News & Announcements
Market Overview – Early March 2023
Steel Market Overview – Early March 2023
The AMM shredded scrap index for Chicago was up $84/GT in early Feb ’23 achieving $456/GT. However, the index is still down $159/GT from the ‘22 high achieved in Apr ’22. Scrap prices have increased based on elevated export and domestic demand and tightening supply. Scrap prices are expected to increase again in Mar ’23.
Mill lead times are 7-9 weeks from the West Coast and are 11-13 weeks when rail is included from mills East of the Rockies. After raising prices by roughly $1,220/ton in late ’20 through the first half of ’21, North American plate mills, including Nucor and SSAB, kept pricing mostly unchanged for the first half of ‘22. Nucor announced $480/ton in price decreases beginning in Jun ’22. Plate prices have remained unchanged to begin ‘23, but two domestic mills have issued price notices in Q1’ 23. SSAB announced a $60/ton price increase in mid Jan ’23 that did not appear to materialize. SSAB announced another $60/ton price increase in late Feb ’23 and some market participants stated the mill intended to collect on the $60/ton price increase announced in Jan ’23 as well. Cleveland-Cliffs also announced a $60/ton plate price increase in early Mar ’23. Nucor and Evraz have yet to announce a price increase in Q1 ‘23. With scrap price increases, delays in new capacity and an increase in mill bookings, some market participants are expecting a modest overall price increase to be implemented in the coming month.
HOT ROLL SHEET
Mill lead times range between 9-11 weeks for delivery from the Midwest to the West Coast with similar lead times from West Coast mills. Domestic prices notched all-time highs in the late summer/early fall ’21, but prices steadily eroded prior to early Mar ’22. Overall, domestic mills gave back $920/ton between mid Oct ’21 and Mar ’22. Between late Feb and May ’22 domestic sheet mills issued price increases totaling $500/ton. Since that time coil prices have steadily declined with Q3 & Q4 ’22 price decreases totaling $860/GT. Mill coil prices have rebounded from Dec ’22 lows with increases totaling $380/ton through late Feb ‘23. Some larger mills, including Nucor have announced an additional $150/ton price increase as of early Mar ’23, which would bring the total mill change to $530/ton since the low point of Dec ’22.
Tube mill rolling cycles are 5-6 weeks for West Coast tube mills. Domestic tube mills including, Atlas, Nucor and Maruichi follow, but generally lag domestic hot roll sheet mill price trends as coil is the primary raw material used in tube manufacturing. Domestic tube mills announced a total of $500/ton in price increases between Mar and Apr ’22. Since the price increases of ‘22, domestic mill tube prices slid roughly $760/ton from mid-Jun ’22 to mid-Jan ’23. Tube mill prices are now on the rise with mills announcing $190/ton in total increases since late Jan ’23. As of early Mar ’23, Atlas has announced an additional $100/ton price increase, which if other domestic mills follow would bring the total tube mill price increases up by $290/ton in Q1 ’23.
Lead times are roughly 4-6 weeks for most production runs on the West Coast. Domestic merchant bar mills including, Nucor and Gerdau, issued price decreases of $50/ton in Jul ’22, $60/ton in early Oct ’22 and $70/ton in Dec ‘22. The initial decrease represents the first merchant bar price reduction since May ’20. Pricing has remained unchanged for Q1 ’23. Merchant bar mills are closely monitoring scrap prices, backlogs and end user demand before making additional adjustments. Some market participants would suggest that rising scrap prices would be the catalyst for a merchant bar mill price increase in the coming 30 days.
Lead times are roughly 8-10 weeks for West Coast delivery. Domestic beam mills, including SDI, Gerdau and Nucor, issued fourteen price increases since early Nov ’20 through Apr ‘22 totaling $775/ton. Beam mills enjoyed a two-year run without a price decrease. Jul ’22 ended the beam mill price increase streak with a $60/GT price decrease, which was followed by another $60/ton price decrease in early Oct ’22 and a $90/ton price decrease in Dec ‘22. Mill floor stock for standard items has remained steady compared to late ’22, but some speculate that a modest price increase may be in the works for the month of Mar ’23 based on rising scrap prices.
Lead times are roughly 5-7 weeks from West Coast rebar mills. Domestic rebar mills had announced cumulative price increases of $585/ton over twelve announcements from late summer ’20 to spring of ‘22. Domestic rebar mills, including CMC, Gerdau and Nucor, have since announced a $40/ton price decrease in Sep ’22, a $30/ton price decrease in Nov ’22 and a $40/ton price decrease in Jan ’23. Rebar demand is stable with mill capacity able to support and in some cases are building inventory. Downward pressure for domestic mills to lower prices is abating and some market participants would suggest that prices may increase modestly in the coming month.
After steady price decreases during the last 8 months of ‘22, mill sheet and tube prices are rapidly recovering in the early stages of Q1 ‘23. Merchants, beam and rebar prices also recognized substantial price decreases for the second half of ’22, but have yet to implement price increases. Domestic plate mills are mixed if they will be able to successfully implement a Q1 ’23 price increase as two mills have announced a price increase while the others have not. According to the Institute of Supply Management (ISM), the manufacturing sector contracted in Feb ’23 for the fourth straight month. ISM indicates domestic manufacturing contracted month over month with an index of 47.7 in Feb ’23 up .3 from 47.4 in Jan ’23. Manufacturing PMI has been at the lowest levels since May ’20, when it registered 43.5. The ISM New Orders and Production indexes were at 47 and 47.3 respectively in Feb ‘23. ISM New Orders index increased from 42.5 while the Production index decreased from 48 compared to the previous month. ISM readings greater than 50 signal expansion. According to the US Dept. of Labor, nonfarm payrolls increased by 517,000 in Jan ‘23 and the unemployment rate decreased to 3.4% as the labor market remains tight. The US Dept. of Commerce indicated that real gross domestic product (GDP) contracted in the first two quarters of ‘22 at an annual rate of -1.6% in Q1 ’22 and -.6% in Q2 ’22. Economic activity expanded in Q3 ’22 and Q4 ’22 with a reading of 3.2% and 2.7% respectively. Revised estimates indicate that US GDP expanded at 2.3% Q3 ’21, 6.7% in Q2 ’21, 6.3% in Q1 ’21, 4.5% in Q4 ’20 and 33.8% in Q3 ’20 after decreasing due to the pandemic by -31.2% in Q2 ’20 and -5.1% in Q1 ’20. US GDP for ‘23 has a mixed outlook as some market participants are forecasting a recession while others call for a modest expansion.
Sources Include: Domestic Steel Mills, Scrap Processors, Steel Consumers, US Labor & Commerce Departments, ISM, AMM, Bloomberg, AP