News & Announcements
Market Overview – Dec 2016
The AMM Shredded Scrap Index for Chicago increased $30/GT as of Nov ’16 to settle at $228/GT from early Oct ‘16.The index is up $68/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. Market participants expect Chicago shredded scrap will increase by roughly $30-$50/GT in Dec ‘16.
Mill lead times decreased to roughly 7-8 weeks for delivery from the Midwest with 6-7 week lead times from the West Coast. Domestic plate mills have announced price increases of $100/ton since early Nov ’16. Price gains have been attributed to raw material price increases, low service center inventory, fewer import offers, and uncertainty over additional tariffs. Market participants anticipate another price increase to be announced in Dec ’16.
Mill lead times have increased to roughly 7-8 weeks for delivery from the Midwest with similar lead times from the West Coast. Domestic sheet prices have increased by $140/ton since early Nov ’16 through a flurry of price increase announcements. Similar to plate, price gains have been attributed to raw material price increases, low service center inventories, first quarter restocking, and uncertainty over additional tariffs.
Tube mill rolling cycles are roughly 4-5 weeks for West Coast tube mills. Domestic tube mill price announcements have increased $130/ton since early Nov ’16. Tube prices have increased primarily due to rising sheet price. If sheet prices continue to increase, then tube prices may follow in the coming 30 days.
Lead times remain at roughly 4-7 weeks for most production runs on the West Coast. Domestic merchant bar mills were largely flat in Nov ’16 but Nucor and Gerdau announced an increase of $30/ton in early Dec ‘16. The early Dec ’16 merchant bar price increase follows the Nov ’16 scrap price increase. Should scrap prices increase in Dec ’16, then merchant bar prices may follow.
Lead times are roughly 6-7 weeks for West Coast delivery. Domestic beam mills including Nucor, Gerdau, and SDI increased prices by $30/ton in Nov ’16. Modest demand has been reported for domestic beam activity. Beam imports are still available, but import offer prices have increased over the past month.
Chicago shredded scrap prices increased by $30/GT over the past month and are expected to climb an additional $30-$50/GT in Dec ‘16. All carbon product groups saw higher prices in the month of Nov ’16 with the exception of merchant bars that increased in early Dec ‘16. There are indications of price increases coming in the next 30 days for carbon steel products especially if scrap prices rise in Dec ’16 and service centers continue to restock for first quarter. According to the Institute of Supply Management (ISM), the overall economy grew for the 90th consecutive month in Nov ‘16. ISM indicates domestic manufacturing expanded with an index of 53.2 for Nov ‘16, which is up from 51.9 in Oct ‘16. The ISM New Orders and Production Index contracted with readings of 53 and 56 in Nov ’16, up respectively from 52.1 and 54.6 from Oct ‘16. ISM readings greater than 50 signal expansion. The US Labor Dept. showed non-farm payrolls increasing in Nov ‘16 by 178,000 jobs with an unemployment rate at 4.6%. The US Dept. of Commerce has issued an estimate of GDP expansion of 3.2% in Q3 up from 1.4% in Q2 ’16.
Sources include: AMM, ISM, Bloomberg, AP, US Labor & Commerce Departments, Domestic Steel Mills