News & Announcements
Market Overview – Early May 2016
The AMM Shredded Scrap Index for Chicago increased $50/GT to $260/GT as of mid Apr ’16 which is up $100/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. Export activity is increasing boosting prices on the East Coast with sales to Turkey and on the West Coast with sales to Asia. Early May sales signal that prices in the Philadelphia region are up, pointing to other domestic markets to follow suit and settle at higher prices in the coming weeks.
Mill lead times increased to roughly 7-8 weeks for delivery from the Midwest with 5-6 week lead times from the West Coast. Domestic plate mills announced four price increases totaling $130/ton from Dec ’15 through Mar ’16. Domestic plate mills announced two additional increases in Apr ’16 totaling $100/ton for new orders. The US Dept. of Commerce has officially initiated the investigation of trade case violations targeting Austria, Belgium, Brazil, China, France, Germany, Italy, Japan, South Korea, South Africa, Taiwan, and Turkey with US mills pointing to dumping margins between 8% and 248%. There is speculation that another plate increase may be announced in May ’16 based on increased scrap prices and the beginning of trade case investigations.
Mill lead times are out 9-12 weeks for delivery from the Midwest with similar lead times from the West Coast. Domestic sheet mills announced four price increases totaling $120/ton from Dec ’15 through Mar ‘16. Domestic sheet producers CSI and Arcelor announced an $80/ton price increase in Apr ’16 and May ’16, respectively, for Jul ’16 production.Domestic production problems, idled furnaces, trade petitions, slower imports, and low service center inventories are supporting price increases. 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 four price increases totaling $120/ton from Dec ’15 through Mar ’16. Domestic tube producers announced an additional increase in Apr ’16 of $60/ton. 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. As sheet prices continue to climb it is anticipated that tube mills will increase prices again in May ‘16.
Lead times remain at roughly 4-7 weeks for most production runs on the West Coast. Domestic merchant bar mills raised prices for the first time this year with a $30/ton increase announced in Apr ’16 from Nucor and a $50/ton increase announced from Gerdau. In addition, Nucor has announced a price increase of $30/ton for May ’16. Imports for merchants are still widely available but domestic bar mills will have to contend with higher scrap prices in the coming month.
Lead times are roughly 6-7 weeks for West Coast delivery. Domestic beam mills have changed prices as Gerdau announced a $40/ton price increase in Apr ’16 with mixed acceptance and Nucor increased the raw material surcharge by $50/ton. Beam imports are abating somewhat but domestic supply still appears to be greater than demand. Reviews are mixed if domestic beam mills will attempt a price increase in May ’16 based on rising scrap inputs.
Scrap prices increased by $50/GT in mid Apr ’16 and may continue to increase in May ’16 based on increased activity. Domestic steel producers for plate, sheet, tube, merchant bar, and beam have announced price increases in Apr ‘16, with at least one major sheet and merchant bar producer announcing a price increase in the first days of May ‘16. Legislation on plate, sheet, and tube products is anticipated to be a headwind for imports and reducing overall supply. According to the Institute of Supply Management (ISM), the overall economy grew for the 83rd consecutive month. ISM indicates domestic manufacturing expanded with an index of 50.8 for Apr ‘16, which is down from 51.8 in Mar ‘16. The ISM New Orders and Production Index expanded with readings of 55.8 and 54.2 in Apr ’16 respectively. ISM readings greater than 50 signal expansion. The US Labor Dept. showed non-farm payrolls increasing in Apr ‘16 by 215,000 jobs with an unemployment rate of 5.0%. The US Dept. of Commerce has issued an advanced estimate of GDP expansion of .5% in Q1 ’16. 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