From Steel Market Update perspective there are a number of keys to watch during the month of August:
• Scrap prices: Shredded scrap prices are forecast to be down $10-$20 per gross ton due to oversupply. Other scrap grades such as
cut grades and prime are forecast to be sideways to down $5 per gross ton as supplies are tighter and demand is stronger which is helping to put a floor under those products and increasing the spread between shred and prime grades.
• Mill price increase collection of previous announcements. As the month of July ended the domestic mills had set benchmarks for base prices on hot rolled, cold rolled and coated steels. Hot rolled is $33.50/cwt-$33.75/cwt, cold rolled and coated base prices at $38.50/cwt-$38.75/cwt. Anticipate a continuation of the push for higher prices.
• New mill price increase announcements. You need to review your relationship with your suppliers to insure that you are receiving the lowest prices possible.
• Service center spot prices rising. As new higher priced material arrives from the domestic mills anticipate higher spot pricing out of the distribution community. Spot prices should be higher by the end of August than they were at the end of July.
• Watch mill lead times and any outages which may impact supply. U.S. Steel Lake Erie Works will not be back in operation during the month of August as their labor situation continues to be an issue for the company. U.S. is also taking down a blast furnace at Great Lakes for maintenance. Severstal Columbus has a caster down due to an accident on July 30th. It is expected to be back in operation by the 6th of August.
• Imports and import pricing – there were some excellent import offers during the first two to three weeks of July. SMU was made aware of Chinese and Russian cold rolled being sold around $630-$640 per ton CIF, Duty Paid, Houston and potentially the East Coast ports. As we enter August import prices were rising. We do not expect imports to surge during the month of August but we do expect them to increase as we move later into the year.
• Both Zinc and Aluminum spot pricing on the LME have been trading within a very narrow ranges. Zinc at $.80-$.85 per pound and Aluminum at $.77-$.82 per pound. Expect this trend to continue through the month of August. This means cost pressures from these metals remain the same as July on Galvanized, Galfan, Galvannealed, ZAM or Galvalume.
• Demand for flat rolled products is anticipated to remain flat for the month of August with the domestic steel mills producing at approximately 77-79 percent utilization rates.
• SMU Price Momentum Indicator is at “Higher” meaning we anticipate a continuation of rising spot prices in flat rolled markets over the next 30 days.
John PackardRead more from John Packard
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