News & Announcements
Market Overview – Mid-September 2020
The AMM shredded auto scrap index for Chicago increased to $280/GT, up $45/GT, from $235/GT achieved in early May ’20. The index is up $13/GT since early Jan ‘20. Demand from domestic mills improved in Aug ‘20 and early Sep ‘20 from prior months. Some scrap dealers have raised prices to attract supply. Scrap exports from the West Coast have been muted with some early September deals to Turkey from the East Coast. Strong iron ore prices have been cited as helping boost domestic scrap prices. Some market participants also expect a modest gain in scrap prices for the coming month.
Mill lead times are 4-5 weeks from the West Coast and 7-9 weeks when rail is included from plate mills east of the Rockies. Domestic plate mills announced two price increases since mid-August. In Aug ’20, domestic mills announced a price increase for $40/ton. The Sep ‘20 price increase announcement varied by mill with Nucor raising prices an estimated $30/ton, while SSAB and Algoma announced a price increase of $40/ton. JSW Steel, located in Baytown, Texas, announced in Sep ‘20 that it was idling plate rolling operations, laying off 270 employees, due to lack of Brazilian semi-finished slab imports curtailed by the US government.
HOT ROLL SHEET
Mill lead times are roughly 6-8 weeks for delivery from the Midwest to the West Coast with similar lead times from West Coast mills. Domestic sheet mills announced two price increases since Aug ‘20. Mills announced an Aug ‘20 price increase of roughly $40/ton, while slab converter, CSI, announced a price increase by as much as $60/ton. Domestic mills, ArcelorMittal and US Steel, both announced prices increases in Sep ’20. ArcelorMittal issued a Sep ’20 price increase of $50/ton, while US Steel increased spot prices by $60/ton. CSI, impacted by the Brazilian semi-finished slab quota reduction, is expected to announce their second price increase in two months before the end of Sep ‘20.
Tube mill rolling cycles are 4-5 weeks for West Coast tube mills. Tube mills have followed domestic hot roll sheet mill price increases with two rounds of price increases of their own. Midwest and West Coast tube mills announced a $50/ton price increase in Aug ‘20, followed by Midwest tube mills issuing another price increase of $50/ton in Sep ‘20. West Coast tube mills have yet to announce a price increase in Sep ’20, but are rumored to take action once CSI comes out with an expected price increase announcement in Sep ‘20. Some tube buyers are on the sidelines holding purchase orders, unsure if the mill prices increases will actually stick.
Lead times are roughly 4-6 weeks for most production runs on the West Coast. With raw material inputs rising, domestic merchant bar mills, including Nucor and Gerdau, issued a price increase of $30/ton in Sep ‘20. With stable demand, higher merchant bar prices are believed to be based primarily on rising scrap prices.
Lead times are roughly 6-8 weeks for West Coast delivery. After domestic beam prices were flat for four months through May, June, July and August, two of the three US beam mills announced a price increase of $30/ton in Sep ‘20. SDI and Gerdau both issued a price increase announcement, with Nucor yet to make a price increase announcement. Beam demand has been cited as sluggish in Q3 ‘20.
Steel prices for all major product lines have increased in Sep ‘20 with plate, sheet, and tube mills also announcing price increases in Aug ‘20. Higher scrap prices are a strong catalyst for rising prices of finished steel. According to the Institute of Supply Management (ISM), manufacturing expanded for the fourth month in Aug ’20 after its first contraction in Apr’ 20, which ended 131 consecutive months of expansion. ISM indicates domestic manufacturing expanded with an index of 56 for Aug ‘20, which is up 1.8 from 54.2 in Jul ‘20. The ISM New Orders and Production Index expanded with readings of 67.6 and 63.3, respectively in Aug ’20. The ISM New Orders are up 6.1 and the Production Index is up 1.2 compared to Jul ’20. ISM readings greater than 50 signal expansion. According to the US Dept. of Labor, the unemployment rate was 8.4% in Aug ‘20, down 1.8% from Jul ’20, after nonfarm payrolls rose 1.4 million. The US Dept. of Commerce issued a Q2 ’20 estimate of GDP contracting at -32.9%, after decreasing 2.5% in Q1 ’20, due to COVID-19 effects on the US economy. US GDP expanded at an annual rate of 2.3% in 2019 and is expected to expand in Q3 ’20.
Sources Include: Domestic Steel Mills, US Labor & Commerce Departments, ISM, AMM, Bloomberg, AP