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POSTED June 23, 2020

Market Overview – Late June 2020


The AMM Shredded Auto Scrap Index for Chicago increased to $255/GT up $28/GT from early May ’20. The index is down $12/GT since early Jan ‘20. Weakening demand for domestic mills has been cited for the export market from both coasts. Views on domestic scrap prices are flat to modestly down for the coming month.


Mill lead times are 5-6 weeks from the West Coast and 6-8 weeks when rail is included from plate mills east of the Rockies. Domestic plate mills announced two price increases since mid-May totaling $80/ton. The two price increases were not fully accepted by the market as demand remains in a lull. Demand is struggling to recover from the COVID-19 pandemic and a particularly hard-hit energy sector.


Mill lead times are roughly 5-8 weeks for delivery from the Midwest to the West Coast with similar lead times from West Coast mills. A second round of domestic price increases occurred in late May of $40/ton, but was not fully accepted. Higher prices were dashed by weak demand as some mills negotiated prices lower for larger buys. Demand is expected to improve as domestic automotive facilities start to ramp up production.


Tube mill rolling cycles are 4-5 weeks for West Coast tube mills. After domestic tube prices hit a three and a half year low in Apr ’20, domestic tube mills located in the Midwest announced a price increase of $40/ton in mid-May. West Coast tube mills elected not to follow the price increase and have kept prices relatively flat over the past 30 days. No price increases are expected in the coming 30 days.


Lead times are roughly 4-6 weeks for most production runs on the West Coast. After domestic merchant bar mills announced a price decrease of $25/ton in late Apr ’20, prices have been flat through May and June. No price increases are expected in the coming 30 days.


Lead times are roughly 6-8 weeks for West Coast delivery. After domestic beam mills announced a price decrease of $25/ton in late Apr ’20, prices have been flat through May and June. As some states start to reopen from COVID-19 related shutdowns, there is some optimism that demand may start to rebound.


Steel prices for all major product lines have not increased in the month of June and direction appears to be for modest declines as mills work to fill their open capacity. According to the Institute of Supply Management (ISM), manufacturing contracted for the second month in May ’20 after a prolonged expansion. ISM indicates domestic manufacturing contracted with an index of 43.1 for May ‘20, which is up 1.6 from 41.5 in Apr ‘20. The ISM New Orders and Production Index remain in contraction with readings of 31.8 and 33.2, respectively in May ’20. The ISM New Orders are up 4.7 and the Production Index is up 5.7 compared to Apr ’20. ISM readings greater than 50 signal expansion. According to the US Dept. of Labor, the unemployment rate was 13.3% after nonfarm payrolls rose 2.5 million for the month of May. The US Dept. of Commerce issued a Q1 ’20 estimate of GDP contracting at -4.8% due to COVID-19 effects on the economy compared to GDP expansion of 2.3% in 2019.

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

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