Bruno, who joined U.S. Steel in 2014, is also senior vice president of the company’s global information technology operations and president of U.S. Steel Europe, the company’s steel mill in Kosice, Slovakia.

Jaycox joined U.S. Steel in September 2020. He succeeded Doug Matthews, who retired in January 2021 after 33 years with the company.

“I want to thank Ken for his service to U. S. Steel. During his time at the company, he has been instrumental in developing a customer-centric approach and driving customer value creation in the areas of sales, commercial support, and marketing,” U.S. Steel President and CEO David Burritt said in a statement.

“I wish him much success in the next chapter of his career,” Burritt added.

The statements from U.S. Steel confirm information in a letter to customers about Jaycox’s departure that the company circulated on Monday.

Jaycox will be leaving U.S. Steel for an opportunity outside of the steel industry. And Bruno will maintain his current roles in addition to taking on Jaycox’s work, sources familiar with the matter said.

The U.S. Steel spokeswoman did not confirm those details. She also noted that the company had “robust succession plans, and a deep bench of professionals.”

Jaycox is not the only senior executive to have left U.S. Steel over the last year.

Dave Rogers, vice president of financial planning and analysis (FP&A) for U.S. Steel’s North American flat rolled and tubular products business segments, has also left the company, sources said. The U.S. Steel spokeswoman said that Rogers left in May.

Also, Richard Fruehauf, former chief strategy and chief sustainability officer, departed from the company in February, according to his LinkedIn profile.

The spokeswoman said Fruehauf provided notice of his intention to leave the company in the fall of 2023, providing ample time for a transition. Christian Gianni, who joined U.S. Steel in 2022, has taken on some of those responsibilities as senior vice president of sustainability and chief technology officer, she noted.

Therefore, the CA$225 million (US$165.5 million) deal, which was announced in December, is now expected to close in the third quarter.

“We are pleased to have obtained regulatory clearance, as we think the acquisition will be favorable for our customers, suppliers, employees, and the communities in which we operate,” said John Reid, Russel’s president and CEO.

The Samuel facilities included in the transaction are in Winnipeg, Manitoba; Calgary and Nisku, Alberta; and Langley and Surrey, British Columbia, in Canada; and Buffalo, N.Y.; and Pittsburgh, in the US.

This was a 0.5% rise from the prior week’s output of 1,735,000 st when the utilization rate was 78.1%, and the highest weekly production rate since early April.

However, output was down 0.5% from the same time last year, AISI said.

Weekly production by region is shown below, with the weekly changes noted in parentheses:

• Northeast: 136,000 st (-2,000)
• Great Lakes: 551,000 st (-4,000)
• Midwest: 208,000 st (-3,000)
• South: 779,000 st (+17,000)
• West: 69,000 st (unchanged)

Year-to-date production now stands at 37.180,000 st with a capability utilization rate of 76.6%. Output is down 2.6% from the same 2023 period when overall utilization was 77.9%.

Editor’s note: The raw steel production tonnage provided in this report is estimated and should be used primarily to assess production trends. The monthly AISI “AIS 7” report is available by subscription and provides a more detailed summary of domestic steel production.

Market participants had been expecting the move after Big River Steel (BRS), a subsidiary of Pittsburgh-based U.S. Steel, announced higher extras in May. The new BRS extras are also effective July 6.

“Consistent with our practice to monitor the cost of zinc, we have revised our galvanized coating weight extras effective with orders acknowledged for the week ending July 6,” Nucor said in a letter to customers on Monday.

The new extras can be found on www.nucornow.com/announcements. The increase means the price for a galvanized 0.06” G90 coating will increase from $80 per short ton (st), or $4 per hundredweight (cwt), to $90/st, or $4.50/cwt.

Zinc prices are the primary driver of changes in coating extras. After ten months of relative stability, zinc spot prices have increased in recent months.

However, ISM said the overall economy expanded for the 49th straight month in April after one month of contraction in April 2020. The institute added that a manufacturing PMI above 42.5%, over time, usually indicates the overall economy is expanding.

“Demand remains elusive as companies demonstrate an unwillingness to invest due to current monetary policy and other conditions,” ISM chair Timothy R. Fiore said in a statement. “These investments include supplier order commitments, inventory building, and capital expenditures.

“Production execution continued to expand but was essentially flat compared to the previous month,” Fiore added.

Of the 16 manufacturing industries tracked, ISM said seven reported growth in May while another seven reported contraction. Primary metals and fabricated metal products were identified as industries in expansion.

Steel market comments

The report includes comments from survey respondents. A fabricated metal products executive expressed easing business conditions, commenting, “Export shipments continue to be soft as capital equipment sales remain lower than forecast. As a result, production is also trending lower and inventory that is not able to be pushed out is growing.”

Another primary metals respondent noted his concerns regarding weakening prices and continued economic headwinds, remarking, “General concern about overall industry economics. Pricing weakness continues, and we anticipate more headwinds in the coming months for spot orders and inflation. Contract order book remains steady.”

“Brandon Farris has the experience we need in a government affairs executive, including an impressive record of advancing initiatives through grassroots, grasstops and coalition-building techniques,” Bell said in a statement on Monday.

Farris has over two decades of experience. Before joining SMA he was the vice president of domestic policy at the National Association of Manufacturers (NAM). He was named by The Hill as a top lobbyist in 2023.

Rytec produces high-speed, high-performance commercial doors at its two Wisconsin manufacturing facilities. The company’s rolling doors are used in warehouses, manufacturing facilities, auto dealerships, and parking garages.

According to Nucor’s chair, president, and CEO, Leon Topalian, the acquisition expands Nucor’s strategy of expanding beyond its core steelmaking assets into related downstream businesses.

“Adding high-performance doors will create cross-selling opportunities with other Nucor businesses and greatly expand Nucor’s product portfolio serving the commercial arena,” Topalian said in a statement, noting that “Rytec has a strong cultural fit with Nucor.”

Chad Utermark, Nucor’s EVP of new markets and innovation, added that Rytec’s “products are a natural platform for expanding Nucor’s overhead door product suite.”

“The combination of Rytec with CHI Overhead Doors will create an overhead platform that will deliver superior product breadth and solutions to Nucor’s commercial customers,” Udermark said.

Nucor completed its $3 billion acquisition of CHI Overhead Doors in 2022.

Other downstream acquisitions the company had made more recently include its 2021 purchase of steel racking solutions provider Hannibal Industries, and its 2022 buy of steel racking manufacturer Elite Storage Solutions. Nucor combined those companies to create its Nucor Warehouse Systems division.

The sideways move comes after two consecutive weeks of a $10/st increases the HR coil CSP from the $760/st price point Nucor set at the start of May.

The steelmaker noted that the HR base price at its California Steel Industries (CSI) subsidiary will remain at $840/st. The higher price reflects the difference between the West Coast market and the rest of the country.

To keep track of the latest mill price notices, visit SMU’s price announcement calendar.

Those who think prices might bottom soon predict that the Charlotte, N.C.-based steelmaker will announce higher HR number when it rolls out its first “consumer spot price” of June. They also note planned outages as well as lingering production issues at some producers could support that.

But others aren’t so sure prices will rise in the immediate term, regardless of what mills might announce. They point to a potentially weak June scrap market. They also note that it’s hard to fight seasonality. And lead times are in July, typically one of the slowest months of the year. (Independence Day, automotive model-year changeovers, etc.)

Meanwhile, most people tell us that demand, while stable, is back to pre-pandemic levels. In other words, there is no obvious catalyst on the demand side for higher prices. And mills might struggle to enforce higher prices if filling July order books proves challenging.

A restock, yes, but when?

So what might the catalyst be for the next cycle of higher prices? Based on conversations with some of you, I think the catalyst might be a good, old-fashioned restock. The question is when that happens.

We’ve heard anecdotally that many service centers are either drawing down inventories or merely filling holes – sometimes by buying from one another rather than from mills. And we’ve seen indications of that in our survey data as well. (See slide 31 here.) Only 12% of service center respondents in our last check of the market said they were restocking. Compare that to 59% who were maintaining inventory and 29% who were reducing it.

In addition, some center contacts have told me they have plenty of stock already. SMU’s service center inventory data supports that too. As those with a “premium” subscription can see here, service centers had 57.8 days of supply in April, down from 58.3 in March but up from 51.1 in April of last year.

Looking at those factors, I can see why some contacts say they don’t plan to restock until late summer.

And where do prices bottom?

But others tell me that, while they have no immediate need to restock, they would do so if they thought prices were at or near bottom. Basically, when they felt the downside risk was far less than the upside risk.

What makes folks – especially larger buyers capable of placing tens of thousands of tons (or more) aka “big tons” – step back into the market? It’s an important question to consider because big orders like that could stretch out lead times and lead to a familiar pattern (in the US market) of rapid-fire price hikes.

Let’s start with some of the dynamics we’re seeing in the spot market. SMU’s HR spot price stands at $750/st on average. (We’ll update our price again on Tuesday afternoon.) US mills have publicly stated that they’re seeking more than that. But we’ve also heard from some larger buyers that prices of ~$700/st, or even the high $600s, are available for those able to place big tons.

That makes some sense. We’ve heard that import from South Korea is available at approximately $670-680/st. And buyers might be willing to pay a little more in exchange for the shorter lead times (and fewer uncertainties in general) associated with domestic purchases.

We’ve also heard that some of the larger service centers have made offers in the mid-$600s but weren’t accepted by domestic mills. So does that mean that prices are at a bottom? Maybe. But it might be too early to jump to that conclusion.

Let’s also consider what things look like in the contract market. Let’s say the spot market is $750/st. And let’s say the average contract discount is about seven percent. That theoretically puts contract prices just under $700/st.

I’ve been told that mills’ breakeven is mid/low $600s/st in a post-pandemic world of inflation and higher costs in general. That roughly squares with where we’ve seen prices bottom over the last two years: $642/st on average in November 2022 and $676/st in September 2023, according to our pricing archives. (Keep in mind those are spot prices, so contracts were lower.)

In past cycles, mills might have gone to or a little below breakeven for the biggest buyers. It’s arguably worth it to get a baseload of business that provides a foundation from which to announce and support higher prices.

So do big buyers think spot prices will bottom in the mid-$700s? Or do they hold out until they can get HR in the mid/low $600s/st as they have in past cycles? As for of timing, do prices fall quickly in June and then rebound? Or do they drift sideways or lower throughout the summer before rebounding in the fall?

I think one thing to watch for might be mills threatening to idle production (or doing it) rather than accepting prices below a certain threshold. We’ve seen that in past cycles. And it is perhaps the most obvious sign that prices have truly bottomed.

Agree or disagree? Let me know what you think at info@steelmarketupdate.com!

Steel 101 on June 11-12 in Ft. Wayne, Ind.

Our next in-person Steel 101 is about a week away. There are a few spots left, and we expect them to go quickly.

Attendees will learn how steel is made in the morning on June 11. And then they’ll feel the heat of steel being made at SDI Butler in the afternoon. The mill tour really makes the knowledge stick.

They’ll on June 12 learn more about market cycles, key end markets, and fun stuff (for us steel nerds) like coating extras and futures.

You can learn more and register here.

China is not our only problem. But it is our No. 1 challenge right now, in geopolitics, potential hostilities, and economics. EVs are a sign of this challenge.

Tariffs are not the only tool

Electric vehicle (EV) development is an important example of this struggle. Indications are that China has a big lead in this market. That affects all the products and technology that go into EVs, including steel, electronics, critical minerals, and energy generation.

BYD, the largest EV producer in the world, markets models (but not in the US) listing under $10,000. In the US, the average EV price exceeds $35,000. Ford makes all-electric trucks that sell for more than $50,000. But Ford loses $100,000 or more on every one of them.

The Biden administration just proposed to tax EVs from China at 100%. Economists consider 100% tariffs as the equivalent of an embargo. Currently, because of the tariffs in place, Chinese-origin EVs are not marketed in the US. But they are selling briskly in other markets. The increased tariffs will not reduce EV imports into the US, because they are already near zero. Steep tariffs are not likely to make US EV makers globally competitive, because there is more to the problem than competition.

The EV supply chain is in a similar pickle. The current propulsion system for EVs is lithium-ion batteries. China has largely captured control of the lithium-ion battery supply chain. Lithium is mined in ten or so countries. Australia is number one, Chile number two, and China number three. The US produces 1% of raw lithium.

Where China has taken over is not in mining of lithium but the refining of the metal. China owns or controls about two-thirds of global lithium refining and an equivalent share in the manufacture of batteries. Any industry that hopes to sell EVs at this point must buy refined lithium—and lithium-ion batteries—from Chinese or Chinese-owned refiners and producers.

The US is a leader in favoring EVs over internal combustion vehicles as a matter of government policy. As the market grows for EVs, China’s industry stands to benefit tremendously. Every EV made in the US will have a lot of Chinese content until we can figure out a way to out-compete China in battery production.

Another tool: Mine, baby, mine!

New tariffs on EVs will not address this problem. The US has plenty of lithium reserves. But getting permits to open new mines is as hard here as anywhere, and maybe harder. And, even if more lithium were mined in the US, the refining capacity and battery-manufacturing capacity lags behind. All three segments (mining, refining, and batter manufacturing) are necessary to create reliable supply chains. Tariffs on EVs and subsidies (such as the $7,500 tax credit on EVs) do not address that problem.

The question in this as in so many other areas is: What to do about China? The country has managed, over the last 15 years or so, to become an indispensable part of global supply of minerals—not only of lithium but also of nickel (for stainless steel), cobalt, graphite, and other minerals. China leads the way in developing new battery materials using cobalt and manganese, and it is a major player in those markets too.

I believe we have the tools to meet this challenge. It is important to recognize that meeting it does not mean defeating and humiliating China. The West’s treatment of Germany after 1918 should be a lesson there.

Work together with our allies

Meeting the challenge now requires that we in the US and in throughout the “Western” world (I include India, Japan, and Taiwan in that definition) recognize our strengths and employ those better. It seems that our discussion of China unduly lionizes their strengths and puts too little trust in ours.

The current administration, for example, talks about “worker-centric” trade policies. But it seems to believe that advancing the interest of workers necessarily means hurting companies and management. It does not have to do that. Cooperation between workers and management may achieve better results than incessant conflicts.

The emphasis on tariffs as a tool of economic competition is also, IMHO, misplaced. Tariffs don’t weaken America’s adversaries, at least not as much as we want to believe. If trade restrictions have a useful place, it is not because they raise prices for imports (and, in addition, for domestic production too). Protection can provide a space for domestic companies to improve and thereby meet competition where it matters—in the marketplace.

If tariffs are employed, they should be conditioned by requiring the protected industries to improve their competitiveness. The U.S. Steel/Nippon transaction is an example of the potential for companies and industries to improve. While government subsidies may be part of the solution, they are not the only way to go.

We also must recognize that our strategic partners can help as well. US allies are, along with us, helping Ukraine by permitting the use of weapons to attack Russian targets. That support is important to blunting the current Russian offensive in Ukraine. And the EU is working with the US to address the challenge of China’s surging exports of EVs.

Transitioning our transportation sector away from internal combustion engines and fossil fuels requires us and our friends to catch up in mining, refining, manufacturing of batteries, and EV production. While the Biden administration professes to understands this, protective tariffs alone will not close the gap.

Editor’s note: This is an opinion column. The views in this article are those of an experienced trade attorney on issues of relevance to the current steel market. They do not necessarily reflect those of SMU. We welcome you to share your thoughts as well at info@steelmarketupdate.com.

Later on May 31, the core Personal Consumption Expenditures (PCE) Price Index – the US Federal Reserve’s preferred inflation measure – was set to be released by the US Bureau of Economic Analysis (BEA). While a soft PCE reading could weigh on the US Dollar and lift the aluminum price as the most immediate reaction, a stronger reading could add to recent concerns that interest rates may remain high for longer.

SHFE cash came under some light selling pressure on Friday. The cash contract settled at RMB21,370 per mt and was trading Friday at RMB21,465/mt.

Hydro to install new line at US plant

Hydro will add a 28,000-mt-per-year casting line largely fed by recycled aluminum at its Henderson mill in Kentucky to serve the automotive industry. The new unit, costing $85 million to install, will be based on the company’s HyForge technology, already in use at the Husnes primary plant in Norway and Rackwitz recycling plant in Germany. Due to become operational in 2026, the casthouse will produce smaller-diameter billets that can be forged directly into automotive components, thereby reducing the number of steps in traditional processing. This will lead to cost efficiency and higher product quality, according to Hydro. As HyForge uses a high portion of aluminum scrap, its output has a low carbon footprint in line with the US automotive industry’s desire to further decarbonize, said Hydro’s president and CEO Eivind Kallevik.

Meanwhile, installation of a new baghouse and homogenization equipment at the Henderson recycling plant is nearing completion and will enable the mill to produce larger volumes of advanced alloys with a lower-carbon footprint.

Hydro starts onsite renewable energy production with battery storage systems

In Sweden, Hydro Extrusion announced it has started onsite production of renewable energy. The end goal is a switch to 100% locally produced energy from renewable sources for Hydro’s extrusion plants in Vetlanda and Finspång. With the recent completion of phase one (executed by Hydro’s renewable energy company, Hydro Rein) rooftop and ground mounted solar panels, coupled with battery storage systems, have started delivering an important contribution, supplementing an already existing local hydropower plant, Hydro said.

The technical solution involves seven rooftop installations, with a total capacity of 2.1 Megawatt peak (MWp), a 2 MWp ground-mounted solar PV system and three battery storage solutions with a total capacity of 4.5 MW. The energy project was initiated in 2022. The end goal is to reduce CO2 emissions from the extrusion plants in Vetlanda and Finspång to zero. Attention is now directed to further improve activities including an array of energy efficiency and transition measures to reduce climate and environmental impacts.

Novelis announces launch of IPO roadshow

Novelis announced it has launched a roadshow for the initial public offering (IPO) of 45,000,000 of its common shares held by Hindalco Industries. The IPO’s price per common share is currently estimated to be between $18.00 and $21.00 per share. Novelis has applied to list its common shares on the New York Stock Exchange under the symbol “NVL.” After the completion of the IPO, a subsidiary of Hindalco will own 555,000,000 shares of Novelis’ common shares, representing 92.5% of Novelis’ total outstanding common shares.

By considering the mid-point of the range of $18–21 per share, Novelis could raise about $877.5 million in the IPO. Morgan Stanley, BofA Securities and Citigroup are acting as lead book-running managers for the proposed offering.

US ITC initiates Section 337 investigation on some aluminum products

The US International Trade Commission (ITC) has recently voted to institute an investigation of certain high-strength aluminum and aluminum alloy-coated steel. The investigation also covers automotive products containing same. The investigation is based on a complaint filed by ArcelorMittal of Luxembourg on April 17, 2024. The complaint alleges violations of section 337 of the Tariff Act of 1930, regarding imports of those products into the US. The complainant requests that the ITC issues a limited exclusion order and cease and desist orders.

The ITC’s Chief Administrative Law Judge will make an initial determination as to whether there is a violation of section 337. The ITC will then make a final determination in the investigation at the earliest practicable time. Within 45 days after institution of the investigation, the ITC will set a target date for completing the investigation.

To learn more about CRU’s services, visit www.crugroup.com/analysis/aluminium/.

“Overall outlooks grew somewhat more pessimistic amid reports of rising uncertainty and greater downside risks,” the Fed said in May’s report, noting that high interest rates and tight credit standards continue to stunt growth.

Economic activity increased slightly in the Chicago district, and contacts generally expect a similar growth rate for the next year.

Manufacturing in the Chicago district decreased slightly in the period. Steel volumes were flat, and a slowdown in the heavy machinery sector was noted by contacts.

Several manufacturers in the Chicago district “reported that high borrowing costs led them to delay planned expansions or to purchase used equipment rather than new,” according to the report.

In the Dallas district, in which the entire state of Texas is included, economic activity was flat or slightly up in the reporting period.

The outlook of manufacturers in the Dallas district worsened slightly, “weighed down by waning consumer confidence and election uncertainty.”

Activity in the Cleveland district expanded slightly, but contacts expect slower growth to continue in the coming months. At the same time, manufacturers in the district generally anticipate a slight increase in demand,

The Beige Book provides a summary of commentary on current economic conditions across the 12 Federal Reserve districts. It really is a book – it has a ton of information in it. Check out the report if you’d like to take a deeper dive into economic activity across the country.

Here’s the skinny

The event runs Monday-Wednesday, Aug. 26-28, in Atlanta at the Georgia International Convention Center (GICC).

We’ve got a host of great speakers lined up, including leaders from mills, service centers, and end-users, as well as analysts, economists, and more. The agenda for the event can be found here.

We’d love for everyone in the SMU Community to join us to hear the latest economic data, steel price forecasts, and the most important current events shaping the industry. And don’t forget the conference provides some of the best networking opportunities out there!

We’re just a few months away from the start of the event on Monday, Aug. 26, so we encourage you to register today and book your travel arrangements if you haven’t already.

Who’s already coming

Below is a list of companies that have recently registered. Those with an asterisk next to their name are sending more than one person to this year’s Steel Summit.

3GM Steel, Inc.*, AASA ABLOY*, ABL, Aceromex*, Aceroteca Metals LLC*, Agway Metals*, Air Products and Chemicals, Inc., Al Ghurair Iron & Steel LLC*, Alabama Metal Industries Corp (AMICO), Algoma Steel, Inc.*, All Metals, Allegheny Steel Distributors, Alliance Laundry Systems*, Alliance Steel LLC*, Alro Steel*, Altec Industries, Inc., Alter Logistics Company, Alter River Terminals/Alter Logistics Co, Amarr Company*, Ambassador Supply, American Heavy Plates*, American Iron and Steel Institute*, American Metal Group (AMG)*, American Metals Supply Co. Inc., Ameristar Perimeter Security*, Amico Global, Andes Coil Processors*, AON Credit Solutions, ArcelorMittal Dofasco*, ArcelorMittal International America, ArcelorMittal Mexico, ArcelorMittal*, Arcosa Inc*, ARKU, Inc.*, ASD, ASSA ABLOY Door Group*, ASSA ABLOY Opening Solutions America, Astec Industries, Atkore International*, B&W Trailer Hitches*, B.F. Steel de Mexico, Bailey Metal Processing*, Beaver Steel Services, Inc., Behlen Manufacturing Co.*, Bilstein Cold Rolled Steel*, Blackhawk Steel, BlueScope Coated Products*, BlueScope Steel Americas, BlueScope*, BMO*, BofA Global Research, BofA Securities, Inc.*, Borusan Pipe US, Inc.*, Boyd Metals of Fort Smith, Bradford White, Brandt Industries Canada LTD*, Broan Nutone LLC., Brock Grain Systems, Brown Gibbons Lang & Company, BTD Manufacturing*, Butech Bliss*, C.D. Wälzholz GmbH & Co. KG*, Canam Steel Corporation (CSC)*, Carlisle Construction Materials*, Central Plains Steel Co.*, Central States Manufacturing, Inc.*, Century Metals & Supplies, Inc. Chapel Steel, Chemcoaters LLC*, Chicago Tube & Iron, Citi, ClarkDietrich Building Systems*, Cleveland Steel Container, Clopay Building Products Co., CloudForge*, CMC Commercial Metals, CMC Steel*, Coface, Coilplus, Inc.*, Colakoglu Metalurji, Commercial Metal Forming*, Commercial Steel Products, Conklin Metal Industries, Inc.*, Cooper Consolidated, LLC*, Copeland*, Corbets Capital, CornellCookson, Cosen Saws*, C-River Logistics*, Crowe LLP*, CRU*, Crunch Risk, LLC*, CSI – Nucor, Cummins Inc.*, Curtis Steel Company*, Dalco Metals, Inc.*, DCM Metal, Diehl Tool Steel, Doosan Bobcat, Dynamic Metals, Inc.*, Eferro Solutions, Elgen Manufacturing, Emerson, Evapco*, Fagor Arrasate USA, Inc.*, FAMCO Mfg, Fasco, Feralloy Corporation*, Ferragon Corporation*, Ferrosource LLC*, FerrouSouth/Ferragon Corporation, Fibrebond Corporation*, Fifth Third Bank, Friedman Industries*, Fulton County Processing, Galvaprime*, Galvasid S.A. de C.V.*, GE Appliances, Georg North America, Inc.*, Gerdau Steel, Goldman Sachs, Grand Steel Products, Inc.*, Great Dane, Greenpoint Metals, Inc., Hannibal Industries, Hanwa American Corp., Harris Steel Company*, Headlight Solutions*, Headwall Partners, Heidtman Steel*, Helmer Scientific, Trane Life Sciences Solutions, Hercules Industries, Heritage Capital Group, Inc.*, Hirsh Industries LLC*, Hunter Engineering, Hyundai Corporation, Hyundai Steel Company*, Illinois Tool Works (ITW)*, Imperial Manufacturing Group*, Infra-Metals/Delta Steel, ITW Drawform, James Burg Trucking Company, Jemison Metals*, Jensen Bridge & Supply Co.*, JFE Shoji America LLC*, John Deere*, J-Star Motion Corp, Klauer Manufacturing Company*, Kloeckner Metals Service Centers de Mexico, Kloeckner Metals*, Knapheide*, KORE Machinery*, LB Steel, Leeco Steel LLC*, Lennox International, LSI Industries, Inc., MAAS Hansen Steel*, Macsteel International USA, Majestic Steel, Marmon Rail, Marubeni-Itochu Steel America (MISA)*, McNeilus Steel, Inc.*, Medtrade, Inc.*, Metal Construction Association, Metal Edge Partners LLC*, Metal Resources Holdings LLC, Metal Sales Manufacturing*, MetalRecruiters.com, Metals USA*, Miami Valley Steel Service*, Midmark Corporation, Mill Steel Company, Minmetals Inc, MISA*, Misetal Trading Solutions*, Modern Metals Magazine, Morrison Products, Inc.*, MRH, LLC*, MRI Steel Framing*, Nance Steel Sales LLC, NB Handy*, Nippon Steel Trading Americas, Inc., NLMK*, North American Steel Alliance*, North Star BlueScope Steel*, Northwest Pipe Company*, NS BlueScope Coated Products North America, Nucor Corporation*, nVent*, Ohio Coatings Company*, Ohio Steel Sheet & Plate, Olympic Steel, Inc.*, OmniSource LLC*, OneSteel Trading Inc, Oregon Tool, Osmundson Mfg. Co.*, OTI*, Pacific Metals Trading, Inc.*, PADNOS Recycling*, Pennsylvania Steel Company, Inc., Perfiles LM, Phillips Tube Group, Phoenix Metals*, Pisec Group Austria GmbH, Pisec Group USA, PLS Logistics Services, Port of Ohio at Pier 48, Pridgeon and Clay*, Priefert Steel*, PROLAMSA, INC*, PSI Metals North America, Inc.*, QSL – America, Ram Steel Framing, Ratner Steel Supply Company*, Red Bud Industries*, Reliance Sheet & Strip Company*, Reliance Steel and Aluminum, Rio Tinto Services Inc., Rock Trading Advisors, Ltd, Russel Metals Inc.*, Ryerson Singer Steel, Ryerson*, Salit Steel, Samuel Packaging Systems Group*, Samuel, Son & Co., Limited*, Sanwa*, Searing Industries, Service Steel & Pipe*, Sheffield Steel Products*, SIMS Metal Management, Siskin Steel & Supply*, Southern Coil Solutions LLC, Southwark Metal*, SPS Companies, Inc., SS Steel Limited, SSAB*, Standard Iron & Wire Works LLC, State Steel Supply Company, Steel and Pipe Supply*, Steel Coil Store, LLC*, Steel Dynamics, Inc.*, Steel Market Update*, Steel Warehouse*, Steelscape, LLC*, SteelSummit Holdings, Inc.*, Stelco*, StoneX Financial Inc., Summit Strategy Solutions, Superior Duct Fabrication*, Tatmetal*, Taylor Steel Inc.*, Teijin Automotive Technologies, Ternium Mexico S.A. de C.V.*, Ternium USA, Inc.*, Texas Iron and Steel, thyssenkrupp Materials Trading NA*, Titan International*, Titan Wheel, Toyota Tsusho America, Inc.*, Trane Technologies*, Tri County Metals, Triad Metals International, Trinity Industries*, Triple-S Steel Holdings, Inc.*, U.S. Steel*, UNICOIL, Unist*, USG, Valtir*, Varsteel Ltd*, Venture Steel, Vest LLC, Vicwest Building Products*, Viking Materials Inc.*, Waelzholz North America LLC*, Wallner Expac, Inc.*, Webco Industries*, Welser Profile (Superior Roll Forming), Welser Profile Austria GmbH, Welser Profile North America*, West Central Steel Inc., Westman Steel Industries, Whirlpool Corporation*, Wisconsin Steel & Tube Corporation*, Worthington Enterprises*, Worthington Steel*, XSTEEL USA LLC, Yildiz Demir Çelik*, Zekelman Industries*

We hope to see you there!

SMU Managing Editor Michael Cowden sat down with StoneX futures broker Spencer Johnson on Wednesday. With many years formulating risk management strategies in the steel market, as well as being one of the longest serving members of the London Metal Exchange’s steel committee, Johnson gave a wide-ranging talk on a host of issues related to hedging and the steel futures markets in general. Here’s a snapshot of some of the topics he covered.

Of course, by its nature futures and hedging are granular topics with a lot of twists and turns. So, to truly dive in and appreciate the wealth of detail in the discussion, we invite you to listen to the full Community Chat here.

Growth in futures

Talking about the futures markets for steel, Johnson said a crucial change has been there being a useful electronic marketplace for these products.

“I think one of the most important developments for the markets now is the ability to just open up your phone and be able to trade HRC futures,” he said.

“Not really something that would have been viable when I first started selling the the concept of this to the service center industry about 15 years ago,” he added. “There was really no electronic market, there was very little market at all.”

Along those lines, he noted the growth of market participants.

“When I first started doing this in 2009, we’ve gone from unique market participant numbers of a couple dozen counterparties to now well over 500 unique counterparties that are trading HRC futures,” he said.

“And that number continues to grow, which is a good to see,” Johnson continued. “I think that it will continue to grow so long as there’s an underlying need for the product, and that that’s not probably going away.”

Nucor CSP

Johnson was asked if he thought the Nucor Consumer Spot Price (CSP) would limit the volatility of HRC prices. This was one of the goals stated when the Charlotte, N.C.-based steelmaker announced the CSP back in April.

Johnson had two things to say on this. First, he said the CSP “is helpful and useful for the market.”

“I think that the more data that you have about what’s happening in the spot market, especially the more reliable data, the better,” he said.

“It seemed like, at least initially, when they came out with their number, they were more willing to let that number rest closer to reality than mills had previously done with their sort of index assessments of the market,” Johnson said. “And so that was a bit revolutionary.”

As to whether the CSP would reduce volatility, though, Johnson was unsure, leaning more toward “probably not.”

The factors driving price volatility “aren’t really going away just because Nucor is telling us they have a settlement price they’re going to come out with every Monday,” he said.

Inherent volatility

Johnson said for that for HRC, there are also a lot of “wild card factors” to watch – whether that be potential changes to trade policy or increasing geopolitical tensions. Additionally, he noted there’s a substantial amount of volatility that gets priced into HRC because of big swings in raw material prices.

“I’m talking for iron ore costs, scrap costs, those things are volatile,” he said. “If those things are volatile, then the downstream product that’s created from them will be volatile.”

And there is little sign of volatility in raw material costs going away. Volatility has been ramping up since China decided to do away with annual iron ore contracts.

“So like basically, since the Great Recession,” Spencer said. “When I started doing this job in 2009, it became clear that there was never going to be any annual contract terms for inputs anymore for steel producers.”

Annual contracts had kept price changes for iron ore more moderate from year to year. But “those days are long gone. It’s hard to put the genie back in the bottle on long-term contracts,” he said.

And volatility has only been amplified in more recent years by factors as diverse as the initiation of Section 232 tariffs in 2018, the Covid-19 pandemic in 2020, and Russia’s full-scale invasion of Ukraine in 2022.

Hedging 101

Even in an hourlong discussion, it’s hard to scratch the surface of steel hedging strategies. If you, or someone in your company, would like to learn more, we invite you to attend SMU’s Hedging 101 workshop in Chicago on Saturday, Sept. 25. Find out more information and register here.

In dollar-per-ton terms, US CR is now on average $149 per short ton (st) more expensive than offshore product. Thanks mostly to a decrease in stateside prices, the premium is down from a recent peak of $311/st from mid-January (Figure 1).

This week, domestic CR tags were $1,035/st on average based on SMU’s latest check of the market on Tuesday, May 28, down $10/st w/w. That figure is also down $115/st from early April 9 following seven consecutive weekly declines.

The charts below compare CR coil prices in the US, Germany, Italy, South Korea, and Japan. The left-hand side highlights prices over the last two years. The right-hand side zooms in to show more recent trends.

Methodology

This is how SMU calculates the theoretical spread between domestic CR prices (FOB domestic mills) and foreign CR prices (delivered to US ports): We compare SMU’s US CR weekly index to the CRU CR weekly indices for Germany, Italy, and East Asia (Japan and South Korea). This is only a theoretical calculation. Import costs can vary greatly, influencing the true market spread.

We add $90/st 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 CR price. Buyers should use our $90/st figure as a benchmark and adjust up or down based on their own shipping and handling costs. (Editor’s note: If you import steel and want to share your thoughts on these costs, please get in touch with the author at david@steelmarketupdate.com.)

East Asian cold-rolled coil

As of Thursday, May 30, the CRU Asian CR price was $635/st, sup $9/st w/w. Adding a 71% anti-dumping duty (Japan theoretical), and $90 per ton in estimated import costs, the delivered price to the US is $1,176/st.

The South Korean theoretical price is $725/st. The latest SMU cold rolled average of $1,035/st places US-produced CR theoretically $115/st cheaper than steel imported from Japan. But US tags are still $310/st more costly than cold rolled imported from South Korea.

Italian cold-rolled coil

Italian CR prices were down $2/st to roughly $740/st this week, but are up $21/st from a month ago. After adding import costs, the delivered price of Italian CR is in theory $830/st.

That means domestic CR is theoretically $205/st more expensive than CR coil imported from Italy. The spread is down $8/st from last week and now down $248/st from a recent high of $453/st in mid-December.

German cold-rolled coil

CRU’s German CR price ticked down $2/st vs. the week before’s $742/st. After adding import costs, the delivered price of German cold rolled is in theory $812/st.

The result: Domestic CR is theoretically $223/st more expensive than CR imported from Germany. The spread is down $8/st w/w and $205/st below a recent high of $431/st during the first week of 2024.

Notes: We reference domestic prices 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 a port is important to keep in mind when deciding where to source from. It’s also important to factor in lead times. In most market cycles, domestic steel will deliver more quickly than foreign steel. Note also that, effective Jan. 1, 2022, the blanket 25% Section 232 tariff was removed from most imports from the European Union. It was replaced by a tariff rate quota (TRQ). Therefore, the German and Italian price comparisons in this analysis no longer include a 25% tariff. A similar TRQ with Japan went into effect on April 1, 2022. South Korea is subject to a hard quota rather than a tariff.

In the week ended May 31, the number of active drilling rigs in the US was unchanged week-over-week at 600. Oil rigs declined by one to 496, gas rigs increased by one to 100, and miscellaneous rigs were unchanged at four.

There were 96 fewer active US rigs compared to the same week last year. The number of active oil rigs is down by 59, gas rigs are down by 37, and miscellaneous rigs are unchanged.

Canada rig count

The number of rigs operating in Canada increased by eight this week to 128. Oil rigs rose by ten to 74, while gas rigs fell by two to 54.

Active drilling levels in Canada are up by 31 compared to this time last year, with oil rigs up by 23 and gas rigs up by eight.

International rig count

The international rig count is updated monthly. The total number of active rigs for the month of April rose to a five-month high of 978, up by seven from March and up by 31 from levels one year prior.

The Baker Hughes rig count is important to the steel industry because it 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. For a history of the US and Canadian rig counts, visit the rig count page on our website.

ArcelorMittal said it previously met with the Sindicato Minero union to review and pay out profit-sharing payments for workers. According to the steelmaker, a group of union members are blocking access to the mill because they disagree with the amounts they received.

The company said the union served it with a strike notice on May 28, saying that if an agreement is not reached by June 4, union workers will go on strike.

Since an official strike cannot happen until that date, the steelmaker said the current protest is illegal.

ArcelorMittal urgently appealed to both the state and federal governments to intervene and ensure the free movement and safety of its workers.

Neither Sindicato Minero nor ArcelorMittal Mexico could be reached for comment.

ArcelorMittal Mexico’s Lazaro Cardenas mill has an annual steelmaking capacity of approximately 5.3 million metric tons (mt) (5.84 million short tons), including 2.5 million mt of flat steel, 1.8 million mt of long products, and 1 million mt of slabs.

The MNI report credits this reduction to substantial declines in new orders, order backlogs, and employment. These three subcomponents are now at the lowest levels recorded since the pandemic. An increase in production and supplier deliveries from April to May slightly offset the decline.

Respondents were asked one special question this month, inquiring if recent supply-chain events have had an impact on their business and citing the recent Francis Scott Key Bridge collapse in Baltimore as an example. The majority responded they have felt no impact, 19% reported they expect to experience a moderate disruption, while 11% said the impact was unknown. Only 4% responded that they are currently experiencing disruptions.  

An interactive history of the Chicago Business Barometer Index is available here on our website.

USA

US HR coil prices have now declined for seven straight weeks after falling by $14 per short ton (st) this week to $758/st. Submitted volumes fell this week, and the price range narrowed on both the high and low ends. Value-added product prices were also down, with CR coil and HDG coil (base) prices falling by $18/st and $30/st to $1,099/st and $1,032/st, respectively.

End-use demand is not particularly strong, while supply is in a visible surplus. This surplus comes from rising capacity at domestic mills while import arrivals remain high. Due to limited demand growth, service centers are also trying to destock, leaving mills to become more aggressive in placing tons, often cutting deals much lower than their public offers.

Meanwhile, overseas shipping delays mean that imports are still arriving at a relatively high level for May, with total volumes looking like they will be near those reached in March and April. Market participants also report that this imbalance between supply and demand is forcing some mills located in the Midwest to target markets further afield, like the West Coast, to fill in order books.   

Europe

European sheet prices remained rangebound this week due to a lack of trading activity and weak demand. German and Italian HR coil were assessed at €640 per metric ton (mt) and €648/mt, up €4/mt and down €2/mt, respectively.

Buyers are cautious about how much material they want to order due to doubts over end-use demand in the coming months. Current European lead times are short at around one month for Italian HR coil and 5–6 weeks for German HR coil.

Interest in imports from Asia remained low due to safeguard-related risks and long lead times. This week, HR coil import offers from Japan were quoted at $600-630/mt CFR, while Japanese CR coil was heard to be offered at $720–730/mt CFR. These offers would be for July–August shipment, and arrival in September–October.

China

Domestic Chinese sheet prices fell slightly this week, with the most significant price decrease occurring for HR coil. The general market optimism on real estate stimulus has faded, leading to a downward correction in HR coil futures prices. The knock-on effect in the spot market was then felt this week, with 3mm HR coil falling by RMB30/mt w/w. This, together with steady steelmaking raw materials prices, caused a decrease in mill margins for HR coil. However, steel mill operating rates remain elevated. Underlying demand for downstream sheet products remains healthy, given a continuous strengthening in auto and home appliance sales. Increased purchases for downstream products over the past two weeks also led to a slight w/w fall in sheet inventories.

Asia

Prices of imported sheet products in Asia were either stable or rose slightly over the last week.

Several deals of HR coil SAE1006 rerolling material were heard to have been concluded at $555-560/mt CFR Vietnam. According to market contacts, the total volume sold by Hoa Phat and Formosa to their domestic customers were ~300,000 mt for July shipments. Therefore, unmet demand will have to come from imports, and Chinese material remains the most competitive for now.

A Japanese mill was also heard to have sold 30,000 mt of HR coil rerolling grade at $580/mt CFR Vietnam for June shipment, while offers for July shipments were heard at $600/mt CFR Vietnam.

CRU assessed HR coil at $560/mt CFR Far East, flat w/w. CR coil and HDG coil prices were up by $10/mt w/w to $700/mt and $720/mt, respectively.

India

Indian sheet prices rose slightly by INR200–400 ($2–5)/mt w/w on the back of reduced supply due to recent maintenance shutdowns and higher input costs. Real demand is still modest in India due to a heatwave that has impacted construction activity. Also, most buyers continued to withhold fresh purchases until the elections conclude next week. Meanwhile, spot iron ore prices rose over the past couple of weeks and steelmakers attempted to pass through this cost rise to customers.

Most market participants believe that a revival of pent-up demand from next week on will provide some support to sheet prices in the coming weeks, but the upside will be limited by both low demand during the monsoon season and continued import arrivals. An upside risk to near-term sheet prices is an upswing in export sales, particularly to the EU.

To learn more about CRU’s services, visit www.crugroup.com.

Furthermore, the chart below shows pricing for the current active month (June), which traded at its lowest level on record ($756) on May 13. Interestingly, if we disregard the brief drop and recovery, today’s close for the June contract would be its all-time low. This bottom also coincides with when open interest peaked, showing that market participants started closing down positions.

Continuing along with open interest, an interesting development emerged over the week with Money Managers (below). They now represent 7% of total open interest, their highest share since November 2023. Although they remain net short (white line), a divergence is occurring between their long (blue) and short (red) positions. Long positions have held up at levels last seen in January, while short positions are approaching levels from October 2023. This simultaneous growth in long and short positions underscores the fact that the most speculative participants have not only increased activity, but strongly hold differing market perspectives – resulting in increased overall uncertainty of market direction.

Finally, and inevitably, all bright beginnings eventually fade, as the novelty wears off and the new becomes the everyday with Nucor’s weekly price, the Consumer Spot Price (CSP). From its conception to now, the front of the futures curve clearly awaits the Monday release, whereas in the physical market it may be losing luster. This reverts to what is happening in the fundamentals, which indicate soft demand. Domestic lead times are so-so, spot pricing continues to slide, and steel-sector specific economic data has been disappointing. All of this with currently elevated levels of profitability. Inventories are healthy, further signaling that there is not enough demand to chew through the flood of imports and the up-ticking domestic production levels. Thus, the divergence in physical and financial may be due to the upcoming stalemate we are approaching. Mills are saying they are comfortable with orders, while buyers are saying they are comfortable with their inventories. These two narratives can only coexist for a brief period. It is just a matter of time before one “blinks first” and a new trend emerges.

Disclaimer: The content of this article is for informational purposes only. The views in this article do not represent financial services or advice. Any opinion expressed by Flack Global Metals or Flack Metal Bank should not be treated as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Views and forecasts expressed are as of date indicated, are subject to change without notice, may not come to be and do not represent a recommendation or offer of any particular security, strategy or investment. Strategies mentioned may not be suitable for you. You must make an independent decision regarding investments or strategies mentioned in this article. It is recommended you consider your own particular circumstances and seek the advice from a financial professional before taking action in financial markets.

Below are some famous steel mills and companies that no longer exist, but made a lasting impact on the steel landscape, as well the history of this country in general.

While this week we took a look back, our final crossword next week will be forward-looking. And we’re confident that our readers will be some of the people shaping that future. On the heels of next week will be our Steel 101 course on June 11-12 in Fort Wayne, Ind. The course includes a tour of SDI Butler, an EAF sheet mill. If you want to learn more about steelmaking or market fundamentals, this is the course for you.

Crossword

Click here to attempt this week’s crossword.

Need help? Click here to see the answers.

This development is important for the steel industry, given that the port is home to a diverse range of steel companies. These include three steel mills—Cleveland-Cliffs Burns Harbor, U.S. Steel’s Midwest Plant, and NLMK Indiana—and 15 steel-related businesses, including service centers Ryerson, Worthington Steel, Kenwal Steel, and Steel Cities Steels, among others.

Nearly 80% of the total cargo moving through the Burns Harbor port is steel or for steel manufacturing, according to the port’s website. In recent years, annual steel tonnages have been 1.3 million to 1.5 million short tons of steel, a spokesperson for Ports of Indiana told SMU. The port doesn’t handle a lot of iron ore, as the mills have their own docks and receive it directly, according to the spokesperson.

“This port is going through a transformational multiyear expansion, and the amount of construction happening right now exceeds every year since the port was built in the 1960s,” Ports of Indiana CEO Jody Peacock said in a statement.

A $25-million multimodal project is currently in the works and will significantly enhance the port’s capabilities once completed. Specifically, three additional ship berths will boost the port’s capacity for handling ocean vessels by 35% and two new railyards will increase the storage capacity for 250 additional railcars.

A $9-million break bulk cargo facility is also being constructed, which will add an 84,000-square-foot warehouse and raise the port’s covered bulk storage capacity by 70%. Completion is planned for next year.

The Indiana Department of Transportation is constructing highway bridges to expand the port’s entrance from two lanes to four. The $35.4-million project is a multiyear endeavor.

Additionally, $8.3 million in other capital investments are being made in paving projects, to develop industrial sites, rehabilitate rail and docks, and make other upgrades.

“These are critical projects that ensure our port remains an international gateway for ocean vessels, lakers, and river barges and that our multimodal infrastructure can meet growing freight demands in the Northwest Indiana and greater Chicago market,” Peacock added.

This article has been updated from its original posting to reflect the annual steel tonnages the port handles.

In the May report, only 19% of the respondents said they expect an increase in general economic activity in the next three months, down from 21% in April. Additionally, 26% foresee a decrease in activity, up from 12% in April, while 55% predicted no change in activity vs. 67% a month earlier.

“For most of this year, metalformers’ expectations for business conditions were fairly steady,” David Klotz, PMA president, said in a statement on Thursday.

However, he noted that “this month’s survey shows that members are increasingly concerned with a slowdown in the economy, trade conflicts that could further increase the costs of important inputs including steel and aluminum, and a lack of progress on the tax package in Congress.”

PMA said metalformers predict only slight changes in incoming orders, with 49% of survey respondents expecting no change in orders during the next three months (vs. 54% in April); 32% predicting orders to increase (vs. 33% in April); and 19% forecasting a drop in orders (vs. 13% a month earlier).

For current average daily shipping levels, PMA said levels remained virtually unchanged in May. In the survey, 49% reported no change in shipping levels (vs. 48% in April); 21% logged an increase in levels (equal with last month); and 30% posted a drop in levels (vs. 31% in April).

The US Commerce Department’s preliminary count shows 2.80 million short tons (st) of steel products entered the country last month. This is up from 2.52 million st in March and likely the highest month for imports since June 2022 (2.84 million st). The latest projections on May import licenses are up to 2.68 million st, potentially down 4% from April (note that license data is still being collected so May figures could fluctuate from here).

Imports as a 3MMA

Looking at imports on a three-month moving average (3MMA) basis can smooth out the variability seen month to month and better showcase long-term trends. On a 3MMA basis, imports through preliminary April data rose further from March to 2.60 million st. Now at a 20-month high, the April 3MMA is up 3% from the previous month and up 17% from the start of the year. The 3MMA through projected May license data is even higher, currently at 2.66 million st. Figure 2 shows a five-year view of total steel imports on a 3MMA basis.

Semi-finished and finished steel

Imports of semi-finished steel recovered in April following the previous month’s dip, rising 41% m/m to 694,000 st. Projected May licenses are currently at 467,000 st, 33% lower than April levels. For reference, semi-finished imports averaged 524,000 st per month last year. This year has seen a monthly average of 597,000 st through May figures.

Meanwhile, finished steel imports increased 4% m/m in April to 2.11 million tons, now at a 21-month high. The latest finished import tally through May is up another 5% to 2.21 million st. Finished imports averaged 1.83 million st per month in 2023, whereas the monthly average for 2024 now stands at 2.01 million st.

Flat-rolled steel

Flat-rolled steel imports continue to recover since reaching a seven-month low last November. Preliminary figures show April up 4% m/m to a 22-month high of 1.09 million st. May license projections are up another 5% from April at 1.15 million st, potentially the highest monthly rate seen since March 2022.

Figure 4 shows monthly imports by product category. Imports of long products rose 17% in April to a 10-month high of 530,000 tons; May projections are down 14% to 456,000 st. Pipe and tube imports slipped 14% in April to 378,000 st, potentially rebounding 34% in May to 508,000 st. Stainless imports surged 26% m/m to 106,000 st in April, now up to 20-month high. May stainless projections are currently 8% lower than April at 97,000 st.

Figure 5 shows flat rolled imports by popular products. After rebounding from February to March, flat rolled products are moving in differing directions in both April and May. Two products increased in both April and May; tin plate (+37% m/m in April and +20% in May) and other metallic coated (+15% m/m in April and +29% in May). Two products showing declines over the last two months were hot rolled (-3% m/m in April and -28% in May) and plate in coils (-5% m/m in April and -10% in May).

Imports by product

The chart below provides further detail into imports by product, highlighting high-volume steel products.

This effectively and illegally skirts having to pay the US ADs of 99.14% and CVDs of 27.08% that are currently in place on Chinese-origin OCTG.

Additionally, 10 US importers were also found to be importing Chinese OCTG transshipped through Thailand:

• Amek Aluminum & Stainless
• Centric Pipe
• Copley International Group
• Energy Pipe & Equipment Rentals
• Kana Energy Services
• LE Commodities
• Lixin Energy Group
• Longfellow Energy
• Trek Metals
• TSPGA

As such, CBP will now implement a number of interim measures, including extending and suspending the liquidation of the subject OCTG and requiring additional documentation for entry. The agency has seven months to finalize its investigation and set appropriate penalties.

“Measures like this help promote a healthy, competitive US OCTG supply chain to responsibly develop America’s energy resources with reliable, high-quality products, with a lower carbon footprint,” commented Luca Zanotti, president of Tenaris USA and chairman of USOMA.

The CBP investigation was initiated on Feb. 23, 2024, after USOMA filed an allegation of transshipment under the Enforce and Protect Act (EAPA).

The EAPA, signed into law in 2016, established procedures for any interested party to submit a claim of duty evasion. Since its implementation, CBP has launched more than 300 investigations and identified over $1 billion in AD/CVDs owed to the US government.

“Filing this EAPA allegation was the first step that USOMA has taken to combat unfairly traded imports, but it will certainly not be our last,” noted Jacky Massaglia, SVP of Vallourec North America and vice chairman of USOMA.

“We are pleased with the regulatory approvals received, as they are a clear indication that the transaction with Nippon Steel is pro-competitive and supports the strategic merits of foreign investment,” David B. Burritt, U.S. Steel’s president and CEO, said in a statement on Thursday.

The companies said they currently expect the transaction will be completed in the second half of 2024. They noted this was “subject to the fulfillment of the remaining, customary closing conditions, including the receipt of required US regulatory approvals.”

The approvals of the deal have been received from:

• Directorate-General for Competition of the European Commission (pursuant to the EU Merger Regulation and, separately, the Foreign Subsidies Regulation)
• the Mexican Federal Economic Competition Commission
• the Serbian Competition Commission
• the Ministry of Economy of Slovakia
• the Turkish Competition Authority

Also, U.S. Steel said the UK Competition and Markets Authority confirmed it had no additional questions regarding the proposed transaction.

“Our goal for this transaction has been clear and consistent–to protect and grow U.S. Steel,” Takahiro Mori, representative director and vice chairman of Nippon Steel, said in the statement.

U.S. Steel shareholders voted in favor of the deal in April.

The United Steelworkers (USW) union remains opposed to the merger.

Domestic HR coil prices are now just 3.4% more expensive than imports. The premium is down from 4.7% last week and a 10-week high of 15.2% in mid-April.

In dollars-per-ton terms, US HR coil is now, on average, $26 per short ton (st) more expensive than offshore product (Figure 1). That’s down $10/st on average from last week and represents the lowest premium since last October.

The charts below compare HR prices in the US, Germany, Italy, and Asia. The left-hand side highlights prices over the last two years. The right-hand side zooms in to show more recent trends.

Methodology

This is how SMU calculates the theoretical spread between domestic HR coil prices (FOB domestic mills) and foreign HR coil prices (delivered to US ports): We compare SMU’s US HR coil weekly index to the CRU HR coil 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/st 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 HR coil price. Buyers should use our $90/st 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 get in touch with the author at david@steelmarketupdate.com.

Asian HRC (East and Southeast Asian ports)

As of Thursday, May 30, the CRU Asian HRC price was $508/st, unchanged from the week prior. Adding a 25% tariff and $90/st in estimated import costs, the delivered price of Asian HRC to the US is approximately $725/st. The latest SMU hot rolled average for domestic material is $750/st.

The result: US-produced HRC is theoretically $25/st more expensive than steel imported from Asia. The spread is down $10/st vs. last week, and down $256/st from its seven-month high of $281/st in late December.

Italian HRC

Italian HR coil prices were down $2/st to roughly $638/st this week. After adding import costs, the delivered price of Italian HR coil is in theory $728/st.

That means domestic HR coil is theoretically about $22/st more expensive than HR coil imported from Italy. The spread is down $8/st from last week. The domestic hot band price premium over offshore product from Italy is now down $275/st from a recent high of $297/st in mid-December.

German HRC

CRU’s German HR coil price ticked up $3/st from the week before to $630/st. After adding import costs, the delivered price of German HR coil is in theory $720/st.

The result: Domestic HR coil is theoretically $30/st more expensive than HR coil imported from Germany. The spread is down $13/st week over week and $235/st away from 2023’s widest spread of $265/st.

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, Section 232 tariffs no longer apply 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 prices from other countries. We do not include any antidumping (AD) or countervailing duties (CVD) in this analysis.

Steel Market Update was happy to sit down with Rowe on Tuesday to get to know the new steel industry executive and to catch a glimpse into the future of the Reibus online metals marketplace under his leadership.

Allow us to introduce you to…

Jared Rowe, the newly appointed CEO and chairman of the board at Reibus, brings with him a wealth of executive experience spanning more than 20 years in the technology and digital marketplace sectors.

His leadership roles at Cox Automotive, AutoWeb, FordDirect, and YP.com—particularly his tenure at Cox where he oversaw the media solutions group including the popular Kelley Blue Book, AutoTrader, and Dealer.com—have equipped him with the skills and insights to help drive Reibus further towards maturity.

Having led several digital transformation initiatives and marketplace expansions, Rowe is excited to make his entrance into the steel industry with Reibus.

While he may be brand new to steel, Rowe said he sees patterns across the industries he’s served in and believes steel will be a natural fit for him.

For example, there are many parallels between what Reibus is trying to do and what Cox has done for the automotive industry, he said. In automotive and in steel, “Relationships matter, understanding your customers’ needs matters, and servicing your customers’ needs matters,” he noted.

Starting point

Rowe is taking over where founder and former CEO John Armstrong and interim CEO Temy Mancusi-Ungaro left off.

Reibus was founded in 2018 and expanded quickly, perhaps beyond where it should have. It’s been quite successful, considering it survived the unique challenges of Covid as a start-up company.

From 2022 to 2023 alone, Reibus’ combined North American transaction volume for metal sales and logistics grew more than 50%.

Now, Rowe said, we’re seeing a “retrenching” of the company. It is shifting from rapid growth to investing in the platform—the foundation of the company—to better support customers and the company’s future growth opportunities.

He credited Armstrong, who stepped back as Reibus CEO in the fall of 2023, with doing an amazing job building a great culture and strong team made up of steel industry veterans and technology-side folks.

Since SMU spoke to Armstrong in March last year, Reibus has had to cut its workforce in half. Today, it employs around 100 people worldwide, but mainly in North America.

Additionally, Rowe said Reibus is shifting its focus back to predominantly North America. The company closed its Dubai office in 2023 and is currently winding down its operations in Europe.

Where do we go from here?

Rowe said Reibus is transitioning from a focus on the original concept and buildout of the online metals marketplace platform to a path toward more sustainable, long-term growth. Instead of trying to be everything to everyone, the focus will be on providing “demonstrably” better systems and processes for its core customer group: service centers.

Throughout our conversation, Rowe stressed the importance of listening to customers and evolving Reibus’ offerings to meet their needs.

“I tend to believe that the best ideas come from our customers in terms of how we can modify our technology and our approach to actually support their end goals. Our customers’ success is our success. It’s not the other way around,” he commented.

It is critically important for Reibus to identify users’ pain points and solve them so that they will want to do business again, Rowe said. The goal is to deliver so much value to a client, i.e., to make their jobs easier and better, that they want to use the platform.

Capital infusion

Reibus this week also announced a fresh injection of new capital to further stabilize the company: $30 million in a combination of equity and debt from existing investors Canaan and Nosara, and new banking partner HSBC.

Rowe said that with the funding, there will be “a heavy focus on product and innovation around the platform,” as that is the core of Reibus’ work and the value it provides.

“Candidly, one of the reasons why I’m excited is because this isn’t about invention. This really is about optimization and evolution,” he remarked.

Evolution, not revolution

“Reibus is here to help the industry, to be part of the ecosystem, as opposed to trying to dramatically change systems and processes that have been in place for a very long time,” Rowe told SMU.

And he hopes Reibus will play a small role in helping the steel industry continue on its natural path to digitalization.

“We view this as a journey of evolution, as opposed to disruption or revolution,” he stated.

Rowe said several things are needed for a marketplace to flourish, including having an abundant population of buyers and sellers, being trust-infused, and delivering value on both sides of the transaction.

By being transactionally focused, Reibus brings economic value equally to both buyers and sellers in the steel industry, he said.

“What we’re really trying to do here at Reibus is simply help our buyers and sellers be more efficient, effective, and profitable,” he put it simply.

Rowe stressed that Reibus is here to stay. “We’ve got a good solution,” he said, and thinks that by listening to its customers more, Reibus will be able to deliver even more value to those customers, stakeholders, and the industry.

SMU will host Jared Rowe on an upcoming Community Chat. Stay tuned for details.

If you need help accessing the webinar replay, or if your company would like to have your voice heard in our future webinars, contact info@steelmarketupdate.com.

Want to have your voice heard? Contact david@steelmarketupdate.com to be included in our market questionnaires.

Steel prices have turned and are trending lower. How do you expect prices to trend over the next three months?

“I expect prices to bottom out in the next week or two and then trend up over the next 6-8 weeks before buyers are able to push back again.”

“I expect a bottoming out in the next 2-3 weeks. I expect a mill increase to be announced in the next week or so as CME HR futures are pointing up with no economic reason why the market should change direction.”

“Continue a bit lower, but bottoming ‘soon’ as imports start drying up.”

“We are expecting a pretty good down cycle here, maybe until late summer even. No real reasons out there for things to turn around in the immediate term.”

“If demand does not pick up or capacity taken offline, prices will continue to decline.”

“Lower, slowing economy and cheap imports.”

“Stable to $650 to 700 per ton until interest rates start to fall.”

“Discrete plate may trend slightly lower.”

“Coil to rise slightly, plate flat.”

“Up from here.”

Is demand improving, declining or stable?

“Declining, this was a very slow week going into the holiday, and I expect this week to be slow as buyers are on vacation.”

“Demand has declined with prices falling, but expect with prices bottoming, buyers will return for July lead times.”

“Declining, too much automotive inventory in pipeline.”

“Declining due to market demand is slow mainly due to high interest rates.”

“Declining, customers are waiting for the bottom.”

“Demand remains sluggish.”

“Declining, recession.”

“Stable to declining slightly.”

“Demands seems just ‘OK’ at best. The bigger the outfit, the slower they are it seems.”

Is inventory moving faster or slower than this time last year?

“Inventory for us is moving fast, but we’re also keeping less on hand.”

“A bit faster as folks play close to the vest.”

“Faster, inventories are lower as end-users anticipate lower prices in the future.”

“Slower due to slower demand and good inventories at service centers.”

“A bit slower.”

“Slower, with prices falling.”

“Slower, declining demand.”

“Slower, we don’t want to sell at a loss.”

Are imports more attractive than domestic material?

“Yes, pricing is becoming lower than domestic except lead times are long.”

“With domestic numbers falling, biting off some imports becomes a wee bit riskier. The numbers are still good, though.”

“Similar.”

“Not anymore for HRC but still for CRC, HDG and other value added.”

“Imports are not as attractive with prices falling.”

“No, lead times are too long.”

“No, they take too long to get here in a very unstable market.”

“Not attractive.”

What’s something that’s going on in the market that nobody is talking about?

“So many giant service centers are selling at minimal or no profit. This has been happening for a while. We collectively need these mammoths of the industry to stop racing to the bottom with price to allow for better overall profit margins. With 3-month treasury notes yielding over 5% and some major players yielding 0.5% or less Q1 margin, the insanity needs to stop. Investors need to stop having an appetite for loss/ minimal yields.”

“The real truth on how manufacturing is doing. We have seen over 500 people being laid off in our area.”

“Lead times are not as bad as buyers expected, which means most will miss the bottom of the market.”

“Lack of new import orders being replaced.”

“We keep hearing the Evraz NA sale is getting close (for real this time!), but who knows?!?”