News & Announcements

POSTED November 8, 2019

Market Overview – Early November 2019

SCRAP

The AMM Shredded Auto Scrap Index for Chicago decreased to $217/GT down $35/GT from early Oct ’19. The index is at its lowest point since Dec ‘16. Scrap is a general indicator used by some domestic electric arc furnace mills to help determine price changes for finished steel products. Some market participants have cited an increased appetite for domestic scrap while West Coast scrap exports are starting to look more attractive to offshore buyers. Domestic scrap prices are expected to increase over the coming month.

CARBON PLATE     

Mill lead times are 4-5 weeks from the West Coast and 6-8 weeks when rail is included from plate mills east of the Rockies. Domestic plate prices have eroded over the last several months due to lack of demand. Domestic plate mill lead times remain relatively short. Evraz, the West Coast’s only plate mill, announced a price increase of $40/ton in late Oct ’19, while Nucor issued a price increase announcement of $40/ton in early Nov ‘19.

HOT ROLL SHEET   

Mill lead times are roughly 7-8 weeks for delivery from the Midwest to the West Coast with similar lead times from West Coast mills. After sheet prices softened in Oct ’19, domestic sheet mills issued a price increase of $40/ton in late Oct ’19. Domestic mills are signaling that sheet prices have bottomed and have backed up the Oct ’19 price increase announcement with an additional $40/ton price increase announcement in early Nov ‘19.

HSS TUBE 

Tube mill rolling cycles are 4-5 weeks for West Coast tube mills. Domestic tube prices hit a two-year low in Oct ’19, but saw their raw material prices increase when domestic sheet mills announced a $40/ton price increase in late Oct ’19. Domestic tube mills responded by announcing a price increase of $40/ton in late Oct ’19 of their own. Prices are expected to stick in the coming 30 days. Market participants also expect domestic tube mills to follow the sheet mills’ early Nov ’19 price increase.

MERCHANT BAR

Lead times are roughly 4-6 weeks for most production runs on the West Coast. Domestic merchant bar mills announced a price decrease of $30/ton in mid Sep ’19, which coincided with raw material inputs (scrap) prices declining. With scrap prices expected to rise in the coming 30 days it is uncertain if domestic bar mills will initiate a price increase. Prices are not expected to decrease in the coming 30 days. Domestic bar mills have available inventory on some sizes.

BEAM     

Lead times are roughly 6-8 weeks for West Coast delivery. Domestic beam mills announced a price decrease of $30/ton in mid Sep ’19 due to weak demand as the timing of the price change also coincided with a decline in raw material inputs (scrap). Domestic beam mill prices have consistently slid since Q2 ’19 and are approaching two year lows. Domestic beam mills have available inventory on some sizes. Prices are not expected to increase in the coming 30 days.

MARKET

According to the Institute of Supply Management (ISM), the overall economy grew for the 126th consecutive month in Oct ‘19. ISM indicates domestic manufacturing contracted with an index of 48.3 for Oct ‘19, which is up .5 from 47.8 in Sep ‘19. The ISM New Orders and Production Index remain in contraction with readings of 49.1 and 46.2, respectively in Oct ’19. The ISM New Orders are up 1.8 and the Production Index is down 1.1 since Sep ’19. ISM readings greater than 50 signal expansion. The US Labor Dept. showed non-farm payrolls increasing in Oct ‘19 by 128,000 jobs with an unemployment rate at 3.6%. The US Dept. of Commerce issued a revised estimate of GDP expansion of 1.9% in Q3 ’19 down from 2.1% in Q2 ’19 and from 3.1% in Q1 ‘19.

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

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