Algoma Steel Inc. plans to ramp up production at its modernized plate mill toward the end the year.
The Canadian sheet and plate producer said it in the meantime continues hot commissioning at the upgraded facility and has begun cold commissioning as well.
The company said it has also run trials through the plate mill’s heavy-gauge inline shear.
Algoma CEO Michael Garcia said the development was a “key milestone” in press release providing both fiscal Q2 earnings guidance and operations updates.
Recall that the plate mill upgrade has faced significant delays.
Another development on the operations side: Algoma expects to perform planned annual maintenance on its steel-making vessel, including a reline, in its fiscal Q3.
That maintenance comes ahead of Algoma transitioning to EAF production, something that is necessary for it to meet aggressive decarbonization targets.
Work on that transition “has advanced as expected” during the company’s fiscal second quarter. The two EAFs, which will replace Algoma’s two blast furnaces, are on track to be commissioned late in 2024, Garcia said.
Fiscal Q2 Earning Guidance
All told, Algoma expects to ship 450,000 to 550,000 tons of steel in its fiscal Q2.
The company also projects that adjusted earnings before interest, taxes, depreciation, and amortization (ebitda) in Q2 will be Canadian $75 million to $85 million ($55 million to $63 million USD).
That’s significantly lower than adjusted ebitda of C$191.2 million in Algoma’s fiscal first quarter, when it shipped 569,433 tons.
Algoma said recent steel shipments had been hit by “lower than expected” prices resulting from the UAW strike at Ford, GM, and Stellantis operations in the US. The company is “closely monitoring” the expanding strike, Garcia said.
Unlike in the US, auto workers in Canada did not go on strike. But closely interlinked North American supply chains mean that the impact of the UAW strike is being felt outside of the States.
The US scrap market for October is a bit unsettled as the UAW strike against the Big Three automotive companies has expanded and shows scant signs of an imminent settlement. There is only speculation on how the strike will affect both the amounts of steel needed and of scrap produced.
The September market saw #1 busheling shockingly fall $50 per gross ton after NorthStar and Nucor entered the market, the UAW potential strike notwithstanding. A few mills in the southeast only dropped $40 per gross ton. However, shredded, HMS, and P&S all traded sideways from August levels. This divergence raised a few eyebrows in the scrap (our) community.
So, for the coming month, will the mill buyers attempt to take down the obsolete grades they were unable to last month? If so, will the trade support this move, especially when the export markets for these grades have held rock-solid in Turkey? Can they take busheling down further without creating dealer resistance? After all, flows have been waning lately, and the winter months are on the horizon.
A scrap executive in the Chicago area believes #1 grades, like busheling and #1 bundles, will remain weak in October. Shredded and HMS are not as weak. But he sees all grades falling by $10-20 per gross ton.
It seems the events concerning the strike will be the main determinant. Do the mills need prime scrap, like #1 busheling and #1 bundles? I spoke to a retired GM executive about the state of the strike. He said the parts distribution centers were not active, but the parts manufacturing centers were working. This could mean a certain amount of scrap would be generated. Likewise, steel would be needed for these centers. The question is: How much?
On Friday, Sept. 29, it was announced the UAW expanded its strike to more assembly plants at Ford and GM. It’s unclear as to how this will affect production at the stamping plants in Chicago and the Detroit area.
It is noted various flat-rolled mills have scheduled outages in Q4, and they’ll need less prime scrap than they normally would. Apprehension about continued shipments to automakers is also weighing on buying decisions. But the scrap community has faced obstacles like this before. Once the outages are behind us and the strike is settled, the scrap buyers will come back into the market all at once. If this happens, say in November, the price of all grades of ferrous scrap will severely escalate. What the mills save by dropping prices now may not outweigh the increases they could face in December and January. We’ll see what happens shortly.
ArcelorMittal said it expects to produce less steel than previously forecast in Brazil. Gerdau has hinted at potential layoffs as imports surge. The Brazil Steel Institute is asking the government to raise import levies to 25% from the existing 9.6%. Meanwhile, Mexico has applied levies to some steel imports.
Jefferson De Paula, who heads ArcelorMittal’s operations in Brazil, said the company now expects to produce 1.3 million metric tons less steel this year than the previously projected range of 15-16 million metric tons.
Gerdau’s CEO Gustavo Werneck backed the Institute’s call for tariffs, saying the company is close to laying off workers because of under-utilized capacity.
“We now have a plant in Ceara state that is fully idled, plants from north to south of the country that are not operating. People are sitting at their homes waiting for a government decision,” he was quoted as saying by Reuters news agency.
Around 600 Gerdau workers have already had their contracts temporarily suspended, he added.
“The alarm was sounded in July, and the scenario gravely intensified by August. We are in the midst of a true deluge of incoming steel, predominantly from China,” Brazil Steel Institute CEO Marco Polo de Mello Lopes was quoted as saying by local financial newspaper Valor.
Brazil’s import volume in August was 496,000 metric tons, well up on the 252,000-metric-ton monthly average of the past ten years, he added. Last month, China shipped in 302,000 metric tons, equal to 61.3% of the total, with the rest chiefly coming from South Korea and Russia.
“The globe has been under siege by unscrupulous trade behaviors, and this is not recent,” he added.
The import surge comes against a background of apparent consumption in Brazil declining 0.6% in the first eight months of the year and 0.9% in August, Lopes noted.
The Institute would like to see 25% antidumping (AD) tariffs on thick coils, three categories of hot-rolled coils, two categories of cold-rolled coils, galvanized sheets, aluminum-zinc coated sheets, wire rod, rebar, hot-rolled stainless steel, three categories of cold-rolled stainless steel, cold-rolled stainless steel bar, and three categories of seamless tubes.
Elsewhere, trade authorities in Mexico have imposed preliminary AD tariffs of between 12.77% and 81.06% on cold-rolled steel from Vietnam. Under Mexican trade law, interested parties have 20 days from the preliminary findings to comment, the Vietnam News Agency reported.
Learn more about CRU’s services at www.crugroup.com
The number of active oil and gas drilling rigs in the US dropped this week while Canada’s count increased by one, said oilfield services company Baker Hughes in its weekly report.
There were 623 active rigs in the US for the week ended Sept. 29, a decline of seven from the previous week. Oil rigs decreased by five, gas rigs were down by two, and miscellaneous rigs were unchanged.
Active rigs in the US were down by 142 from one year ago when there were 765 rigs in operation. Compared to the previous year, there are 102 fewer oil rigs, 43 fewer gas rigs, and three more miscellaneous rigs.
Active rotary rigs in Canada totaled 191 in the last week of September, up by one from the week prior. Oil rigs remained flat, while gas rigs increased by one.
The Canadian rig count is down by 22 year-over-year, with 29 fewer oil rigs and seven additional gas rigs.
The international rig count is updated on a monthly basis and is therefore unchanged from last week’s report.
The Baker Hughes rig count is important to the steel industry because it is is a leading indicator of demand for oil country tubular goods (OCTG), a key end market for steel sheet.
A rotary rig rotates the drill pipe from the surface to either drill a new well or sidetrack an existing one. Wells are drilled to explore for, develop, and produce oil or natural gas. Baker Hughes’ rotary rig count includes only those rigs that are significant consumers of oilfield services and supplies.
For a history of the US and Canadian rig counts, visit the rig count page on our website.
Pessimism grew among metalformers in September’s business report from the Precision Metalforming Association (PMA). The leading factor in the growing negative sentiment: the possibility of a prolonged United Auto Workers (UAW) strike.
Half of the surveyed metalforming companies expect a downturn in business conditions in the coming months. That figure is up from 29% the month before. Still, 42% are anticipating no change in activity. Just 8% expect better business activity.
Nearly half (47%) of metalformers also predict a decline in incoming orders, up notably from 28% in August.
More metalformers reported higher average daily shipping levels in September – 23% vs. 16% in August. The number reporting no change in shipping levels was unchanged month to month at 42%, PMA said.
“PMA has many members who supply the automotive sector, and the prospects of a prolonged labor strike against the major automakers certainly is reflected in this month’s Business Conditions Report,” PMA president David Klotz in a statement.
“PMA members hope that both sides reach an agreement as soon as possible to avoid further disruption to the economy,” he added.
The PMA represents stampers, fabricators, roll formers, and other value-added processors. Its monthly Business Conditions Report samples 98 metalforming companies in the US and Canada. The report serves as an economic indicator for manufacturing.
The LME aluminum 3-month price was up 4.7% during the last week of the month to close September trading at $2,325 per metric ton – its highest price since early August. Several correlations appeared to have broken down in the short term given the weakness in the US stock market, a weaker copper price, and, critically, the resurgent dollar.
Meanwhile, the SHFE was closed on Friday, Sept. 29, as the Golden Week holiday began. SHFE aluminum prices were also up, extending their recent robust performance. The cash SHFE contract settled at RMB19,710 per metric ton, a gain of 0.7% on the day. Optimism around future Chinese demand and the strong SHFE aluminum rally in recent weeks were seen as important reasons supporting the gains in the LME price.
The US Midwest premium is being offered below the $0.19.5–0.20 per pound mark CRU last cited. There is very little physical demand nearby and the offer may be just a wishful bid. CRU does have evidence of a 2024 position being booked at $0.205 per pound following the forward curve seen in the year ahead. The CME has shifted to $0.19 per pound into 2024 but a larger contango has started to build in 2024. The current level would be difficult to sustain without any uptick in demand, putting most of the risk in the market to the upside as the current rate is near actual costs for freight, warehousing, and insurance. Any large jumps are unlikely, and the expectations are for the premium to continue to float between $0.19-20 per pound for the remainder of 2023.
UAW Goes for the Jugular to Constrain Parts Supply
In the second week into the UAW strike against the Big 3 US auto OEMS – Ford, GM, and Stellantis – the union leadership layered on phase two of the stand-up strike ordering their rank-and-file at 38 parts centers off the job at noon on Friday, Sept. 22. The 38 parts centers, located in 20 different US states, are part of the GM and Stellantis supply chain. Ford was not targeted in the second wave of strikes as the UAW indicated that there had been substantial progress in negotiations with the company, while GM and Stellantis had not yet made sufficient concessions.
While negotiations are ongoing, the move by the UAW aimed at GM and Stellantis will challenge the parties’ willingness to continue the collective bargaining process affecting 145,000 employees and their 40% share of the North American car and light truck market. Things turned even more political the last week of September as President Biden spoke to striking workers.
Constraining parts supply will have a twofold impact on the auto value chain. New car production will be interrupted, further stalling the appetite of US buyers, and putting repair and maintenance work at risk as the parts supply dwindles. Through the first week of the strike, projected economic losses were pegged at $1.6 billion, and losses are expected to escalate exponentially in the next phases of the stand-up strike against the supply distribution network. On Friday, Sept. 29, the strike was expanded to two other Ford and GM assembly plants.
Chinese and Russian Aluminum Associations Sign MoU
The China Nonferrous Metals Industry Association and the Russian Aluminum Association signed a memorandum of understanding during the last week of September. The agreement focuses on enhancing cooperation in alumina, aluminum processing, and other industries, as well as promoting the greater uptake of aluminum in all industries.
Fan Shunke, deputy secretary of the Chinese association, met with Irina Kazovskaya, chair of the Russian association, in China to sign the document. Shunke noted the importance of China as a consumer and the growth in demand for aluminum in photovoltaics, new energy vehicles, and battery energy storage. The application of aluminum materials in urban furniture and daily household products was also highlighted as an important growth area.
Kazovskaya expressed her interest in expanding aluminum consumption and promoting the sustainable development of Russia’s aluminum industry. The state of geopolitics and the changing trade flows, increasing between China and Russia, give this MoU more context.
Learn more about CRU’s services at www.crugroup.com
Electrode producer GrafTech International announced on Thursday, Sept. 28 that its president and CEO would be stepping down.
Marcel Kessler will depart as leader of the Brooklyn Heights, Ohio-based company effective Nov. 15 due to family reasons, the company said in a statement.
Kessler will officially resign as an employee of GrafTech effective Dec. 31 but will continue to serve on the company’s Board of Directors.
Effective Nov. 15, Timothy K. Flanagan, the company’s current CFO and treasurer, will step up to serve as interim CEO.
Current VP and corporate controller Catherine Hedoux-Delgado will take over as interim CFO and treasurer, the company said.
The latest SMU Market Survey results are now available on our website to all Premium members. After logging in at steelmarketupdate.com, visit the Pricing and Analysis tab and look under the “Survey Results” section for “Latest Survey Results.”
Historical survey results are also available under that selection.
If you need help accessing the survey results, or if your company would like to have your voice heard in our future surveys, contact firstname.lastname@example.org.
UAW president Shawn Fain announced a second expansion of the strike against the “Big Three” automakers on Friday.
When will the strike end? And what will it’s impact be on the steel market? We captured a lot of feedback on those issues in our latest survey.
Rather than summarizing the comments we received this week, we are sharing some of them in each buyer’s own words.
We want to hear your thoughts, too! Contact email@example.com to be included in our questionnaires.
How long do you think the strike will last?
“I think at least one more week. But I hope it is resolved before the second half of October. They will have to reach an agreement.”
“Three weeks is enough.”
“There are four weeks of finished units, so it should not last longer than that.”
“At some point, cooler heads will end this thing, but probably not for a while longer. Maybe late October/early November?”
“Ford’s settlement in Canada and their seemingly sincere attempt to settle here will lead the way. But it won’t be easy. The union is aggressive at the moment. This could take another 4 to 6 weeks.”
When do you think sheet will bottom, and why?
“I think the strike will go on through most of October and demand will pick up afterward.”
“We think the dust will settle with the UAW in late October.”
“I feel prices will bottom when the UAW strike is over. Pricing won’t go down much more than where it currently is, unless the strike continues on into November.”
“The length of the auto strike will help shape the bottom and timing for pricing.”
“We’re close. Scrap flow via the growing automotive strike will affect scrap, and domestic mills will hold the line.”
“We were ready to push some small spot price increases last week.”
Where do you think prices will be in two months?
“When the strike is resolved, prices will push upward.”
“Extended contract talks will deflate the number.”
“It’s really driven by when the strike gets settled and short-term needs spike.”
“The end of November will be January lead times. There will definitely be an increase or two by then.”
“Costs of manufacturing are going to prevent prices from lowering much more.”
“I am expecting to see prices fall from here, get to around $600/ton – but then climb back up a little after the UAW strike ends.”
“I feel once the UAW strike is over, prices will spike back up due to low inventories.”
The United Auto Workers (UAW) union expanded its strike on Friday, calling on an additional 7,000 workers at Ford and General Motors to strike as of 12 p.m. ET.
The union remains in talks with all of the Big Three automakers and remains hopeful a deal can be reached soon, UAW president Shawn Fain said in a Facebook Live stream.
“Sadly, despite our willingness to bargain, Ford and GM have refused to make meaningful progress at the table,” Fain said.
UAW Strikes Ford in Chicago, GM in Lansing-Delta Township
Ford’s Chicago assembly plant, which employs 5,700 hourly employees, produces the Ford Explorer, Lincoln Navigator, and Ford Police Interceptor Utility vehicles.
GM’s Lansing Delta Township is one of the automaker’s newest plants in the US, manufacturing the Buick Enclave and Chevrolet Traverse, according to the company’s website.
“Our courageous members at these two plants are the next wave of reinforcements in our fight for record contracts.”– UAW President Shawn Fain –
GM’s Lansing regional stamping plant will continue working, Fain emphasized.
Fain added that the union was not calling on any additional members at Stellantis plants to go on strike. Just before his Facebook Live announcement, “Stellantis made significant progress” toward meeting some union demand – including restoring the 2009 Cost-of-Living Adjustment (COLA), the right not to cross the picket line, and the right to strike over product commitments, plant closures, and outsourcing moratoriums.
“We are excited about the momentum at Stellantis and hope it continues,” Fain stated.
Fain said that as of noon Friday, 25,000 UAW workers would be on strike.
GM’s Gerald Johnson, EVP of global manufacturing and sustainability, released a statement just moments after the UAW’s Facebook Live video.
“We still have not received a comprehensive counteroffer from UAW leadership to our latest proposal made on Sept. 21. Calling more strikes is just for the headlines, not real progress,” Johnson said.
“Our current, record proposal that is on the table offers historic wage increases and job security while not jeopardizing our future,” he added.
Ford said in a statement that “the UAW is holding up the deal primarily over battery plants that will not come online for another two to three years.”
The automaker said the UAW was demanding billions of dollars in costs beyond the billions it has already offered the union. The UAW’s demands “would have devastating implications” for the company and its union jobs, Ford said.
“There is still time to reach an agreement and avert disaster – but not much time given the fragile supply base,” the company said.
“If the UAW’s goal is a record contract, they have already achieved this. It is grossly irresponsible to escalate these strikes and hurt thousands of families,” Ford president and CEO Jim Farley said.
The UAW began its “stand up” strike on Friday, Sept. 15, choosing to strike at one plant of each of the Big Three automakers. A GM plant in Wentzville, Mo.; a Jeep plant in Toledo, Ohio (Stellantis owns the Jeep brand); and a Ford plant in Wayne, Mich.
Last Friday, Sept. 22, the strike was expanded to GM and Stellantis parts distribution centers, impacting 38 locations across 20 states. At that time, the strike was not expanded against Ford, as “real progress” had been made in contract negotiations.
Editor’s note: This is a breaking news story. Please check back for updates.
SMU’s Current and Future Steel Buyers Sentiment Indices both increased this week despite the United Auto Workers (UAW) union strike expansion, based on our most recent survey data.
Every other week we poll steel buyers about sentiment. The Steel Buyers Sentiment Indices measure how steel buyers feel about their company’s chances of success in the current market, as well as three to six months down the road. We have historical data going back to 2008. Check our interactive graphing tool here.
SMU’s Current Buyers Sentiment Index stood at +61 this week, up five points from two weeks prior (Figure 1). Although the UAW strike has been expanding, and shows no sign of ending soon, this hasn’t impacted steel buyers’ bullishness on current market conditions.
SMU’s Future Buyers Sentiment Index measures buyers’ feelings about business conditions three to six months in the future. This week, the index increased to +74 from +71 at the previous market check (Figure 2). This is the highest reading recorded since early March.
Measured as a three-month moving average, the Current Sentiment 3MMA dipped to +58.83 vs. +59.33 two weeks earlier. (Figure 3).
This week’s Future Sentiment 3MMA increased to +67.83 from +65.67 two weeks prior (Figure 4).
What SMU Respondents Had to Say:
“Current market pricing is below cost.”
“We will (be successful in today’s market), but we love low HRC pricing, so that probably isn’t a fair answer.”
“Will move to ‘Good’ once auto strike is over.”
“We hope to continue with the demand for the projects promoted by the federal government in Mexico.”
“We expect a higher more sustainable sales price in 2024.”
About the SMU Steel Buyers Sentiment Index
The SMU Steel Buyers Sentiment Index measures the attitude of buyers and sellers of flat-rolled steel products in North America. It is a proprietary product developed by Steel Market Update for the North American steel industry. Tracking steel buyers’ sentiment is helpful in predicting their future behavior.
Positive readings run from +10 to +100. A positive reading means the meter on the right-hand side of our home page will fall in the green area indicating optimistic sentiment. Negative readings run from -10 to -100. They result in the meter on our homepage trending into the red, indicating pessimistic sentiment. A reading of “0” (+/- 10) indicates a neutral sentiment (or slightly optimistic or pessimistic), which is most likely an indicator of a shift occurring in the marketplace. Sentiment is measured via SMU surveys twice per month.
Nucor Corp. is keeping plate prices unchanged with the opening of its November order book. The sideways move by the steelmaker comes after it lowered plate prices in August, according to SMU’s steel mill price increase calendar.
The Charlotte, N.C.-based steelmaker said the move was effective on Sept. 29, according to a letter to customers, adding that it would be maintaining the prices set in its Aug. 31 price letter.
The notice applies equally to rolled, normalized, and quench & tempered plate products. Published adders and extras will continue to be applied, and the company reserves the right to review and requote any unconfirmed offers, the letter said.
“We reserve the right to review and requote any offers that are not confirmed with either a Nucor sales acknowledgment or written acceptance by both parties,” the company said.
SMU’s latest check of the market on Sept. 27 put discrete plate prices at an average of $1,455 per ton ($72.75 per cwt), FOB mill. The price was down $10 per ton vs. the prior week.
The top end of our range continues to reflect Nucor’s published price.
The news comes as a surprise to many in the market especially given tighter lead times, easing demand, and souring sentiment. But others argued that a lower price point would have little positive impact on demand, only devaluing inventories and lowering replacement costs.
But even more bullish sources expected a marginal decrease given bearish dynamics on the heels of Q4 – a generally slower period when destocking takes precedence.
I didn’t see the Cleveland-Cliffs price increase coming on Wednesday. And I didn’t expect to see a target base price of $750 per ton ($37.50 per cwt) for hot-rolled coil.
But I’ve since heard that other mills, even if they hadn’t publicly announced anything, had been quietly raising prices before Cliffs publicized its increase.
Are they all targeting $750 per ton? Not necessarily. Are some trying to hold the line at $700 per ton? Yes.
It’s a similar thing when it comes to cold-rolled and coated base prices. Cliffs didn’t announce a target price for those products. But market contacts have told me some mills are now seeking base prices as high as $900-950 per ton.
Bears Say It Won’t Stick
Some of you are already telling me that none of this makes any sense. How can you increase HRC prices by ~$100 per ton in the face of a UAW strike – one that is set to expand as soon as tomorrow? (UAW president Shawn Fain will announce the union’s next steps on Friday at 9 a.m. ET on his preferred medium, Facebook Live.)
If the goal was to stabilize the market and get buyers off the sidelines, why not stop at up $100 per ton? Why not set a target of $1,500 per ton? In short, there is no shortage of cynicism about this increase and its chances of success.
But, again, it’s notable that other mills are following, even if they haven’t announced anything yet. And I don’t think it’s wise to brush off the increase as simply mill bluster and wishful thinking.
Bulls Say Strike Price Declines Already Baked In
I’ve spoken to market participants who said the price declines resulting from the UAW strike were already baked into the market – that in fact they’d been mostly baked in even before the strike began.
How does that make sense? Consider this: SMU’s galvanized base price hit a recent peak of $1,035 per ton in mid-July, following a round of price hikes announced by domestic mills in June. Prices have since fallen $170 per ton, or nearly 14.6%, since then, per our pricing tool.
SMU’s lead times for galvanized product have been roughly 6.5-7 weeks on average since then. In other words, prices started falling in July as lead times were pushing into September – the month when the strike began.
Our galvanized lead time now is approximately 6.5 weeks, which is in mid-November – just ahead of Thanksgiving. Also, keep in mind that that’s an average. Some mills are into December, and certain lines are booked out for the balance of the year.
I’d written before that mills had readied price increases of as much as $100 per ton. And that they would unleash them as soon as there was an inkling that the UAW strike might be resolved.
I’m not aware of any firm evidence that the strike will be over before the holidays. But some market participants seem to think lead times are now past the date when a deal (or at least a tentative agreement) might be in hand.
Will Prices Pop, or Pop and Then Drop Again?
As I’ve noted before, sheet inventories were lower in August and could move lower again in September. Meanwhile, imports have slipped. And they are likely to remain low for some time. That’s because most buyers haven’t been ordering foreign steel thanks to competitive US prices.
Domestic sheet prices don’t typically stay at parity or below prices abroad for long. Typically, US prices shoot above the rest of the world again. Are we about to see that liftoff?
I’ve talked to some mills who say they’ve seen a big increase in bookings – that buyers were already getting off the sidelines before the Cliffs increase, and that the company’s price increase only accelerated that trend.
But what happens if the UAW strike broadens to hit more assembly plants and extends past Thanksgiving? That would be beyond current coated lead times. In that case, could we see prices pop now and then drop again? (And if they did pop and drop, would the rebound only be sharper in Q1?)
Let me know your thoughts.
Steel 101: Oct. 24-25 in Charleston, S.C.
It’s no joke that space is limited for the SMU’s Steel 101 workshop. We can only take as many people as will fit on the bus for the tour of Nucor Steel Berkeley.
It’s a great experience. Students will learn about how steel is made in the morning of the first day, and then see (and feel the heat of) it being made in the afternoon. They’ll also get to network with each other and with SMU’s instructors.
Register here if you or someone you know is interested – before the seats on the bus are gone!
On Sept. 15, the United Auto Workers (UAW) went on strike at three plants, one of each of the Big 3. On Sept. 22, the UAW expanded its strike to 38 more GM and Stellantis plants. Since Sept. 15, the HRC futures curve has rallied $60-75 in the November – February futures months. The reason why there has been this breakneck rally is because, uh, well, um. I have no idea. I am as shocked by it as perhaps you are, frankly.
CME Hot-Rolled Coil Futures Curve $/st
My last contributing article was on Aug. 10. That was before the SMU Steel Summit, where so much time was spent discussing the potential auto strike. In that article, I discussed the surprising rally in the August futures, screaming up from $800 around Memorial Day to as high as $995 in mid-July before eventually plummeting back to around where it started at $805. It appears that some market participant or participants lost a lot of money trading this future, while those that took the other side of those trades were rewarded handsomely.
August CME HRC Future $/st
“Stay open-minded” about pricing is something I like to say in these articles. Stay open-minded about this auto strike and about pricing. Thinking back to the Steel Summit, to the discussions, forecasts, and opinions about the strike. Would the UAW strike? If so, how? Would it be at one company or all three? I think the reality has surprised everyone, and that should remind us of how unpredictable not only this market is, but also has been for years. Remember Q1? Remember Russia’s escalation into Ukraine? Remember $1,900 hot rolled? Remember COVID? Remember Cliffs buying ArcelorMittal? The list goes on and on. This isn’t crazy, this is hot rolled.
Despite all of this uncertainty, open interest, or the number of outstanding futures contracts, or tons in this case, across a product’s curve, remains near multi-year lows. Open interest fell to 367,000 tons Wednesday night following the expiration of the September future. Open interest climbed to an all-time high of 903,000 tons in January 2022. To me, current open interest tells us there is a relatively large number of unhedged physical tons at service centers.
Rolling 2nd Month CME HRC Future $/st & Open Interest (red) (22-day M.A. ylw)
I find this baffling because of the price risk tied to the auto strike, but even more so because of the massive carry in the futures curve relative to physical spot. This chart compares this week’s $666 CRU print with the futures curve. The December future is $158 above this week’s CRU. January is $180, February $190, and March $195 above this week’s CRU. I don’t know what kind of profit margin your service center or trading company expects to earn, but a 27% margin seems a bit rich, making these futures extremely attractive as a hedge. Thus why the rally seen in response to the auto strike is even more surprising.
CME Hot Rolled Coil Futures Curve $/st
Since the UAW started taking action on Sept. 15, volume has picked up dramatically, as shown below.
October CME HRC Future $/st w Aggregate Curve Volume & 5-Day Avg. (yel)
There was a flurry of buying that came into the market last week that was mostly focused on the November and December months. The relentless buyer or buyers attracted those looking to “roll” forward their short October positions. That means they would buy in their October short positions and simultaneously sell the November or December futures one for one. This is called a calendar spread. For a calendar spread to transact, both sides of the trade have to be executed simultaneously.
There was the relentless buyer of the November and December futures and then there were the parties interested in spreading October to November/December. All that was needed were sellers of the October future. As a result, the October future started to get bid up, first trading to $720, and then thousands of tons traded at $730 on Thursday and Friday.
If you do the math, that implies a CRU of around $800 by the last week of October. However, the spreaders didn’t care what they paid for the October future because they were spreading it forward to the tune of $50-70. This created an anomalous situation that allowed some players to step in and make an extremely favorable trade from a risk-reward standpoint. The upward pressure on the October future went away and it quickly fell back to as low as $689 on Tuesday. However, in the moment, there were some, myself included, wondering what was going on. What am I missing here?
I am comfortable admitting that I don’t know where prices will be in 60 or 90 days, let alone further out in time. Perhaps those buying the November and December futures last week will make a nice profit. Perhaps those locking in forward pricing in Q1 at $850 will prove to have made a wise decision. What surprises me is that we haven’t seen a surge of selling by service centers and importers to lock in abnormally large profits by purchasing physical HRC in the $600s and selling futures in the mid-$800s. You steel folks baffle me time and time again. What is funny to me is when physical players call hedging “just gambling.”
Keep an open mind about prices, my friends.
United Auto Workers (UAW) union president Shawn Fain is scheduled to make an announcement on Facebook Live, according to the UAW International Union’s Facebook page.
The live stream is set for Friday, Sept. 29 at 10 a.m. ET (9 a.m. CT). There’s a possibility that Fain could announce another expansion of the strike against the “Big Three” automakers – Ford, General Motors, and Stellantis – the owner of Chrysler.
A spokesperson for the UAW did not respond to a request for more detail on what Fain might say.
An announcement expanding the strike against General Motors and Stellantis parts distribution centers was made on a Sept. 22 via Facebook Live. The UAW spared Ford at the time because it said the automaker was “serious about reaching a deal,” Fain said.
The union began its strike against the “Big Three” automakers on Sept. 15, hitting one assembly plant at each of the “Big Three.”
Sheet lead times were mixed this week, the continuation of a trend we’ve seen since the summer months.
But in a new development, those for plate collapsed, according to SMU’s most recent market survey.
Current mill lead times are now well into late October, November, and early December, depending on product and mill source.
Steel Mill Lead Times This Week
Hot rolled lead times were reported by buyers this week to be between 3 and 7 weeks, with an average of 4.55 weeks. That’s 0.16 weeks shorter than in our previous market check and the shortest lead time for hot rolled since late July.
Surveyed buyers reported lead times for cold rolled ranging from 5 to 8 weeks. SMU’s average cold rolled lead time extended by 0.28 weeks from our Sept. 14 market check to 6.46 weeks this week.
Lead times for galvanized sheet were also said to be between 5 and 8 weeks with an average of 6.54 weeks. That’s a contraction of 0.27 weeks from the survey two weeks ago, and the shortest lead time for galvanized product since early July.
Galvalume lead times were reported between 5 and 10 weeks. The average of 7.33 weeks inched up by 0.19 weeks from the prior market check. Note that figures for Galvalume can be volatile due to the limited size of that market and our smaller sample size.
Plate lead times, meanwhile, were reported between 4 and 7 weeks. They plummeted by 0.87 weeks from our prior check to an average of 4.86 weeks this week. That’s the shortest lead time for plate since January. Plate lead times had been between 5 and 6 weeks during August and the first half of September. Prior to that, they’d been above 6 weeks since mid-March.
The plate market has been under pressure and appears to showing signs of weakness on the price front as well. SMU will publish a plate market report in our next issue with more details and commentary from market sources.
This Week’s Survey Says
Nearly half (47.5%) of surveyed service centers and manufacturers this week categorized current domestic lead times as “shorter than normal,” while 42.5% said they are “normal.”
One manufacturer predicted lead times will be extending two months from now, commenting that “after [the UAW] strike is over, everyone will run to the door to place orders.”
A trader, foreseeing extending lead times two months from now, said they think the industry is “cranking it down too much” in response to market developments and the strike. Starting in late December and early January, they think “there will be a relatively short bounce-back” in lead times.
Another manufacturer thinks lead times will be flat two months out, but with them “so dang short,” this is still a problem. His company doesn’t “see a true catalyst for a pricing rebound.”
3MMA Lead Times
Let’s have a look at lead times on a three-month moving average (3MMA) basis, which can smooth out the variability in SMU’s biweekly readings.
Hot rolled’s 3MMA was at 4.7 weeks since the Aug. 31 market check, but this week it fell back to 4.6 weeks.
The 3MMAs for cold-rolled and galvanized sheet held steady at 6.4 and 6.7 weeks, respectively.
Galvalume’s 3MMA inched up by 0.1 weeks from two weeks prior to 7.0 weeks – the longest seen since July.
Plate’s 3MMA came in at 5.5 weeks this week, a decline of 0.2 weeks from two weeks earlier. That’s the shortest 3MMA for plate lead times since March.
Note: These lead times are based on the average from manufacturers and steel service centers participating in this week’s SMU market trends analysis. SMU measures lead times as the time it takes from when an order is placed with the mill to when the order is processed and ready for shipping, not including delivery time to the buyer. Our lead times do not predict what any individual may get from any specific mill supplier. Look to your mill rep for actual lead times. To see an interactive history of our steel mill lead times data, visit our website here.
Worthington Industries has so far been little impacted by the United Auto Workers (UAW) strike, company executives said.
“Obviously, the situation is front and center for us,” said Tim Adams, VP of strategy and corporate development for Worthington’s steel processing division.
“So far, it has had little impact on our business,” he added.
Should the strike expand, Worthington has plans to address any slowdown in business, Adams said.
Although there are risks associated with the strike, there are also opportunities. Worthington has put itself in a position to win new business should the market rebounds once the strike is resolved, he said.
“Customers remember which suppliers did their best to help them navigate through these tough situations,” Adams said.
But Worthington executives acknowledged on the call that the near-term challenges in the automotive market might impact the company’s results in the current quarter (fiscal Q2 2024).
Commenting on the prior quarter’s results (fiscal Q1 2024), Adams said declines in the residential and nonresidential construction markets offset significant year-on-year growth in automotive volumes.
President and CEO Andy Rose said that the Columbus, Ohio-based service center and manufacturer’s planned spinoff of its steel business is ahead of schedule and on track for completion by year’s end.
Rose said Worthington Steel, the future name of its service center business, would have significant opportunities to grow its core markets and to grow into other markets, such as electrical steel.
“In terms of the electrical steel business, that’s the business that’s going to continue to grow. And we’re investing in that business,” CFO Joseph Hayek said.
“Despite some potential near-term challenges, it’s a very exciting time to be in steel,” Adams added.
The overall steel mill negotiation rate remained level this week vs. two weeks earlier, but plate’s rate fell by 15 percentage points, according to SMU’s most recent survey data.
Every two weeks, SMU asks steel buyers whether domestic mills are willing to negotiate lower spot pricing on new orders. This week, 90% of participants surveyed by SMU reported mills were willing to negotiate price on new orders, the same as the previous market check (Figure 1). That’s a huge change from the end of the first quarter, when the rate stood at 24%.
Figure 2 below shows negotiation rates by product. Hot rolled rose one percentage point from two weeks prior to 91% of buyers saying mills are willing to negotiate on pricing. Cold rolled stood at 90% (+4 pts), galvanized at 100% (+14), and Galvalume at 84% (-16 pts). Recall that Galvalume can be more volatile because we have fewer survey participants there.
Meanwhile, the percentage of steel buyers saying mills were willing to negotiate spot pricing on plate orders stood at 75%, down from 90% at the previous market check.
Note: SMU surveys active steel buyers every other week to gauge the willingness of their steel suppliers to negotiate pricing. The results reflect current steel demand and changing spot pricing trends. SMU provides our members with a number of ways to interact with current and historical data. To see an interactive history of our Steel Mill Negotiations data, visit our website here.
US hot-rolled coil (HRC) continues to be a better deal than foreign coil.
That’s because US prices fell more than those overseas this week, according to SMU’s latest foreign vs. domestic price analysis.
The Big Picture
Domestic HRC prices have fallen since peaking in mid-April. Foreign prices have decreased too. But domestic declines have outpaced those abroad.
Case in point: US tags have fallen by $245 per ton ($12.25 per cwt) since mid-July. Offshore price slipped just $42 per ton on average over the same period.
The result: Imported product is now more than 10% more expensive than domestic material once freight and other costs are accounted for. That’s a big change from earlier this year, when US HRC was as much as 23% more expensive than imported HRC.
SMU’s price for domestic HRC stands of $645 per short ton on average this week, down $15 per ton from last week. US HRC prices have fallen to their lowest level since early December 2022, according to our pricing tool. They are also down $515 per ton since peaking this year at $1,160 per ton in April.
This is how SMU calculate the theoretical spread between foreign HRC prices (delivered to US ports) and domestic HRC prices (FOB domestic mills): We compare the SMU US HRC weekly index to the CRU HRC weekly indices for Germany, Italy, and East and Southeast Asian ports. This is only a theoretical calculation. Import costs can vary greatly, influencing the true market spread.
We add $90 per ton to all foreign prices as a rough means of accounting for freight costs, handling, and trader margin. This gives us an approximate CIF US ports price to compare to the SMU domestic HRC price. Buyers should use our $90-per-ton figure as a benchmark and adjust up or down based on their own shipping and handling costs. If you import steel and want to share your thoughts on these costs, please contact firstname.lastname@example.org.
Asian Hot-Rolled Coil (East and Southeast Asian Ports)
As of Thursday, Sept. 28, the CRU Asian HRC price was $513 per ton, down $4 per ton from the previous week. Adding a 25% tariff and $90 per ton in estimated import costs, the delivered price of Asian HRC to the US is approximately $731 per ton. The latest SMU hot rolled average for domestic material is $645 per ton.
The result: US-produced HRC is now theoretically $86 per ton cheaper than steel imported from Asia.
Italian Hot-Rolled Coil
Italian HRC prices fell $17 per ton this week to roughly $602 per ton. After adding import costs, the delivered price of Italian HRC is in theory $692 per ton.
That means domestic HRC is now theoretically $47 per ton cheaper than HRC imported from Italy. That’s a big difference from late March, when US prices were $260 per ton more expensive than prices for Italian hot band.
German Hot-Rolled Coil
CRU’s German HRC prices fell $8 per ton WoW to $623 per ton. After adding import costs, the delivered price of German HRC is in theory $713 per ton. The result: Domestic HRC is now theoretically $68 per ton cheaper than HRC imported from Germany.
Figure 4 compares all four price indices. The chart on the right zooms in to highlight the difference in pricing from the second quarter of this year to the present.
Notes: Freight is important in deciding whether to import foreign steel or buy from a domestic mill. Domestic prices are referenced as FOB the producing mill, while foreign prices are CIF the port (Houston, NOLA, Savannah, Los Angeles, Camden, etc.). Inland freight, from either a domestic mill or from the port, can dramatically impact the competitiveness of both domestic and foreign steel. It’s also important to factor in lead times. In most markets, domestic steel will deliver more quickly than foreign steel.
Effective Jan. 1, 2022, the traditional Section 232 tariff no longer applies to most imports from the European Union. It has been replaced by a tariff rate quota (TRQ). Therefore, the German and Italian price comparisons in this analysis no longer include a 25% tariff. SMU still includes the 25% Section 232 tariff on foreign prices from other countries. We do not include any antidumping (AD) or countervailing duties (CVD) in this analysis.
Worthington Industries Inc.
|First fiscal quarter ended Aug. 31||2023||2022||% Change|
|Per diluted share||$1.93||$1.30||48.5%|
Worthington Industries Inc. on Wednesday reported net income of $96.1 million in its fiscal 2024 first quarter, up 49.9% from a year earlier despite net sales falling 15.3% over the same period.
The Columbus, Ohio-based service center and manufacturer said the drop resulted mostly from lower average prices in its steel processing division as well as lower overall sales volumes.
Steel processing, the service center wing of the company, posted net sales of of $881.3 million in fiscal Q1, down 15% from $1.039 billion in the same quarter last year. The drop came despite steel processing’s fiscal Q1’24 sales volumes weighing in at 999,658 tons, up 2.6% from 974,649 tons in fiscal Q1’23.
Recall that Worthington plans to split itself into two, separate publicly traded companies as soon as December.
The steel processing division, which accounts for most of its net sales by value, will become “Worthington Steel”. The company’s downstream divisions – consumer products, building products, and sustainable energy solutions – will become “Worthington Industries.” Those divisions account for the bulk of sales volumes.
Consumer products, the biggest segment of the downstream divisions, posted lower net sales and lower sales volumes. It recorded net sales of $149.3 million in fiscal Q1’24, down 20.8% from $188.7 million in fiscal Q1’23 on sales volumes that fell 23.7% to 17.07 million tons.
But Worthington should remain on solid footing despite economic headwinds, president and CEO Andy Rose said in a statement released with earnings figures.
“Our businesses continue to perform well despite some economic uncertainty and signs that consumers are stretched,” Rose said in the statement.
“Our experienced teams continue to navigate the current environment exceptionally well,” he added.
US President Joe Biden is set to meet European Commission President Ursula von der Leyen and European Council President Charles Michel on Oct. 20 in Washington ahead of a deadline for an agreement on steel, according to a report in Reuters.
The meeting comes as negotiations are due to expire on Oct. 31 for the Global Arrangement on Steel and Aluminum, which is being worked on by the EU and the US.
“I think there is willingness on both sides at least to reach an agreement,” a senior EU official was quoted in the article as saying. The official preferred to remain anonymous.
If a deal is not reached, this could trigger the reinstatement of Section 232 tariffs on steel and aluminum on EU exports to the US. These tariffs have been suspended since 2021.
In turn, this could provoke retaliatory measures by the EU. Additionally, a possibility exists that some interim accord can be reached, and the negotiations extended.
Other subjects that could be touched on in the meeting include the war in Ukraine and green subsidies in the US Inflation Reduction Act, the article said.
Nucor has announced a collaboration with fusion power company Helion to develop a 500-megawatt nuclear fusion power plant.
The project will offer “baseload zero-carbon electricity from fusion” directly to a Nucor steel mill, the steelmaker said on Wednesday.
The Charlotte, N.C.-based company said it is working with Helion to set a firm timeline. The steelmaker added it’s committed to beginning operations as soon as possible, with a target of 2030.
“This is the first fusion energy agreement of this scale in the world and will pave the way for decarbonizing the entire industrial sector,” Nucor said in a statement.
The company will make a direct investment of $35 million in Helion to accelerate fusion deployment in the US, Nucor said.
“This agreement with Helion, along with recent investments in clean energy, can change the entire energy landscape and forever change the world, embracing a clean energy future we could have hardly imagined a few years ago,” Leon Topalian, Nucor chair, president, and CEO, said in the statement.
Everett, Wash.-based Helion has already built six working fusion prototypes, according to the statement. Also, it’s the “world’s first private fusion company to achieve 100-million-degree plasma temperatures.”
This temperature is generally considered the minimum “bulk ion temperature” needed for large amounts of thermonuclear fusion to occur to generate commercial electricity, according to Helion’s website.
“Currently, the company is building its seventh prototype, Polaris, which is expected to be the first to demonstrate electricity generated from fusion,” Nucor said.
When asked by SMU about any additional information about possible sites, a Nucor spokesperson said no further details were available at this time.
Cleveland-Cliffs plans to significantly increase prices for steel sheet effective immediately, the company said in a press release on Wednesday, Sept. 27.
The Cleveland-based steelmaker also said its new minimum base price for hot-rolled coil (HRC) will be $750 per ton ($37.50 per cwt).
The company did not say what the amount of the increase was. But $750 per ton would represent a $105-per-ton increase over SMU’s HRC prices, which settled on Tuesday evening at $645 per ton.
Cliffs did not specify a target price for cold-rolled or coated products but said the increase applied equally to all sheet products.
SMU’s HRC price stands at $645 per ton was down $20 per ton vs. the prior week and down $515 per ton from a 2023 peak recorded in mid-April.
That marks the lowest point for hot band prices since mid-December 2022, per our pricing tool.
The increase move caught some market participants by surprise, especially coming amid the ongoing UAW strike.
But others have noted that, the strike aside, demand remains firm. Some have also pointed to lower inventories and less import buying as factors that could support a price floor.
Sheet prices declined less than usual this week. Does that mean we’re nearing a bottom, or is it just a pause before the market moves lower yet again?
Your answer might depend on whether you think the United Auto Workers (UAW) strike will be a typical 4-6 weeks or whether it might be a lengthier disruption.
It’s above my pay grade to handicap the strike, so I’ll lay out the two cases I’ve heard for prices this week – a bull case that prices are near a bottom, and a bear case that they still have room to fall.
The Bull Case
I spoke to one mill executive who said his company had recently recorded their best booking week of the year.
Were the prices great? No. HRC was in the low $500s per ton for companies capable of buying 100,000 tons or more. The figure was the mid/high $500s per ton for those buying 10,000-20,000 tons or more. So why be proud of that? This week, he said, his company has been able to hold the line around $640-660 per ton for standard spot buys.
I’ve heard similar things from buyers. Namely, that (a) we might already be past the price bottom for “big tons” and that (b) the bottom for standard spot tons will follow on a bit of a lag.
How is it that we’re talking about a potential sheet price bottom during an expanding UAW strike? The charts below might be instructive.
Below we’ve plotted out HRC prices and lead times.
As you can see, prices dropping below lead times doesn’t happen often. When it does happen, it’s often an indicator that prices are about to bottom out and rebound.
Some of you would disagree with this. You’ll say that HRC lead times are shorter than advertised. But keep in mind that these are averages.
Also, we’re not just seeing that trend in HRC. Below are base prices vs. lead times for galvanized coil:
I think there is less room for complaint with the galvanized lead times. We know from a recent SDI lead time sheet that the steelmaker is out roughly 7-8 weeks for galv. That’s extended for SDI, especially considering that the company typically keeps lead times short by design.
We’ve also written in recent editions that US prices are near parity with prices abroad and below them once you factor in freight and other costs.
With domestic price low and lead times relatively standard, few respondents to our survey say they are looking to buy foreign steel:
And what do inventories look like?
Here’s where they were in August:
August 2023, the orange bar, is down modestly from July and roughly on par with where we were in August 2022, the light blue bar.
We won’t have September numbers until the middle of next month. That said, and as we’ve noted before, many steel buyers have been reducing inventories over the last month. I wouldn’t be surprised if September inventories were also lower.
In other words, this looks a lot like what we saw in the fourth quarter of last year. That’s when low domestic prices and limited offshore buys helped set the stage for a sharp rebound in Q1.
And make no mistake, there is a school of thought, one that has gained significant traction over the last two weeks, that prices will pop in Q4 as soon as there is any inkling that the UAW strike might end.
The Bear Case
On the HARDI call today, it was pointed out that few people had expected galvanized prices to fall below $1,000 per ton. And yet here we are in the $800s per ton on average – meaning that we’re collectively not very good at predicting the future.
And while it was not a majority opinion, at least a couple of people on the call expressed concern that the UAW strike could become a protracted one.
Keep in mind that the UAW has struck just three assembly plants to date. The strike at parts distribution centers, announced last Friday, might have more impact on dealers than on automotive production. In other words, steel production is probably less impacted now than it was at this point in the 2019 strike against all GM facilities.
But it’s no secret that the UAW and the “Detroit Three” automakers are far apart on a range of issues. What happens, then, if the strike expands this Friday to more assembly plants? I’m guessing we might see more blast furnace idlings, especially at mills heavily exposed to automotive. We might also see the extension of current or upcoming fall maintenance outages.
I can see why some are predicting a lengthy strike. President Joe Biden on Tuesday joined a picket line in Belleville, Mich. – a first for a sitting president. He told striking workers: “You deserve what you’ve earned. And you deserve a whole hell of a lot more than you’re getting paid now,” according to The Washington Post.
That’s not exactly the kind of language that might bridge the gap between the “Detroit Three” automakers and the UAW. (Well, President Biden also said earlier this month that there would be no UAW strike. So let’s not overestimate his influence on these negotiations.)
In any case, what happens to the consensus that has formed over the last two weeks – that prices are at or near a bottom – if UAW President Shawn Fain announces more “Stand Up” strikes on Friday? Let me know your thoughts!
Tampa Steel Conference
Our Tampa Steel Conference might not be until Jan. 28-30, 2024. But our early-bird discount expires Sept. 30. And hotel rates are only going to go up as we get closer to peak tourism season in the Sunshine State. So register now!
Hot-rolled coil prices were down again this week, continuing a streak of week-over-week (WoW) declines that began in early/mid-July.
Recall that’s when a round of price hikes announced in June faltered after briefly stabilizing the market.
While HRC prices slipped, the $15-per-ton (0.5 per cwt) w/w decline SMU recorded this week was modestly less than the ~$25-per-ton w/w declines we’d averaged previously.
Take a look at SMU’s pricing tool. You’ll see it was a similar story for cold-rolled and galvanized base prices, which were both down $10 per ton w/w. Cold-rolled and galvanized WoW declines had been averaging ~$15-20 per ton previously.
Some market participants will tell you that those changes are significant and potential evidence of a sheet market nearing a bottom.
They might tell you that lower inventories, uncompetitive imports, and mostly steady demand outside of automotive will support a new floor. They might also note that capacity has been tightened by U.S. Steel idling a blast furnace, by fall maintenance outages (some of which have been extended), and by certain EAF mills quietly ratcheting back capacity.
Other sources will tell you that it’s just noise. They might tell you that it’s hard to handicap prices without knowing how long the UAW strike might last and how many assembly plants it might impact. Both of those factors are unknows as of now.
All told, however, sheet sentiment was more positive this week than in prior weeks. That was not the case in plate, where prices slipped $10 per ton and where sentiment soured.
SMU is in the meantime keeping its price momentum indicators pointed lower. While there is talk of a price bottom in sheet, we will not move our sheet price indicator to neutral until we see more evidence of a stable floor.
The SMU price range is $600–690 per net ton ($30.00–34.50 per cwt), with an average of $645 per ton ($32.25 per cwt) FOB mill, east of the Rockies. Both the bottom end of our range decreased $20 per ton vs. one week ago, while the top end of our range was $10 per ton lower WoW. As a result, our overall average is $15 per ton lower compared to the prior week. Our price momentum indicator for hot-rolled coil is still pointing lower, meaning SMU expects prices will decline more over the next 30 days.
Hot-Rolled Lead Times: 3–7 weeks
The SMU price range is $830–900 per net ton ($41.50–45.00 per cwt), with an average of $865 per ton ($43.25 per cwt) FOB mill, east of the Rockies. The lower end of our range was unchanged WoW, while the top end was $20 per ton lower compared to a week ago. Our overall average is down $10 per ton WoW. Our price momentum indicator on cold-rolled coil is still pointing lower, meaning SMU expects prices will decline more over the next 30 days.
Cold-Rolled Lead Times: 5–8 weeks
The SMU price range is $830–900 per net ton ($41.50–45.00 per cwt), with an average of $865 per ton ($43.25 per cwt) FOB mill, east of the Rockies. The lower end and top end of our range were down $10 per ton vs. last week. As a result, our overall average is down $10 per ton vs. the prior week. Our price momentum indicator on galvanized steel is pointing lower, meaning SMU expects prices will decline more over the next 30 days.
Galvanized .060” G90 Benchmark: SMU price range is $927–997 per ton with an average of $962 per ton FOB mill, east of the Rockies.
Galvanized Lead Times: 4-9 weeks
The SMU price range is $850–900 per net ton ($42.50–45.00 per cwt), with an average of $875 per ton ($43.75 per cwt) FOB mill, east of the Rockies. The lower end of our range was down $10 per ton vs. last week, while the top end of the range was $40 per ton lower WoW. Our overall average was down $25 per ton compared to one week ago. Our price momentum indicator on Galvalume steel is still pointing lower, meaning SMU expects prices will decline more over the next 30 days.
Galvalume .0142” AZ50, Grade 80 Benchmark: SMU price range is $1,144–1,194 per ton with an average of $1,169 per ton FOB mill, east of the Rockies.
Galvalume Lead Times: 6–8 weeks
The SMU price range is $1,390–1,520 per net ton ($69.50–76.00 per cwt), with an average of $1,455 per ton ($72.75 per cwt) FOB mill. Both our lower end and top end of our range were down $10 per ton compared to the week prior. Thus, our overall average is down $10 per ton vs. one week ago. Our price momentum indicator on steel plate shifted to lower from neutral, meaning SMU expects prices will decline more over the next 30 days.
Plate Lead Times: 3–8 weeks
SMU Note: Below is a graphic showing our hot rolled, cold rolled, galvanized, Galvalume, and plate price history. This data is available here on our website with our interactive pricing tool. If you need help navigating the website or need to know your login information, contact us at email@example.com.
Ford Motor Co. said on Monday that it has stopped work at its $3.5-billion project for an electric vehicle (EV) battery plant in Michigan, according to media reports.
“We’re pausing work and limiting spending on construction on the (Marshall, Mich.,) project until we’re confident about our ability to competitively operate the plant,” an article from MarketWatch on Monday said, citing a Ford spokesperson.
The automaker announced the investment back in Feb. 2023. The plant would be the first automaker-backed lithium iron phosphate (LFP) battery plant in the country, according to the original press release from Ford.
Named the BlueOval Battery Park Michigan, the plant would employ approximately 2,500 people. Ford had planned for LFP battery production to begin in 2026.
The MarketWatch article said that a final decision about the planned investment in BlueOval has not been made yet.
After the announcement, United Auto Workers (UAW) union president Shawn Fain released a statement on X, formerly Twitter, saying, “This is a shameful, barely veiled threat by Ford to cut jobs.”
“Closing 65 plants over the last 20 years wasn’t enough for the Big Three, now they want to threaten us with closing plants that aren’t even open yet,” Fain said on X. “We are simply asking for a just transition to electric vehicles and Ford is instead doubling down on their race to the bottom.”
Recall that the UAW has been on strike against all three Detroit-area automakers since Sept. 15 at targeted plants. An expansion of the strike was announced last Friday against General Motors and Stellantis, but Ford had been spared. Fain said at the time that at Ford “they are serious about reaching a deal.”
The United Steelworkers International (USW) executive board on Tuesday appointed David McCall as the union’s new international president. He will fill the remainder of Tom Conway’s term.
Conway passed away earlier this week after serving for four years as the union’s leader.
“We are all mourning a great loss, but even in our sadness, our union is strong, thanks in large part to Tom’s leadership and vision,” McCall said in a statement. “Now, we’ll move forward the only way we can: together.”
McCall has served as USW international vice president of administration since July 2019, USW said.
“In that role, he bargained contracts with some of the union’s largest employers in steel, aluminum, rubber, and other industries,” according to the statement.
Before his role as vice president, he served for 21 years as the director of USW District 1. In this position he represented 70,000 USW members and retirees throughout Ohio, and helped to broker some of the union’s biggest contracts, the union said.
McCall began his career as a union activist with USW Local 6787 at the Burns Harbor integrated steel facility in northwest Indiana, now part of Cleveland-Cliffs. He worked as a millwright, USW said, and served the local union in various positions, including grievance chairman and vice president.
In 1986, he joined the USW International staff.
“We’re organizing new members in new industries in both the United States and Canada, even as we bargain cutting-edge agreements for members in our traditional sectors,” McCall said.
“I am humbled to lead our union as we continue to fight for a better future for all working people,” he added.
The drop in imports continued for the second straight month, in line with license applications and falling lower year on year (YoY).
The US imported 2,511,751 net tons of steel products in August, according to a preliminary count by the US Department of Commerce. This was a 4% decline from July and down further from the 12-month high of 2,797,419 tons in June.
Compared to year-ago levels, August’s imports were down 10%.
Looking at imports on a three-month moving average basis to smooth out the month-to-month fluctuations, we can see that imports have been somewhat steady since March but have been trending down over the past couple of months and are still well below the elevated levels seen mid-2021 through mid-2022.
While imports of semifinished steel dropped by more than 20% from July to 407,173 tons in August, they were just 1% below year-ago levels.
Finished steel imports, meanwhile, were up 1% MoM but 11% lower YoY at 1,864,463 tons in August.
Flat-rolled steel imports moved up MoM after declining consecutively in June and July. August flat-rolled imports came in at 856,045 tons. This was a 5% MoM increase yet a 20% YoY fall.
While overall flat-rolled imports were up MoM, plate in coils, cold-rolled sheet, and tin plate registered decreases of 14%, 12%, and 6%, respectively. Other metallic-coated imports shot up 50%, followed by cut plate.
Imports of hot-rolled rebounded MoM, surging by 21% from July to 178,437 tons in August.
Pipe and tube imports surged by 50% in August to 87,195 tons after falling to a 17-month low from the month prior.
OCTG imports were down markedly again in August, a trend seen repeatedly since May. It is a reversal from seeing elevated totals for the prior six months.
Imports of wire rod and structural pipe and tube were at 124,726 tons and 43,289 tons, respectively in August. Structural pipe and tube recovered strongly after posting a near two-year low the month prior.
Mechanical tubing imports, meanwhile, slipped in August to 56,746 tons after reaching an almost two-year high in July.
The table below provides further detail into imports by product, highlighting high-volume steel products.
Ken Simonson, chief economist for The Associated General Contractors of America (AGC), will be the featured speaker on the next SMU Community Chat webinar on Wednesday, Oct. 4, at 11 a.m. ET.
The live webinar is free. A recording will be available free to SMU members. You can register here.
We’ll talk about the outlook for construction, a key end market for steel. We’ll discuss how changing material costs, including for steel, might affect that outlook.
We’ll in addition dive into the impact of higher interest rates, the Inflation Reduction Act, and infrastructure spending. To what extent might higher rates slow construction activity? And to what extent might the IRA and infrastructure help to offset that?
Another important topic: labor. We’ve seen labor shortages and widespread strikes – not only at the UAW but across other industries as well. Does that mean skilled workers will remain hard to find for longer than anticipated?
And we’ll of course take your questions too.
Simonson is in a good position to answer them because AGC is the leading association for the construction industry, with more than 27,000 member firms across a range of markets. Also, Simonson has been chief economist at AGC since 2001 – so he’s seen more than a few construction market cycles.
As always, we’ll keep it to about 45 minutes. You can drop in, learn something – and then get on with your day.
PS – If you’d like to see past Community Chat webinars, you can find those here.
Despite economic headwinds in the headlines, the near-term future could prove brighter than expected, according to members of the Heating, Air-Conditioning & Refrigeration Distributors International (HARDI) speaking on the Tuesday, Sept. 26, meeting of its Sheet Metal/Air Handling Council.
With the ongoing United Auto Workers (UAW) strike and the fate of U.S. Steel up in the air, many are questioning what the effects will be for the steel industry.
“It’s unprecedented to have two events that big going on at the same time,” said Steel Market Update’s (SMU) managing editor, Michael Cowden.
However, people haven’t been as bearish as expected, added Cowden. “People are more constructive on where they see things in a month or two,” he said.
In SMU’s last survey, participants reported an 80%-90% mill negotiation rate for most of the products SMU surveys. That means a great majority of the mills are willing to talk price these days. Additionally, service center inventories slid down in August, as many have been reducing inventory.
One HARDI member from the East Coast reported that demand has been OK, with some areas being stronger than others.
Another member from the Midwest shared that though September was softer than August, there was no reason to be concerned. “October inquiries have been strong, so we’re expecting things to pick up,” the member said.
A member from the West Coast said his company is doing well year over year, and better than anticipated. However, residential construction is still soft.
According to a participating service center, shipments and inventory have been solid, and inquiry volumes have grown.
The biggest question on everyone’s minds was: When will the UAW strike end?
On this month’s call, 50% of participants present expect the galvanized base price to be flat (+/-$2 per hundredweight) over the next month. Another 28% expect the price to be down more than $2/cwt, while 1% predict the price to increase more than $2/cwt. Looking forward six months, 44% believe prices will be up more than $6/cwt, while 33% think prices will be up more than $2/cwt. Of members present, 11% think prices will be flat (+/-$2 per cwt).
Steel Market Update participates in a monthly steel conference call hosted by HARDI. The call is dedicated to a better understanding of the galvanized steel market. The participants are HARDI member companies, wholesalers who supply products to the construction markets. Also on the call are service centers and manufacturing companies that either buy or sell galvanized sheet and coil products used in the HVAC industry and are suppliers to the HARDI member companies