News & Announcements
Market Overview – April 2014
The AMM Shredded Scrap Index for Chicago increased by $10/GT and now stands at $398/GT as of early Apr ’14 from early Mar ’14. AMM Shredded Chicago scrap is generally used as an indicator by most domestic electric arc furnace mills to help determine price changes for finished steel products. Market participants are forecasting a sideways move with minor fluctuations over the next 30 days.
Mill lead times are roughly 11-12 weeks for delivery from the Midwest with shorter lead times from the West Coast. Domestic plate mills Evraz, ArcelorMittal, SSAB, and Nucor have announced price increases of between $25 and $40/ton in Apr ’14. Extended domestic plate mill lead times are due to strong demand in energy, rail car, bridge infrastructure, and shipbuilding markets.
Mill lead times are roughly 7-8 weeks from the West Coast and 9-12 weeks from the Midwest. Domestic sheet mills including ArcelorMittal, Nucor, and CSI have announced price increases of $40/ton in Apr ’14. Recent price increases are sticking based on extended mill lead times. The recent price increase has recaptured most if not all of the mill price discounting in late Q1 ’14. Mill lead times are extended primarily through supply disruptions including iron ore delays due to extreme weather on the Great Lakes in Q1 ’14 and a facility shutdown at US Steel Corp’s Great Lakes Works where force majeure was declared.
Tube mill rolling cycles are holding at roughly 5-6 weeks for West Coast tube mills. Midwest and West Coast tube mills announced a $40/ton price increase in Apr ’14. Some Midwest mills have announced an additional price increase of $40/ton as of late Apr ’14. The basis for price increase is due to announced domestic sheet mill price increases.
Lead times remain at roughly 4-7 weeks for most production runs on the West Coast. After domestic mills raised prices in Jan ’14, the domestic market has been flat for the past three months. Future price changes appear to be dependent on more significant changes to the domestic scrap market.
Lead times are roughly 6-8 weeks for West Coast delivery. Gerdau and Nucor announced a $20/ton price increase in Mar ’14, but prices were left unchanged in Apr ’14. Beam mills are signaling that nonresidential building is improving leading to an increased demand for beam products.
Carbon price announcements made by domestic plate and sheet mills were up in Apr ’14 with extended lead times. Tube prices are also rising based on increased sheet costs, but merchant bar and beam prices remained flat. Scrap prices increased by $10/ton in early Apr ’14, but are expected to move sideways in May ’14. According to the Institute of Supply Management (ISM), the overall economy grew for the 58th consecutive month. ISM indicates domestic manufacturing expanded with a reading of 53.7 for Mar ’14, which is up from a Feb ’14 reading of 53.2. The ISM New Orders and Production Index also reported readings of 55.1 and 55.9 in Mar ’14 up from 54.5 and 48.2 in Feb ’14 respectively. ISM readings greater than 50 signal expansion. The US Labor Department showed payrolls increasing in Mar ’14 by 192,000 jobs with an unemployment rate of 6.7%. The US Department of Commerce revised report indicates that GDP grew at an annual rate of 2.6% in Q4 ’13 and 4.1% in Q3 ’13.
Sources include: AMM, ISM, Bloomberg, AP, US Labor & Commerce Departments, Domestic Steel Mills.