News & Announcements
Market Overview – Early December 2020
The AMM shredded scrap index for Chicago remains at $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. Scrap demand, from both domestic mills and exports, has been strong in early Dec ’20 with prices in most markets expected to increase significantly. Anticipated scrap price increases are expected to finalize across the country between $50/ton and $100/ton for Dec ’20.
Mill lead times remain extended at 7-8 weeks from the West Coast and 8-10 weeks when rail is included from plate mills east of the Rockies. North American plate mills, including SSAB and Algoma, announced price increases ranging from $40/ton to $50/ton in early Dec ’20, which follows 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 eight price increases since May ’20 for a combined $350/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. In addition, Nucor has moved to an ex works pricing model that breaks out freight and fuel surcharges separately from material. Nucor’s move is a separation from past practice of freight equalization. Nucor plate will be more expensive the further product travels, affecting the West Coast in particular.
HOT ROLL SHEET
Mill lead times remain extended at 11-12 weeks for delivery from the Midwest to the West Coast with similar lead times from West Coast mills. Coil products remain extremely tight with few spot tons available between now and Mar ‘21. Domestic sheet mills are using forms of controlled order entry, which limits buyers’ ability to secure tons beyond the mill capacity. Domestic sheet mills have announced a series of price increases since Aug ’20 totaling roughly $300/ton, but coil indexes have roared back over $400/ton in the past three months up from a 4-year low achieved this summer. Coil prices are touching a two-year high approaching the 2018 peak spurred by Section 232 tariffs. Higher coil prices are the result of rising raw material costs combined with some domestic mills’ capacity reduction earlier in the year due to COVID related slowdowns, and increased demand from automotive, durable goods and construction related industries. Additional coil capacity is expected to be brought back online in ’21 with USS announcing the restart of its number four blast furnace, but not before prices continue to escalate in the near term.
Tube mill rolling cycles are 4-5 weeks for West Coast tube mills, but reduced coil availability is pushing some mills’ rolling cycles on mechanical sizes out to 5-7 weeks. Tube mills were following domestic hot roll sheet mill price increases with price increases of their own, but stepped out ahead in early Dec ’20. Domestic tube mills announced an early Dec ’20 price increase of $100/ton, which follows earlier price increases of $75/ton announced in late Nov ’20 and $50/ton announced in late Oct ’20. Domestic tube mills have announced seven price increases for roughly $425/ton over the last three-plus 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 $50/ton in early Dec ’20, which follows earlier price increases of $30/ton in mid Nov ’20 and $30/ton in Sep ‘20. Price increases for merchant bar products are due to strengthening demand and rising scrap prices.
Lead times are roughly 7-9 weeks for West Coast delivery with mill inventory becoming less available. Domestic beam mills, including Nucor, SDI, and Gerdau have now issued three price increases in the past five weeks. The most recent price increase was for $70/ton in early Dec ’20, which follows earlier price increases of $30/ton in mid Nov ’20 and $25/ton in early Nov ‘20. Price increases for beams are due to strengthening demand and rising scrap prices.
Lead times are roughly 4-6 weeks from West Coast rebar mills. CMC announced a $65/ton price increase for rebar in early Dec ’20, which was quickly followed by Nucor, Gerdau, and SDI. Domestic rebar mills announced earlier price increases of $30/ton in late Nov ’20 and $40/ton in early Sep ’20. Domestic rebar mills have announced a combined $135/ton in price increases since Sep ’20. The most recent $65/ton price increase looks to keep pace with higher scrap prices expected to firm across the country in early Dec ’20.
Steel prices for all major product lines have increased significantly in Nov ’20 and early Dec ’20. Sheet, tube and plate have logged the largest gains over the last several months with cumulative price increases ranging between $350 and $425/ton. Higher scrap prices are driving rising prices for all finished steel, with limited coil capacity contributing to larger gains in sheet and tube products. According to the Institute of Supply Management (ISM), manufacturing expanded for the seventh month in Nov ’20 after its first contraction in Apr’ 20. ISM indicates domestic manufacturing expanded with an index of 57.5 for Nov ‘20, which is down 1.8 from 59.3 in Oct ‘20. The ISM New Orders and Production Index expanded with readings of 65.1 and 60.8, respectively in Nov ’20. The ISM New Orders index is down 2.8 and the Production index is down 2.2 compared to Oct ’20. ISM readings greater than 50 signal expansion. According to the US Dept. of Labor, the unemployment rate declined to 6.7% in Nov ‘20, down .2% from Oct ’20, after private sector payrolls rose 344,000. 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 -5.0% 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