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POSTED May 25, 2022

Market Overview – Mid May 2022

Steel Market Overview – Mid May 2022


The AMM shredded scrap index for Chicago was down $70/GT in May ‘22 after achieving a high of $615/GT in Apr 22. Year-over-year scrap pricing is up roughly $100/GT. Scrap prices increased throughout ‘21 based on strong export and domestic demand while supply channels were constrained. Scrap prices started ’22 lower by roughly $60/GT, but skyrocketed by roughly $120/GT after the conflict in the Ukraine began. Scrap has begun to soften over the past few weeks with some market participants expecting scrap to soften further over the next month.


Mill lead times are 7-9 weeks from the West Coast and are 8-10 weeks when rail is included from plate mills east of the Rockies. After raising prices by roughly $1,220/ton in late ’20 and ’21, North American plate mills, including Nucor and SSAB, kept the elevated pricing unchanged in Jan and Feb ‘22. However, Nucor announced a $40/ton price increase in early Mar ’22 followed by a second $55/ton increase in the same month. Prices were unchanged in Apr ‘22. In May ’22, Nucor announced a $40/ton price decrease for new orders. Some market participants are interpreting that plate prices may have peaked in the near term.


Mill lead times range between 8-10 weeks for delivery from the Midwest to the West Coast with similar lead times from West Coast mills. Domestic sheet prices notched all-time highs in the late summer/early fall ’21, but mill prices steadily eroded through early Mar ’22 by nearly $920/ton. After the conflict in the Ukraine began, prices for raw materials spiked taking sheet prices higher by roughly $500/ton through mid Apr ’22. Coil prices have since retreated by roughly $200/ton in the last four weeks any may continue to soften in the next month.


Tube mill rolling cycles are 5-6 weeks for West Coast tube mills. Domestic tube mills, including Atlas, Nucor, and Maruichi, followed domestic hot roll sheet mill price increases up since coil is the primary raw material used in tube manufacturing. Domestic tube mills announced a total of $500/ton in price increases since early Mar ’22. Prior to recent the recent price increase, domestic tube prices slid roughly $600/ton from mid Nov ’21 to late Feb ’22. Tube mill prices have plateaued and are have yet to follow sheet prices back down. Some market participants expect tube prices to soften in the coming month.


Lead times are roughly 4-6 weeks for most production runs on the West Coast. Domestic merchant bar mills, including Nucor and Gerdau, issued price increases of $50/ton in early Aug ’21 and $50/ton early Nov ’21. Merchant bar prices never fell from their peak achieved in Q4 ’21. Nucor recently announced an additional price increase of $80/ton in early Mar ’22. Merchant bar mill backlog remains strong with mills not expecting to decrease prices in the coming month.


Lead times are roughly 8-10 weeks for West Coast delivery as demand remains steady. Domestic beam mills, including SDI, Gerdau and Nucor, issued twelve price increases since early Nov ’20 through 2021 totaling $655/ton. The most recent price increases included $60/ton in mid Mar ’22 and $60/ton early Apr ‘22. Mill floor stock for standard items is limited and requires buyers to book scheduled rollings to ensure supply. Although scrap prices are softening, mill order books remain strong and downward price adjustments are not anticipated in the near term.


Lead times are roughly 5-7 weeks from West Coast rebar mills. Domestic rebar mills, including CMC, Gerdau and Nucor, Announced a $100/ton price increase in Mar ’22. This was preceded by $30/ton price increase in early Dec ’21. Rebar mills have announced cumulative price increases of $585/ton over twelve announcements since late summer ‘20. Rebar demand is strong with minimal floor stock.


Sheet and tube prices were retreating in Jan and Feb ’22 while plate, merchants, beam and rebar prices remained elevated. Since early Mar ’22 the conflict in Ukraine triggered global commodity prices to climb including oil, grain, and metals. Commodity ramifications resulting from quickening domestic inflation and the conflict in Ukraine are being blamed for rising gas and diesel prices at the pump along with steel mills announcing price increases of $500/ton for sheet and tube, $100/ton for rebar, $80/ton for merchant bars, $95/ton for plate and $120/ton for beam over the last two months. According to the Institute of Supply Management (ISM), the overall economy expanded in Apr ’22 for the 23rd consecutive month. ISM indicates domestic manufacturing expanded with an index of 55.4 for Apr ’22 down from 57.1 in Mar ’22. The ISM New Orders and Production indexes expanded at 53.5 and 53.6 respectively in Apr ’22. ISM New Orders and Production indexes decreased from 53.8 and 54.5 respectively in Apr ’22 compared to Mar ‘22. ISM readings greater than 50 signal expansion. According to the US Dept. of Labor, nonfarm payrolls increased by 428,000 in April ’22 and the unemployment rate decreased to 3.6% further tightening the labor market. The US Dept. of Commerce indicated that real gross domestic product (GDP) contracted at an annual rate of -1.4% in Q1 ‘22 and expanded at 6.9% in Q4 ‘21. Revised estimates indicate that US GDP expanded at 2.3% Q3 ’21, 6.7% in Q2 ’21, 6.3% in Q1 ’21, 4.5% in Q4 ’20 and 33.8% in Q3 ’20 after decreasing due to the pandemic by -31.2% in Q2 ’20 and -5.1% in Q1 ’20. US GDP is expected to expand in Q2 & Q3 ’22.

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

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