News & Announcements
Market Overview – Mid February 2018
The AMM Shredded Auto Scrap Index for Chicago remained at $325/GT after increasing $32/GT from early Jan ’18 and up $62/GT from early Dec ‘17. The index is at its highest point in roughly three years since late Feb ‘15. Scrap is a general indicator used by some domestic electric arc furnace mills to help determine price changes for finished steel products. Market participants are mixed as to the direction of price changes in the coming 30 days.
Mill lead times have extended 7-8 weeks from the West Coast and 9-10 weeks when rail is included from plate mills east of the Rockies. Domestic plate mills announced (5) price increases totaling $230/ton between Nov ’17 and late Jan ‘18. Two of the five price increases announced by domestic plate mills occurred in Jan ’18 at $50/ton each. Nucor announced a sixth price increase of $50/ton on February 14th that other domestic mills are anticipated to follow. The Feb 14th price increase would total $280/ton in cumulative increases since Nov ’17. As with the previous month mill price increases are believed to be issued due to increased demand, rising raw material prices, and uncertainties surrounding Section 232.
Hot Roll Sheet
Mill lead times are at roughly 8-10 weeks for delivery from the Midwest to the West Coast with similar lead times from West Coast mills. Domestic sheet mills announced (4) price increases totaling $120-130/ton between mid Nov ’17 and late Jan ’18. Two of the four price increases announced by domestic sheet mills occurred in Jan ’18 raising prices from Midwest sheet mills by $60-70/ton and by $60-90/ton from West Coast sheet mills.
Tube mill rolling cycles are roughly 4-5 weeks for West Coast tube mills. Domestic tube mills announced (4) price increases totaling $120/ton between mid Nov ’17 and early Feb ‘18. The most recent tube mill price increase of $30/ton was announced in early Feb ’18. As with the previous month tube demand has been cited as brisk since the start of 2018 with price increases in line with changes in the sheet market as tube mills’ primary raw material input.
Lead times remain at roughly 4-7 weeks for most production runs on the West Coast. Domestic merchant bar mills announced (2) price increases totaling $60/ton between mid Dec ’17 and mid Jan ‘18. The recent price increases are consistent with rising scrap prices. Floor stock at some merchant bar mills has tightened as mill increases took hold.
Lead times are roughly 6-7 weeks for West Coast delivery. Domestic beam mills announced (3) price increases totaling $125/ton between mid Dec ’17 and early Feb ‘18. Fewer imports, rising raw material prices, and a bullish sentiment are components fueling the recent price increases.
Chicago shredded scrap prices increased by $62/GT since early Dec ‘17 with uncertainty if prices will continue their upward trend in the coming month. All mill product groups including plate, sheet, tube, and beam have announced at least (2) price increases since the start of 2018 with merchant bar mills only announcing (1) increase since the start of the year. The Dept. of Commerce submitted its Section 232 report on steel imports and national security to the White House in mid Jan ‘18. The President has until mid Apr ‘18 to take a course of action, if any, that may impact steel imports with tariffs, quotas, and/or both. According to the Institute of Supply Management (ISM), the overall economy grew for the 105th consecutive month in Jan ‘18. ISM indicates domestic manufacturing expanded with an index of 59.1 for Jan ‘18, which is down from 59.3 in Dec ‘17. The ISM New Orders and Production Index expanded with readings of 65.4 and 64.5 respectively in Jan ‘18, down from 67.4 and 65.2 in Dec ‘17. ISM readings greater than 50 signal expansion. The US Labor Dept. showed non-farm payrolls increasing in Jan ‘18 by 200,000 jobs with an unemployment rate unchanged at 4.1%. The US Dept. of Commerce issued a revised estimate of GDP expansion of 2.6% in Q4 ’17, 3.2% in Q3 ’17. Previous GDP readings were 3.1% in Q2 ’17, and 1.2% in Q1 ‘17.
Sources include: AMM, ISM, Bloomberg, AP, US Labor & Commerce Departments, Domestic Steel Mills