Steel Products
August Keys to Staying Ahead of the Curve
Written by John Packard
August 12, 2013
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 Packard
Read more from John PackardLatest in Steel Products
US rig count up, Canada declines
Oil and gas drilling activity was mixed this week, according to Baker Hughes. US rig counts expanded for a second straight week, while Canadian activity continued its seasonal slowdown of eight consecutive weeks.
US, offshore CRC prices continue to diverge
US cold-rolled (CR) coil prices declined again this week, slipping for a third straight week. Most offshore markets did the opposite, moving higher this week.
S232 lifts EU HR price over US, Asian HR still well behind
Domestic hot-rolled coil prices were flat this week after dropping for four straight weeks. Most offshore markets bucked the trend and gained ground.
SMU Steel Demand Index dips into contraction
SMU’s Steel Demand Index has moved into contraction, according to late April indicators. The slowdown comes in response to growing tariff uncertainty after the index reached a four-year high in late February.
Nucor selects Fives Group for new galv line at CSI
Nucor Corp. has tapped Fives Group as its partner in designing and manufacturing the new continuous galvanizing line being added at its California Steel Industries (CSI) joint venture in Fontana, Calif.