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POSTED January 20, 2021

Market Overview – Late January 2021

SCRAP                               

The AMM shredded scrap index for Chicago increased to $460/GT, up $90/GT, from $370/GT achieved in early Jan ’21. The index is up $225/GT since late Aug ’20. After scrap prices finalized significantly higher for the second month in a row in Jan ‘21, market participants expect scrap prices to modestly correct in the coming 30 days. While demand remains elevated, higher scrap prices have increased supply flows. Pricing is expected to ease in both domestic and offshore markets in the near term.

CARBON PLATE             

Mill lead times are stabilizing at 7-8 weeks from the West Coast and remain at 9-11 weeks when rail is included from plate mills east of the Rockies. In early Jan ‘21, North American plate mills issued new price increases between $100 and $140/ton after hiking prices twice in Dec ’20. Domestic plate mills have announced ten price increases since May ’20 for an estimated $550/ton. Most North American plate mills including Nucor, SSAB, and Evraz have closed order books for spot tons through February rollings. Mills are expected to open spot ton rolling availability in Mar ‘21 at the announced higher prices.

HOT ROLL SHEET          

Mill lead times range between 8-12 weeks for delivery from the Midwest to the West Coast with similar lead times from West Coast mills. Some North American mills have remained on controlled order entry and keep spot tons closed while other sheet mills are starting to return to providing price and availability information at time of inquiry. According to indexes, sheet prices have reached all-time highs in mid Jan ’21. The latest price change comes from CSI with a price increase announcement of $250/ton in mid Jan ’21 for Apr ’21 rollings. Overall, domestic spot sheet mills have announced a series of price increases since Aug ’20 moving coil indexes higher by at least $700/ton, which has more than doubled mill coil prices. Domestic spot sheet prices are well over $200/ton higher than they were at the height of the Section 232 tariffs in 2018. Additional price increases are expected through Q1 ’21, but sheet prices are expected to retreat in Q2 ‘21 as mills increase capacity.

HSS TUBE                         

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 are following domestic hot roll sheet mill price increases since coil is the raw material used in tube manufacturing. Domestic tube mills announced a $100/ton price increase in early Jan ’21, after boosting prices by $200/ton in Dec ‘20. In addition, Atlas announced a second price increase of $150/ton price in late Jan ’21 that other tube mills have yet to follow. Domestic tube mills have announced nine price increases for roughly $625/ton since late summer ’20, but should other domestic mills follow the most recent Atlas price change, then the cumulative 10 price changes would be roughly $775/ton.

MERCHANT BAR           

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 mid-Jan ’21 price increase of $40/ton after increasing prices twice in Dec ’20 by $110/ton. Cumulative merchant bar price increases total $210/ton since late summer ‘20. Higher scrap prices have been cited as the primary driver for rising merchant bar prices.

BEAM                                

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 five price increases since early Nov ’20 totaling $245/ton. The most recent price increase was for $40/ton announced in mid-Jan ‘21. Price increases for beams are due to strengthening demand and rising scrap prices.

REBAR                              

Lead times are roughly 4-6 weeks from West Coast rebar mills. Domestic rebar mills including Nucor, Gerdau and SDI announced a $50/ton price increase in early Jan ’21, which follows two Dec ’20 price increases for a combined $105/ton. Domestic rebar mills have announced a cumulative $225/ton over five price increases since late summer ‘20. Higher scrap prices have been cited as the primary driver for rising rebar prices.

MARKET                           

Steel prices for all major product lines have increased dramatically over Q4 ’20 with all mills announcing an additional price increase in Jan ‘21. Sheet, tube and plate have logged the largest gains over the last several months with cumulative price increases ranging between $550 and $75/ton. Higher scrap prices can be attributed to roughly $225/ton in finished steel price changes with supply and demand dynamics playing a larger role for the remainder of the changes in plate, sheet, and tube. According to the Institute of Supply Management (ISM), the overall economy expanded in Dec ’20 for an eighth month in a row. ISM indicates domestic manufacturing expanded with an index of 60.7 for Dec ‘20, which is up 3.2 from 57.5 in Nov ‘20. The ISM New Orders and Production Index expanded with readings of 67.7 and 64.8, respectively in Dec ’20. The ISM New Orders index is up 2.6 and the Production index is up 4.0 compared to Nov ’20. ISM readings greater than 50 signal expansion. According to the US Dept. of Labor, the unemployment rate held at 6.7% in Dec ’20 compared to Nov ‘20, after private-sector payrolls declined 140,000. 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 and Q1 ’21.

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

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