News & Announcements
Market Overview – Early January 2020
The AMM Shredded Auto Scrap Index for Chicago increased to $297/GT in early Jan ’20, up from $217/GT in early Nov ’19. The index is up $30/GT in the last 30 days and $80/GT in the last 60 days. 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 steady demand while lower than expected scrap flows have contributed to rising prices.
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 mills have issued (4) price increases since late Oct ’19 for a cumulative increase of $160/ton. The most recent mill price increase of $40/ton was announced in mid-Dec ’19. Initial mill price increases announced in early Q4 ’19 were not fully accepted, but as scrap costs have risen, plate price increases have begun to firm.
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. Domestic coil mills have announced (5) price increases since late Oct ‘19 for a cumulative increase of $190/ton. The most recent mill price increase of $40/ton occurred in early Jan ‘20. Rising scrap prices, reduced mill capacity, and longer lead times have contributed to rising mill coil prices.
Tube mill rolling cycles are 4-5 weeks for West Coast tube mills. After tube prices eroded most of 2019, domestic tube mills have responded by announcing (3) price increase for a cumulative of $120/ton since late Oct ’19. The most recent mill price increase of $40/ton occurred in early Jan ’20. Tube prices are expected to stick in the coming 30 days and some believe another price increase is imminent to keep up with the most recent coil price changes. Coil is a tube mill’s raw material.
Lead times are roughly 4-6 weeks for most production runs on the West Coast. Domestic merchant bar mills issued a price increase of $30/ton in mid Dec ’19. Demand does not appear to be testing merchant bar mills’ capability, as mill floor stock can still be sourced for a variety of sizes. However, with scrap prices rising over the last 60 days, some market participants are expecting another merchant bar price increase from a cost input basis. Prices are not expected to decrease in the coming 30 days.
Lead times are roughly 6-8 weeks for West Coast delivery. Domestic beam mills were reported to be discounting below list price in Nov ’19 to entice business, but by early Dec ’19 discounting had largely ceased due to the rise in scrap input costs. By mid-Dec ’19, domestic beam mills issued a $30/ton price increase. Between sluggish beam demand and rising beam imports, domestic mills have yet to attempt to pass on another price increase to match the recent climb of scrap input costs. Beam prices are not expected to decrease in the coming 30 days.
According to the Institute of Supply Management (ISM), the overall economy grew for the 128th consecutive month in Dec ‘19. ISM indicates domestic manufacturing contracted with an index of 47.2 in Dec ‘19, which is down from 48.1 in Nov ‘19. ISM’s Dec ’19 manufacturing index is at its lowest reading in over 10 years. The ISM New Orders and Production indexes remain in contraction with readings of 46.8 and 43.2, respectively in Dec ’19. The ISM New Orders are down from 47.2 and the Production index is down from 49.1 in Nov ’19. ISM readings greater than 50 signal expansion while readings less than 50 signal contraction. The US Labor Dept. showed non-farm payrolls increasing in Nov ‘19 by 266,000 jobs with an unemployment rate at 3.5%. The US Dept. of Commerce issued a revised estimate of GDP expansion of 2.1% in Q3 ’19 up from 2.0% in Q2 ’19 and down from 3.1% in Q1 ‘19.
Sources Include: Domestic Steel Mills, US Labor & Commerce Departments, ISM, AMM, Bloomberg, AP