News & Announcements
Market Overview – June 2014
The AMM Shredded Scrap Index for Chicago decreased by $18/GT and now stands at $365/GT as of early Jun ’14 from early May ’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 to a modest increase in the next 30 days based on strong demand from Midwest mills supporting automotive.
Mill lead times are roughly 17-20 weeks for delivery from the Midwest with 7-8 week 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 and increased prices again in Jun ’14 by $30/ton. 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 6-7 weeks from the West Coast and 8-11 weeks for delivery from the Midwest. Domestic sheet mills including ArcelorMittal, Nucor, and CSI announced price increases of $40/ton in Apr ’14, but prices have been under pressure over the past 30 days as supply disruptions that occurred earlier in the year start to abate. Supply disruption constricting supply earlier in the year included 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 but recently backslide by $20/ton in the Midwest due to softening sheet prices. West Coast prices have not changed in the past 60 days.
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 five months. Future price changes appear to be dependent on more significant changes to the domestic scrap market and/or changes to import volumes.
Lead times are roughly 6-8 weeks for West Coast delivery. Gerdau and Nucor announced a $20/ton price increase in Mar ’14, prices were left unchanged in Apr ’14, and Gerdau’s price increase of $20/ton announced in late May ’14 was rescinded in early Jun ’14 after other domestic mills failed to follow suit. Beam mills are signaling that nonresidential building continues to improve from recession lows.
Domestic carbon price announcements made by domestic plate mills were up in Jun ’14 with extended lead times, sheet and tube mills in the Midwest have experienced downward price pressure, whereas, and merchant bar and beam mills have left prices unchanged for Jun ’14. Scrap prices decreased by $18/ton in early Jun ’14, but are expected to move sideways to slightly increasing in Jul ’14. According to the Institute of Supply Management (ISM), the overall economy grew for the 60th consecutive month. ISM indicates domestic manufacturing expanded with a reading of 55.4 for May ’14, which is up from an Apr ’14 reading of 54.9. The ISM New Orders and Production Index also reported readings of 56.9 and 61.0 in May ’14 up from 55.1 and 55.7 in Apr ’14 respectively. ISM readings greater than 50 signal expansion. The US Labor Department showed payrolls increasing in May ’14 by 217,000 jobs with an unemployment rate of 6.3%. The US Department of Commerce second revised report indicates that GDP grew at an annual rate of .1% in Q1 ’14, but issued a third revision showing a decrease of 2.9% contradicting earlier reports and down from a 2.6% increase in Q4 ’13.
Sources include: AMM, ISM, Bloomberg, AP, US Labor & Commerce Departments, Domestic Steel Mills.