News & Announcements

POSTED March 21, 2018

Market Overview – Mid March 2018


The US Department of Commerce researched the effects of steel and aluminum imports as it relates to national security under Section 232 over much of 2017. The US Department of Commerce submitted its Section 232 report and recommendations on steel and aluminum imports and national security to the White House in mid Jan ’18. The US Department of Commerce also released the Section 232 recommendations in mid Feb ’18 to the public which included options for blanket steel and aluminum tariffs on all countries, steel and aluminum tariffs and/or quotas on select countries, or a steel and aluminum quota for all countries. On March 1st President Donald Trump announced that tariffs of 25% on steel imports and 10% on aluminum imports will be implemented the following week by the US for all countries. On March 8th President Donald Trump followed through with the previous week’s announcement by officially implementing the tariffs of 25% on steel imports and 10% on aluminum imports, but temporarily excluded Canada and Mexico while NAFTA renegotiations are underway. On March 12th Australia joined Canada and Mexico as being excluded from Section 232 tariffs for both steel and aluminum. On March 19th the US Department of Commerce announced the steel and aluminum tariff exclusion process as it relates to Section 232. Visit the US Department of Commerce website at for information on submission requirements requesting exclusions from Section 232 steel and aluminum tariffs.


The AMM Shredded Auto Scrap Index for Chicago increased to $360/GT up $35/GT from early Mar ’18 and up $97/GT from early Dec ‘17. The index is at its highest point in 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. Section 232 ramifications are expected to increase domestic scrap demand but bulk export sales from both the East and West coasts have slowed in early Mar ’18.


Mill lead times have extended 9-11 weeks from the West Coast and 10-12 weeks when rail is included from plate mills east of the Rockies. Domestic plate mills announced (6) price increases totaling $280/ton between Nov ’17 and early Mar ‘18. SSAB announced a seventh price increase of $50/ton in mid Mar ‘18 that other domestic mills are anticipated to follow. Some domestic mills are issuing budgetary prices for Jun ’18 production beyond the formally announced price increases. Price increases are believed to be issued due to increased demand, rising raw material prices, and fewer imports due to worries over Section 232 steel tariffs that are now in place.


Mill lead times are at roughly 10-12 weeks for delivery from the Midwest to the West Coast with similar lead times from West Coast mills. Domestic sheet mill prices have increased roughly $240/ton between Nov ’17 and mid Mar ’18. Price increases have come in a combination of $170-$180/ton in official announcements with spot prices rising another $60-$70/ton in changes to base prices without announcements. Domestic mills are experiencing strong backlogs as lead times increase.


Tube mill rolling cycles are extending to 6-8 weeks for West Coast tube mills as some mechanical sizes are strained due to temporary constricted coil supply and an unplanned outage at one of the mills. Domestic Midwest tube mills announced (6) price increases totaling $230/ton between mid Nov ’17 and early mid Mar ‘18. The most recent tube mill price increase of $60/ton was announced in mid Mar ’18 by Midwest mills and is expected to be followed by West Coast mills. 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 it is 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 (3) price increases totaling $100/ton between mid Dec ’17 and mid Mar ‘18. The total price increases since Dec ’17 are consistent with rising scrap prices over the same time period.


Lead times are roughly 7-8 weeks for West Coast delivery. Domestic beam mills announced (4) price increases totaling $170/ton between mid Dec ’17 and mid Mar ‘18. Fewer imports, rising raw material prices, and a bullish sentiment are components fueling the recent price increases.


Chicago shredded scrap prices increased by $35/GT since early Mar ‘18 with uncertainty if prices will continue their upward trend in the coming month. All mills including plate, sheet, tube, merchant bar, and beam have increased prices since mid Feb ’18. President Donald Trump implemented Section 232 tariffs of 25% for steel and 10% for aluminum imports while exempting Canada, Mexico, and Australia. It is unknown how long the Section 232 tariffs and/or exemptions will last. According to the Institute of Supply Management (ISM), the overall economy grew for the 106th consecutive month in Feb ‘18. ISM indicates domestic manufacturing expanded with an index of 60.8 for Feb ‘18, which is up from 59.1 in Jan ‘18. The ISM New Orders and Production Index expanded with readings of 64.2 and 62 respectively in Feb ‘18, down from 65.4 and 64.5 in Jan ‘18. ISM readings greater than 50 signal expansion. The US Labor Dept. showed non-farm payrolls increasing in Feb ‘18 by 313,000 jobs with an unemployment rate unchanged at 4.1%. The US Dept. of Commerce issued a revised estimate of GDP expansion of 2.5% in Q4 ’17. Previous GDP readings were 3.2% in Q3 ’17, 3.1% in Q2 ’17, and 1.2% in Q1 ‘17.

Sources include: AMM, ISM, Bloomberg, AP, US Labor & Commerce Departments, Domestic Steel Mills