News & Announcements
Market Overview – Mid January 2018
The AMM Shredded Scrap Index for Chicago increased $32/GT as of mid Jan ’18 to $325/GT from early Jan ‘18. The index is at its highest point in roughly three years since late Feb ‘15. 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. Market participants are mixed as to price changes in the coming 30 days. Lack of recent exports, increased domestic demand, and slower flows in some parts of the country due to severe winter conditions have added to the cloudy outlook.
Mill lead times have a broad range of 5-6 weeks for West Coast delivery but can be as long as 9-10 weeks from some Midwest mills when rail is included to the West Coast. Domestic plate mills announced (3) price increases totaling $130/ton between Nov and mid Dec ’17. Domestic plate mills announced an additional price increase of $50/ton in early Jan ’18. Price increases are believed to be issued due to increased demand, rising raw material prices, and uncertainties surrounding Section 232.
Hot Roll Sheet
Mill lead times are at roughly 8-10 weeks for delivery from the Midwest to the West Coast with similar lead times from West Coast mills. Domestic sheet mills have announced (2) price increases totaling $60/ton between mid Nov and early Dec ’17. Domestic mills announced an additional price increase of between $30-$40/ton.
Tube mill rolling cycles are roughly 4-5 weeks for West Coast tube mills. Domestic tube mills announced (2) price increases of $30/ton each, totaling $60/ton, between mid Nov and mid Dec ’17. Domestic tube mills announced an additional $40/ton price increase in early Jan ’18. Tube demand has been cited as brisk since the start of 2018 with price increases in line with changes in the sheet market as tube mills’ primary raw material input.
Lead times remain at roughly 4-7 weeks for most production runs on the West Coast. Domestic merchant bar mills’ issued a price increase of $30/ton in mid Dec ’17 and an additional $30/ton price increase in mid Jan ‘18. The recent price increases are consistent with rising scrap prices. Merchant bar mill Kentucky Electric Steel announced its permanent closure in early Jan ’18 that is expected to take place in Feb ‘18.
Lead times are roughly 6-7 weeks for West Coast delivery. Domestic beam mills announced a price increase of $40/ton in mid Dec ’17 and a $45/ton price increase in mid Jan ‘18. Fewer imports, rising raw material prices, and a bullish sentiment are components fueling the recent price increases.
Chicago shredded scrap prices increased by $32/GT over the past month with uncertainty if prices will continue their upward trend. All product group mills including plate, sheet, tube, merchant bar, and beam announced price increases in early/mid Jan ’18 in addition to announcing price increases in Dec ‘17. The Dept. of Commerce submitted its Section 232 report on steel imports and national security to the White House. The President has 90 days to take a course of action, if any, that may impact steel imports with tariffs, quotas, and/or both. According to the Institute of Supply Management (ISM), the overall economy grew for the 103rd consecutive month in Dec ‘17. ISM indicates domestic manufacturing expanded with an index of 59.7 for Dec ‘17, which is up from 58.2 in Nov ‘17. The ISM New Orders and Production Index expanded with readings of 69.4 and 65.8 respectively in Dec ‘17, up from 64 and 63.9 in Nov ‘17. ISM readings greater than 50 signal expansion. The US Labor Dept. showed non-farm payrolls increasing in Dec ‘17 by 148,000 jobs with an unemployment rate unchanged at 4.1%. The US Dept. of Commerce issued a revised estimate of GDP expansion of 3.2% in Q3 ’17. Previous GDP readings were 3.1% in Q2 ’17, and 1.2% in Q1 ‘17.
Sources include: AMM, ISM, Bloomberg, AP, US Labor & Commerce Departments, Domestic Steel Mills