News & Announcements
Market Overview – Early March 2021
The AMM shredded scrap index for Chicago increased to $450/GT, up $50/GT, from $400/GT achieved in early Feb ’21. The index is up $215/GT since late Aug ’20. After scrap prices retreated in Feb ’21 by $60/ton, some market participants were surprised to see the rebound in scrap prices for Mar ‘21. Scrap demand remains elevated in both domestic and offshore markets with US cargos being exported from both coasts.
Mill lead times are 7-8 weeks from the West Coast and remain at 9-11 weeks when rail is included from plate mills east of the Rockies. In late Feb and early Mar ‘21, North American plate mills issued a new price increase ranging between $70-80/ton. Domestic plate mills have announced eleven price increases since May ’20 for an estimated $630/ton. Limited mill spot tons can be sourced for May production, but availability has not yet fully stabilized.
HOT ROLL SHEET
Mill lead times range between 8-12 weeks for delivery from the Midwest to the West Coast with similar lead times from West Coast mills. Some North American mills have elected to keep order books closed, while other sheet mills are starting to return to providing price and availability information at time of inquiry. According to indexes, coil prices have reached all-time highs in early Mar ’21 with indexes reaching over $1,200/ton. Overall, domestic mills have announced a series of price increases since Aug ’20 moving coil indexes higher by at least $800/ton, which has nearly tripled coil prices. Limited imports and strong domestic demand has temporarily blunted the notion that increasing mill capacity may start to bring prices lower. However, market participants are pointing to substantial capacity increases to occur later this year as justification that prices may erode before year-end.
Tube mill rolling cycles are 4-5 weeks for West Coast tube mills, but reduced coil availability is pushing some mills’ rolling cycles on mechanical sizes out to 5-7 weeks. Tube mills are following domestic hot roll sheet mill price increases since coil is the raw material used in tube manufacturing. Domestic tube mills announced a $50/ton price increase in late Feb ’21. Domestic tube mills have announced eleven price increases for roughly $825/ton since late summer ’20. Tube prices are not expected to retreat until sheet prices decline.
Lead times are roughly 4-6 weeks for most production runs on the West Coast. Domestic merchant bar mill, Nucor, issued an early Mar ’21 price increase of $30/ton, which other US bar mills are expected to follow. Cumulative merchant bar price increases total $240/ton since late summer ‘20. Merchant bar prices did not decrease in Feb ’21 even though scrap dropped by $60/GT, so some buyers were surprised by the early Mar ’21 when demand has been cited as uneven.
Lead times are roughly 8-9 weeks for West Coast delivery as demand continues to strengthen. Domestic beam mills have now issued six price increases since early Nov ’20 totaling $295/ton. The most recent price increase was for $50/ton announced by Nucor in early Mar ’21, which other US beam mills are expected to follow. Price increases for beams are due to tightening supply and a rebound in scrap prices.
Lead times are roughly 4-6 weeks from West Coast rebar mills. Domestic rebar mills have announced a cumulative price increase of $225/ton over five announcements since late summer ‘20. Some market participants expect another price increase in Mar ’21 since scrap prices have rebounded.
Steel prices for all major product lines continue to increase in the past several weeks. Sheet, tube and plate have logged the largest gains over the last several months with cumulative price increases ranging between $630 and $825/ton. After scrap decreased by $60/GT in Feb ’21 it then rebounded by $50/GT in early Mar ’21 adding to the volatility in finished steel. Higher truck and rail transportation costs are also putting upward price pressure for finished steel. According to the Institute of Supply Management (ISM), the overall economy expanded in Feb ’21 for the ninth consecutive month. ISM indicates domestic manufacturing expanded with an index of 60.8 for Feb ‘21, which is up 2.1 from 58.7 in Jan ‘21. The ISM New Orders and Production Index expanded with readings of 64.8 and 63.2, respectively in Feb ’21. The ISM New Orders index is up 3.7 and the Production index is up 2.5 compared to Jan ’21. ISM readings greater than 50 signal expansion. According to the US Dept. of Labor, the unemployment rate was 6.2% in Feb ’21, after nonfarm payrolls increased by 379,000. The US Dept. of Commerce issued a revised Q4 ’20 estimate of GDP that expanded at 4.0%. Q3 ’20 GDP expanded at 33.1%, after decreasing due to COVID-19 effects on the US economy by -31.4% in Q2 ’20 and -5.0% in Q1 ’20. US GDP is expected to significantly expand in Q1 ’21.
Sources Include: Domestic Steel Mills, Scrap Processors, US Labor & Commerce Departments, ISM, AMM, Bloomberg, AP