News & Announcements
Market Overview – Early January 2017
The AMM Shredded Scrap Index for Chicago increased $77/GT as of early Jan ’17 to settle at $305/GT from mid Nov ‘16. The index is up $35/GT since late Dec ‘16. AMM shredded Chicago scrap is a general indicator used by some domestic electric arc furnace mills to help determine price changes for finished steel products. Scrap prices have continued to rise in the absence of strong export activity based on domestic mills appetite for inventory replenishment.
Mill lead times are roughly 6-7 weeks for West Coast delivery from the Midwest with 5-6 week lead times from the West Coast mill. Domestic plate prices have increased $230/ton since early Nov ’16 with five price notices over the last eight weeks. The latest price increase was $40/ton announced on Jan 10th. Price gains have been attributed to raw material price increases, lower service center inventory, and fewer import offers which have been cited as slowing due to tariff action.
Mill lead times are holding at roughly 7-8 weeks for delivery from the Midwest to the West Coast with similar lead times from the West Coast mills. Domestic sheet prices have increased by $180/ton since early Nov ’16. $140/ton of the price increases were announced from Nov through Dec ‘16 and the most recent increase of $40/ton was announced in early Jan ‘17. Similar to plate, price gains have been attributed to raw material price increases, low service center inventories, and uncertainty over additional tariffs.
Tube mill rolling cycles are roughly 4-5 weeks for West Coast tube mills. Domestic tube mill prices have increased a total of $140/ton through two $70/ton price increase announcements in Nov and Dec ’16. Tube mills announced an additional price increase of $40/ton as of Jan 10th based on recent sheet price increases bringing the cumulative tube price change to $180/ton since early Nov ’16.
Lead times remain at roughly 4-7 weeks for most production runs on the West Coast. Domestic merchant bar mills last 2016 price increase announcement came in early Dec ’16 for $30/ton. With recent scrap prices settling higher merchant bar mills increased prices by an additional $25/ton on Jan 10th.
Lead times are roughly 6-7 weeks for West Coast delivery. Domestic beam mills including Nucor, Gerdau, and SDI increased prices by $30/ton in Nov ’16 and another $35/ton in late Dec ‘16. Beam prices have increased as scrap costs rise while overall beam demand is stable. Beam producers are hopeful that infrastructure spending will begin to increase boosting beam demand.
Chicago shred scrap prices increased by $35/GT over the past month posting price gains for three consecutive months. All carbon product groups saw higher prices in the month of Dec ’16 with sheet, plate, tube, and merchant bar prices already climbing in early Jan ‘17. Beam prices may increase in Jan ’17 based on the recent rise in scrap prices. According to the Institute of Supply Management (ISM), the overall economy grew for the 91st consecutive month in Dec ‘16. ISM indicates domestic manufacturing expanded with an index of 54.7 for Dec ‘16, which is up from 53.2 in Nov ‘16. The ISM New Orders and Production Index expanded with readings of 60.2 and 60.3 in Dec ‘16, up respectively from 53 and 56 from Nov ‘16. ISM readings greater than 50 signal expansion. The US Labor Dept. showed non-farm payrolls increasing in Dec ‘16 by 156,000 jobs with an unemployment rate at 4.7%. The US Dept. of Commerce has issued a revised estimate of GDP expansion of 3.5% in Q3, up from 1.4% in Q2 ’16.
Sources include:AMM, ISM, Bloomberg, AP, US Labor & Commerce Departments, Domestic Steel Mills