News & Announcements

POSTED January 03, 2014

Market Overview - January 2014

Scrap

The AMM Shredded Scrap Index for Chicago increased by $23/GT and now stands at $438/GT as of early Jan ’14 from early Dec ‘13. AMM Shredded Chicago scrap is the principle index used by most domestic electric arc furnace mills to help determine price changes for finished steel products. Domestic scrap prices have increased for five consecutive months. The next 30 day outlook is uncertain as scrap price momentum appears to be slowing.

Carbon Plate

Mill lead times are roughly 7-8 weeks for delivery from the Midwest with shorter lead times from the West Coast. Domestic plate mills ArcelorMittal, SSAB, and Nucor have announced cumulative price increases of $100/ton between Oct ’13 through Dec ‘13. SSAB and Evraz have announced additional increases in the amounts of $30/ton and $20/ton respectively in Jan ’14. Plate mill lead times are showing extended lead times in the past two months.

Carbon Sheet

Mill lead times are roughly 5-6 weeks from the West Coast and 7-8 weeks from the Midwest. Domestic sheet mills including ArcelorMittal and Nucor announced cumulative $70/ton price increases from early Oct ’13 through Nov ’13. There have been no additional sheet price increase announcements in Jan ’14 and some market participants are uncertain about the direction of future price increases due to overcapacity questions.

HSS Tubing

Tube mill rolling cycles are holding at roughly 4-5 weeks for West Coast tube mills. Midwest and West Coast tube mills announced cumulative $60/ton price increases between Oct ’13 and Dec ‘13. The basis for price increases was due to domestic sheet mill price increases. Domestic tube mills will most likely not announce additional price increases in the short term without support from domestic sheet mills.

Merchant Bar

Lead times remain at roughly 4-7 weeks for most production runs on the West Coast. After holding prices for five consecutive months, domestic mills announced cumulative price increases of $30/ton between Nov ’13 and Dec ’13. Gerdau and SDI have announced an additional $30/ton price increase in Jan ’14 based on rising raw material inputs.

Beams

Lead times are roughly 5-7 weeks for West Coast delivery. Like merchant bars, domestic beam mills had left prices unchanged for several months, but changed direction and announced cumulative price increases of $30/ton between Nov ’13 and Dec ’13. Gerdau announced an additional $30/ton price increase in Jan ‘14.

Market Overview

Carbon price announcements made by domestic mills were comprehensively up since Oct '13 through Dec '13, whereas, price increases announced in Jan ’14 have only come from some of the product groups. Scrap prices increased significantly by $23/ton through early Jan ’14 from the past month. According to the Institute of Supply Management (ISM), the overall economy grew for the 55th consecutive month. ISM indicates domestic manufacturing expanded with a reading of 57.0 for Dec ‘13, which is the second highest reading of 2013. The ISM New Orders and Production Index also reported readings of 64.2 and 62.2 in Dec ’13 up from 63.6 and down from 62.8 in Nov ’13 respectively. ISM readings greater than 50 signal expansion. The US Labor Department showed payrolls increasing in Dec ‘13 by 74,000 jobs with an unemployment rate of 6.7%. The US Department of Commerce revised report indicates that GDP grew at an annual rate of 4.1% in Q3 ’13, which was up from 2.5% growth in Q2 ‘13.

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