News & Announcements
Market Overview – Late-November 2020
The AMM shredded auto scrap index for Chicago increased to $290/GT, up $10/GT, from $280/GT achieved in early Sep ’20. The index is up $23/GT since early Jan ’20 and up $55/GT since late Aug ’20. Rising scrap prices are based on light inflows, while scrap demand from domestic steel mills is increasing. Higher scrap prices are supported by export bookings from both East and West Coasts. Some market participants expect scrap prices to remain elevated or generate a modest gain in the coming month.
Mill lead times have extended to 7-8 weeks from the West Coast and 8-10 weeks when rail is included from plate mills East of the Rockies. Domestic plate mills announced a $50/ton price increase in mid Nov ’20 and a $50/ton price increase in mid Oct ’20. In total, domestic plate mills have announced seven price increases since May ’20 for a combined $310/ton. Some of the price increase announcements prior to Sep ’20 did not materialize, but price increases announced in the past three months have been firm.
HOT ROLL SHEET
Mill lead times have extended to 11-12 weeks for delivery from the Midwest to the West Coast with similar lead times from West Coast mills. To control order inflows, some domestic mills keep future order books closed or have used a form of controlled order entry to ensure confirmed orders do not outstrip limited capacity. Domestic sheet mills have announced a series of price increases since Aug ’20 totaling roughly $300/ton. The most recent price increase announced in mid Nov ’20 came from West Coast producer CSI at $70/ton for Feb ’21 orders. Most domestic sheet mills have concluded their Dec ’20 and Jan ’21 spot ton order books with some already cementing higher prices in negotiated contracts for 2021. Coil prices have reached nearly a two-year high resulting from some domestic mills capacity reduction earlier in the year due to COVID related slowdowns, but are now struggling to keep up with increased demand from automotive, durable goods and construction related industries.
Tube mill rolling cycles are 4-5 weeks for West Coast tube mills, but availability may be limited for some sizes. Mechanical tube production is limited due to reduced availability of gauge feedstock from domestic coil mills. Tube mills have followed domestic hot roll sheet mill price increases with price increases of their own. The most recent tube price increases included $75/ton announced in late Nov ’20 and $50/ton announced in late Oct ’20 by Midwest tube mills. West Coast tube mills latest price announcement occurred in Nov’ 20 by $50/ton. Domestic tube mills have announced six price increases for roughly $325/ton over the last three months.
Lead times are roughly 4-6 weeks for most production runs on the West Coast. Domestic merchant bar mills, including Nucor and Gerdau, issued a price increase of $30/ton in mid Nov ’20, which followed an earlier price increase of $30/ton in Sep ‘20. Price increases for merchant bar products are due to strengthening demand and rising scrap prices.
Lead times are roughly 6-8 weeks for West Coast delivery with mill inventory becoming less available. Gerdau and SDI attempted to raise beam prices in Sep ’20 by $30/ton, but the increase was rescinded shortly after. However, domestic beam mills, including Nucor, have now issued two price increases in Nov ’20. The first price increase was for $25/ton in early Nov and the second was for $30/ton in mid Nov ’20. Price increases for beams have been based on rising scrap prices and appear to be firmly accepted in Nov ‘20.
Steel prices for all major product lines have increased significantly between Sep and Nov ‘20 with sheet, tube and plate logging the largest gains. Higher scrap prices, limited capacity and strengthening demand have all contributed to rising prices of finished steel. According to the Institute of Supply Management (ISM), manufacturing expanded for the six month in Oct ’20 after its first contraction in Apr’ 20. ISM indicates domestic manufacturing expanded with an index of 59.3 for Oct ‘20, which is up 3.9 from 55.4 in Sep ‘20. The ISM New Orders and Production Index expanded with readings of 67.9 and 63, respectively in Oct ’20. The ISM New Orders index is up 7.7 and the Production index is up 2.0 compared to Sep ’20. ISM readings greater than 50 signal expansion. According to the US Dept. of Labor, the unemployment rate declined to 6.9% in Oct ‘20, down 1 % from Sep ’20, after nonfarm payrolls rose 638,000. The US Dept. of Commerce issued a Q3 ’20 estimate of GDP that expanded at 33.1%, after decreasing due to COVID-19 effects on the US economy by -31.4% in Q2 ’20 and -5% in Q1 ’20. US GDP is expected to expand in Q4 ’20.
Sources Include: Domestic Steel Mills, Scrap Processors, US Labor & Commerce Departments, ISM, AMM, Bloomberg, AP