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Market Overview – Mid March 2022
Steel Market Overview – Mid March 2022
SCRAP
The AMM shredded scrap index for Chicago was down roughly $59/GT in Jan ‘22 after achieving a high of $540/GT in late ‘21. The index closed ‘21 up $305/GT compared to late Aug ’20. Scrap prices remained elevated throughout ‘21 based on increased export activity, strong domestic demand and tightening supplies. Shredded scrap prices were up roughly $5/GT in late Feb’22. Significant price increases are expected in Mar ‘22 as global availability concerns grow due to the conflict in Ukraine.
CARBON PLATE
Mill lead times are 5-7 weeks from the West Coast and are 8-10 weeks when rail is included from plate mills east of the Rockies. After raising prices by roughly $1,220/ton in late ’20 and ’21, North American plate mills, including Nucor and SSAB, have kept pricing unchanged in Jan and Feb ‘22. However, Nucor announced a $40/ton price increase in mid Mar ’22 and SSAB announced it will be implementing a raw material surcharge (RMS) tied to the AMM #1 Heavy Melt Chicago index. With scrap prices expected to rise in the coming month, market participants are expecting further increases for delivered plate prices in the next 30 days.
HOT ROLL SHEET
Mill lead times range between 8-10 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 have steadily eroded prior to early March ’22. Overall, domestic mills gave back $920/ton between mid Oct ’21 and Mar ’22. Since late Feb ’22, domestic sheet mills have issued consecutive price increases of $50/ton and $100/ton. Coil indexes are starting to rebound and are now climbing. Additional mill sheet price increases are expected in the coming 30 days.
HSS TUBE
Tube mill rolling cycles are 5-6 weeks for West Coast tube mills. Domestic tube mills, including Atlas, Nucor, and Maruichi, are starting to follow domestic hot roll sheet mill price increases since coil is the primary raw material used in tube manufacturing. Domestic tube mills announced a $150/ton price increase in mid Mar ’22. Prior to recent the recent price increase, domestic tube prices slid roughly $600/ton from mid Nov ’21 to late Feb ’22. Tube mills are expected to increase prices if coil prices continue to increase.
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 price increases of $50/ton in early Aug ’21 and $50/ton early Nov ’21. Merchant bar prices never fell from their peak achieved in Q4 ’21. Nucor recently announced an additional price increase of $80/ton in early Mar ’22. Merchant bar mills are likely to increase prices should scrap continue to rise.
BEAM
Lead times are roughly 8-10 weeks for West Coast delivery as demand remains steady. Domestic beam mills, including SDI, Gerdau and Nucor, issued twelve price increases since early Nov ’20 through 2021 totaling $655/ton. The most recent price increases included $50/ton in late Jul ’21 and $50/ton early Nov ‘21. Mill floor stock for standard items is limited and requiring buyers to book rollings to ensure supply. Due to expected increases in scrap prices, Beam mills are telegraphing price increases are imminent.
REBAR
Lead times are roughly 5-7 weeks from West Coast rebar mills. Domestic rebar mills, including CMC, Gerdau and Nucor, Announced a $100/ton price increase in Mar ’22. This was preceded by $30/ton price increase in early Dec ’21. Rebar mills have announced cumulative price increases of $585/ton over twelve announcements since late summer ‘20. Rebar demand is strong with minimal floor stock. With scrap prices increasing, rebar prices are not expected to soften for the foreseeable future.
MARKET
Sheet and tube prices were retreating in Jan and Feb ’22 while plate, merchants, beam and rebar prices remained elevated. The conflict in Ukraine has triggered global commodity prices to climb including oil, grain, and metals. Commodity ramifications resulting from quickening domestic inflation and the conflict in Ukraine are being blamed for rising gas and diesel prices at the pump along with steel mills announcing price increases of $150/ton for sheet and tube, $100/ton for rebar, $80/ton for merchant bars, $40/ton for plate and beam mills are expected to raise prices soon. According to the Institute of Supply Management (ISM), the overall economy expanded in Feb ’22 for the 21st consecutive month. ISM indicates domestic manufacturing expanded with an index of 58.6 for Feb ’21 up from 57.6 in Jan ’22. The ISM New Orders and Production indexes expanded at 61.7 and 58.5 respectively in Feb ’22. ISM New Orders and Production indexes increased from 57.9 and 57.8 respectively in Feb ’22 compared to Jan ‘22. ISM readings greater than 50 signal expansion. According to the US Dept. of Labor, nonfarm payrolls increased by 678,000 in Feb ’22 and the unemployment rate decreased to 3.8% further tightening the labor market. The US Dept. of Commerce indicated that real gross domestic product (GDP) increased at an annual rate of 7.0% in Q4 and 2.3% in Q3. Revised estimates indicate that US GDP expanded at 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 is expected to expand in Q1 & Q2 ’22.
Sources Include: Domestic Steel Mills, Scrap Processors, US Labor & Commerce Departments, ISM, AMM, Bloomberg, AP
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