SMU Data and Models

Published Mill Lead Times Back for First Time in ~1 Year - and They're Short

Written by Michael Cowden

Published mills lead times are back, another sign that the steel market is returning to something resembling normal.

Hot-rolled coil lead times, for example, are three to four weeks at some mills. That would be unremarkable in a normal market. But it is news after a year in which customers were either on allocation or faced with lead times stretching out for months even for basic products like hot band.

graph down“’Allocation’ is no longer a part of the vocabulary, and spot availability is definitely out there,” one respondent to a recent SMU survey said.

Case in point: Steel Dynamics Inc. (SDI) published its lead times yesterday, the first time the Fort Wayne, Ind.-based steelmaker had released published lead times since mid-December of last year, according to market participants.

A similar trend is shaping up at NLMK USA, which published lead times two weeks ago and again just recently after having not done so since mid-December of 2020, they said.

Another thing struck industry sources: Lead times are short.

Lead times for hot-rolled coil at SDI’s steel mills in Butler, Ind., and Columbus, Miss., are the week of Dec. 27 – or less than a month.

That would not have been notable in the past. SDI typically keeps its lead times short by design, something that sets it apart from others mills that sometimes allow lead times to extend for months even in comparatively normal markets.

But a four-week mill lead time is notable given that, according to SMU records, hot rolled lead times now average approximately six weeks, down from a high of nearly 11 weeks in early July.

Another thing that caught market participants’ attention was that SDI lead times for galvanized products – both hot-rolled base and cold-rolled base – were the week of Dec. 27, or the same as those for hot-rolled coil. That included not only Butler and Columbus but also The Techs, SDI’s galvanizing facilities near Pittsburgh. Only NexTech, in Turtle Creek, Pa., was out to 2022 – with a lead time the week of Jan. 3.

Galvanized product, because it requires more processing, typically carries a longer lead time than hot-rolled coil.

Another notable addition to SDI’s lead time sheet since it was last published in 2020 was its new mill in Sinton, Texas. All lead times for Sinton were listed as “closed” or “inquire.”

NLMK USA also circulated published lead times yesterday.

The company’s mill in Portage, Ind., which only makes hot rolled products, has hot rolled lead times of the week of Jan. 3, 2022, or slightly more than a month from now.

But NLMK’s mill in Farrell, Pa., has hot rolled lead times of the week of Dec. 20, 2021 – or about three weeks from now. Lead times for cold-rolled products at Farrell, meanwhile, are the week of Jan. 3 or the week of Jan. 17. The company listed its galvanized lead times for Farrell as “inquire.”

NLMK’s western Pennsylvania operations, unlike its mill in northwest Indiana, make a full suite of hot-rolled, cold-rolled and coated products.

Market Reaction

“I received a mill lead time from a Midwest mill I haven’t seen in a year showing some late Dec./early Jan. availability,” a second SMU survey respondent said.

“Spot ton availability is increasing,” agreed a third.

“Holes in the order book caused by fourth-quarter slowdown,” another said.

But while lead times might be shorter, it’s not a bad move on the part of mills to resume publishing lead times, some sources said.

“It’s a good move on their part. They’re going to want to try to control the market as the price continues to fall,” one Midwest service center source said.

“As this moves forward, they may want to use this as a way to show a stronger hand. They can say, ‘Hey, look, our lead times are X,’” he said.

In other words, mills could gain leverage in pricing talks by publishing longer lead times if lead times begin to stretch out again in the first quarter following typical seasonal patterns.

In the meantime, with inventories at normal levels and sheet and plate prices approaching parity, perhaps the only missing ingredient to a truly normal market are published sheet price increases, sources said.

For much of 2021, “there was no point in putting them out because they (prices) were going up every couple of days – you couldn’t put out enough letters,” the Midwest source said.

That is no longer the case. Prices are falling. SMU’s hot-rolled coil price peaked in early September at $1,955 per ton ($97.75 per cwt) and has declined ever since.

By Michael Cowden,

Michael Cowden

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