News & Announcements
Market Overview – Oct 2016
The AMM Shredded Scrap Index for Chicago decreased $22/GT as of late Sep ’16 to settle at $218/GT from earlier in the month. The index is up $58/GT from early Jan ‘16. AMM Shredded Chicago scrap is a general indicator used by domestic electric arc furnace mills to help determine price changes for finished steel products. Export activity increased in Sep ‘16 with scrap cargoes sold into Asia from the West Coast and Turkey from the East Coast, but not enough to justify stronger prices as demand from domestic mill buyers remains weak. Sellers are reluctant to discount further, but there are rumors of modest price softening in the coming month.
Mill lead times decreased to roughly 5-6 weeks for delivery from the Midwest with 3-4 week lead times from the West Coast. Domestic plate prices have drifted lower by $50/ton since early Sep ’16 as mill order books remain weak. Pricing could see further deterioration as mills with light backlogs are motivated, end user demand is weakening, and service center inventory levels are high. US Commerce Department assessed high preliminary anti-dumping duties against plate imports ranging from 42-94% for Brazil, South Africa, and Turkey. Preliminary countervailing duties against plate from China were also set at 210.5%.
Mill lead times decreased to roughly 5-6 weeks for delivery from the Midwest with similar lead times from the West Coast. Domestic sheet prices have decreased by $50/ton since early Sep ’16 as mill order books soften. Automotive remains a bright spot, but not enough to fill the void of other industries where demand is off. Hot rolled anti-dumping duties have been imposed by the US Commerce Department in the amount of 34.28% for Brazil, 56.68% for South Korean producer Posco, and 47.51% for Japan with lesser duties for other countries.
Tube mill rolling cycles are roughly 4-5 weeks for West Coast tube mills. Domestic tube mill prices have decreased $30/ton since early Sep ’16. Tube prices have softened primarily due to sheet price weakness. If sheet prices continue to decline, then tube prices may follow.
Lead times remain at roughly 4-7 weeks for most production runs on the West Coast. Domestic merchant bar mills decreased prices by $32/ton since early Sep ’16. Prices are down as scrap prices have decreased and cheaply priced imports from Mexico and Asia are persisting. Prices are not expected to increase in the coming month.
Lead times are roughly 6-7 weeks for West Coast delivery. Domestic beam mills have decreased prices by $60/ton since early Sep ’16 based on weakening scrap prices, lackluster demand, and cheaply priced imports. Prices are not expected to increase in the coming month.
Scrap prices decreased by $22/GT over the past month. All carbon product groups saw lower mill prices in the month of Sep ’16 with decreases ranging from $32 to $60/ton. There are no indications of price increases coming in the next 30 days for any carbon steel products and we may see additional price deterioration. Steel imports remain competitive and trade case action is starting to firm up for sheet and plate. According to the Institute of Supply Management (ISM), the overall economy grew for the 87th consecutive month in Aug ‘16. ISM indicates domestic manufacturing contracted with an index of 49.4 for Aug ‘16, which is down from 52.6 in Jul ‘16. The ISM New Orders and Production Index contracted with readings of 49.1 and 49.6 in Aug ’16, down respectively from 52.6 and 56.9 from Jul ‘16. ISM readings greater than 50 signal expansion. The US Labor Dept. showed non-farm payrolls increasing in Aug ‘16 by 151,000 jobs with an unemployment rate at 4.9%. The US Dept. of Commerce has issued a revised estimate of GDP expansion of 1.4% in A2 ’16 and revised down real GDP in Q1 ’16 to .8%. 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