News & Announcements
Market Overview – Early March 2017
The AMM Shredded Scrap Index for Chicago increased $40/GT as of early Mar ’17 to settle at $323/GT from Feb ‘17. The index is up $125/GT since Nov ‘16. AMM shredded Chicago scrap is a general indicator used by some domestic electric arc furnace mills to help determine price changes for finished steel products. Contributing factors to the rise of scrap prices include increased domestic demand from mills operating at higher utilization rates and Nucor’s unplanned direct-reduced iron (DRI) operation outage in Louisiana. Export activity also saw scrap prices crest $300/GT in early Mar ’17. Increasing scrap flows drawn out from higher prices and Nucor’s DRI operation resuming in March are expected to dampen further scrap price increases in the coming 30 days.
Mill lead times have increased significantly to 9-11 weeks for West Coast delivery from both Midwest and West Coast mills. Domestic plate mills including Nucor, Evraz, and SSAB have announced $30-$40/ton price increases in early Mar ’17 for carbon plate and $50/ton for heat treated plate. Recent price increases have been attributed to anticipated higher scrap prices, planned maintenance at SSAB’s Alabama mill, and increased mill backlogs. Prior to Mar ’17, domestic mills announced price increases of $240/ton between early Nov ’16 and late Jan ’17 over five announcements.
Mill lead times are holding at roughly 7-8 weeks for delivery from the Midwest to the West Coast with similar lead times from the West Coast mills. Domestic sheet prices have increased by $30/ton in Feb ’17 amid limited import offers and increased demand. Overall domestic sheet mills announced price increases of $210/ton between early Nov ’16 and Feb ‘17. Recent scrap price gains could push domestic sheet mills to announce another price increase in the coming month.
Tube mill rolling cycles are roughly 4-5 weeks for West Coast tube mills. Domestic tube mills announced a price increase of $40/ton in Jan ’17 but witnessed some price discounting in Feb ’17 prior to sheet mills increasing coil prices. Overall domestic tube mills have announced price increases of $180/ton between Nov ’16 and Jan ’17. Anticipated higher sheet prices in Mar ’17 may put additional cost pressure on the domestic tube mills to further increase prices in the coming month.
Lead times remain at roughly 4-7 weeks for most production runs on the West Coast. Domestic merchant bar mills’ last price increase announcement was for $25/ton in Jan ’17 after a $30/ton announcement was made in Dec ’16. Domestic merchant bar mills have been cautious to not increase prices and lose market share to competing mills or imports. However, domestic bar mills may be inclined to increase prices based on the recent rise in scrap prices in early Mar ’17 to offset raw material changes.
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 and another $35/ton in late Dec ‘16. Gerdau attempted to increase beam prices by an additional $40/ton in late Jan ’17 but the price increase was rescinded. Beam prices were flat in Feb ’17 as mills attempted to minimize discounted offerings. Construction optimism along with higher scrap prices may contribute to prices moving north in the coming month.
Chicago shred scrap prices increased by $40/GT over the past month with prices not expected to climb higher in the coming 30 days. All carbon product groups saw higher prices between Nov ’16 and Jan ’17 with plate and sheet mills announcing price increases in Feb ’16 and plate mills announcing additional price increases in early Mar ‘17. According to the Institute of Supply Management (ISM), the overall economy grew for the 93rd consecutive month in Feb ‘17. ISM indicates domestic manufacturing expanded with an index of 57.7 for Feb ‘17, which is up from 56 in Jan ‘17. The ISM New Orders and Production Index expanded with readings of 65.1 and 62.9 in Feb ‘17, up respectively from 60.4 and 61.4 from Jan ‘17. ISM readings greater than 50 signal expansion. The US Labor Dept. showed non-farm payrolls increasing in Feb ‘17 by 298,000 jobs. The US Dept. of Commerce has issued a revised estimate of GDP expansion of 1.9% in Q4 which is down from 3.5% in Q3.
Sources include:AMM, ISM, Bloomberg, AP, US Labor & Commerce Departments, Domestic Steel Mills