar ’16. Market participants are attributing the increases to rising raw material costs and low inventory levels. There is some speculation that another plate increase may be announced in Apr ’16 based on increased scrap prices.
Mill lead times increased to roughly 9-12 weeks for delivery from the Midwest with similar lead times from the West Coast. Domestic sheet mills announced price increases of $40/ton in Dec ’15, $20/ton in Jan ’16, $30/ton in early Mar ’16, and $30/ton in mid Mar ‘16. Price increases are supported by trade petitions, slower imports, and low service center inventories. The US Dept. of Commerce has set preliminary countervailing duty on hot rolled steel imports by 23.25% for Australia, 33.91% to 34.28% for Brazil, 5.07% for the Netherlands, 6.97% to 11.29% for Japan, 3.97% to 7.33% for South Korea, 5.24% to 7.07% for Turkey, and 49.05% for the UK.
Tube mill rolling cycles are roughly 4-5 weeks for West Coast tube mills. Domestic tube mills announced price increases of $30/ton in mid Dec ’15, $30/ton in Jan ’16, $30/ton in Feb ’16, and $30/ton in Mar ‘16. The US Dept. of Commerce has set preliminary countervailing duty on tube imports by 2.53% to 3.31% for Korea, 14.48% for Turkey, and 3.99% to 16.31% for Mexico. Tube mill price increases are based on sheet price increases and pending trade action targeting tube related imports.
Lead times remain at roughly 4-7 weeks for most production runs on the West Coast. Merchant bar prices remain flat over the past 30 days. Even though scrap prices have increased, merchant bar mills continue to grapple with competitively priced foreign steel.
Lead times are roughly 6-7 weeks for West Coast delivery. Domestic beam prices remain flat over the past 30 days. Some market participants signal that prices are at the bottom but it has been difficult to generate a price increase based on ample supply. Domestic beam consumption remains stable.
Scrap prices increased by $20/GT in early Mar ’16 and may continue to increase in Apr ’16 based on a lack of supply and rising iron ore prices. Domestic steel producers for plate, sheet, and tube have announced price increases while merchant bar and beam prices remain flat. In addition to countervailing duties established for sheet and tube, rumblings of Section 201 safeguard action have been heard throughout the domestic steel industry as a way to deal with the global overcapacity. According to the Institute of Supply Management (ISM), the overall economy grew for the 81st consecutive month. ISM indicates domestic manufacturing remains in contraction with an index of 49.5 for Feb ‘16, which is up from 48.2 in Jan ‘16. The ISM New Orders and Production Index expanded with index readings of 51.5 and 52.8 in Feb ’16 respectively. ISM readings greater than 50 signal expansion. The US Labor Dept. showed non-farm payrolls increasing in Feb ‘16 by 242,000 jobs with an unemployment rate of 4.9%. Updated figures from the US Dept. of Commerce indicates that GDP expanded at an annual rate of 1.4% in Q4 ’15, 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