News & Announcements
Market Overview – Mid June 2017
The AMM Shredded Scrap Index for Chicago decreased $10/GT as of early Jun ’17 to $283/GT from mid Apr ‘17. The index is down $40/GT since mid Mar ‘17. 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. There are mixed signals about what scrap prices may do in the coming 30 days. Larger scrap flows and higher than normal scrap imports are putting downward price pressure on scrap whereas the speculation that possible sanctions on US steel imports may boost domestic demand requirements is causing mixed views.
Mill lead times have decreased to 7-9 weeks for West Coast delivery from both Midwest and West Coast mills. Domestic plate prices eased from mid Apr ’17 by $30/ton after rising by $275/ton from early Nov ’16 through mid Apr ’17. Domestic mills announced a price increase of $30/ton in mid Jun ’17. Some suggest the recent price increase was to stem the modest price declines and to bolster prices in anticipation of US sanctions on steel imports. Market participants have cited retreating mill lead times as a point of confusion regarding the recent price increase.
Mill lead times are at roughly 6-8 weeks for delivery from the Midwest to the West Coast with similar lead times from West Coast mills. Domestic sheet prices have decreased by $50/ton in mid Jun ’17 from late Mar ’17. Domestic sheet mills announced $210/ton of price increases between early Nov ’16 and late Mar ’17. In addition, domestic sheet mills recently announced a $30/ton price increase in early Jun ’17. Some sheet buyers have reported to have been decreasing inventories as mill lead times are manageable and demand is tepid which is typical of an early summer dip.
Tube mill rolling cycles are roughly 4-5 weeks for West Coast tube mills. Domestic tube mill prices decreased by roughly $50/ton in May ’17 after increasing by $200/ton from early Nov ’16 to Apr ’17. Tube demand is not robust, but prices could drift higher if the recent sheet price announcement of $30/ton holds.
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 prices have remained flat through mid Jun ’17 since late Jan ’17. Merchant bar demand has also been reported as stable.
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. Domestic beam prices have been flat since Jan ’17 but import prices have been cited as increasing slightly.
Chicago shredded scrap prices decreased by $10/GT over the past month with prices not expected to climb higher in the coming 30 days. Carbon plate, sheet, and tube all experienced modest price declines in the past month(s) after significant price increases occurred earlier in 2017 and late 2016. Merchant bar and beam prices have remained stable since Jan ’17. Domestic plate and sheet mills have issued a price increase of $30/ton in Jun ’17. Industry participants are focused on the Section 232 recommendation from the Dept. of Commerce. The pending Section 232 investigation could yield an outcome that impacts imports with tariffs, imports, or both. Should sanctions indeed occur then domestic steel mills stand to benefit as they would naturally see increased demand. According to the Institute of Supply Management (ISM), the overall economy grew for the 96th consecutive month in May ‘17. ISM indicates domestic manufacturing expanded with an index of 54.9 for May ‘17 which is up from 54.8 in Apr ‘17. The ISM New Orders and Production Index expanded with readings of 59.5 and 57.1 respectively in May ‘17, changed from 57.5 and 58.6 in Apr ‘17. ISM readings greater than 50 signal expansion. The US Labor Dept. showed non-farm payrolls increasing in May ‘17 by 138,000 jobs with an unemployment rate at 4.3%. The US Dept. of Commerce has issued a revised estimate of GDP expansion of 1.2% in Q1 ‘17, 2.1% in Q4 ’16, and 3.5% in Q3 ‘17.
Sources include:AMM, ISM, Bloomberg, AP, US Labor & Commerce Departments, Domestic Steel Mills