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, April 17, at 11 a.m. ET.
The live webinar is free. A recording will be available free to SMU members. You can register here.
Simonson will discuss the outlook for various construction project types and geographic markets. He will review the latest data on construction employment nationally and by state. Simonson will also talk about hiring and wage trends, materials cost and availability issues, and changes in construction spending by category.
Recall that AGC is the leading association for the construction industry, with more than 27,000 member firms across a range of markets. Simonson has been chief economist at AGC since 2001.
As always, we’ll keep it to about 45 minutes. You can drop in, learn something – and then get on with your day. And we’ll take your questions too. So remember to think of some good ones for the Q&A.
Editor’s note: If you’d like to see past Community Chat webinars, you can find those here.
For something that wasn’t on the White House agenda in Washington this week, the proposed Nippon Steel deal for U.S. Steel is getting a lot of attention.
Japan’s Prime Minister Fumio Kishida came to the capital this week to meet with President Biden. With geopolitical tensions on high, the visit seems well warranted. With the number three economy in the world, and a major ally in the Pacific region, now seems a good time to shore up the alliance between the two countries.
Here in the US, though, there has been some vocal opposition to Nippon’s play for the Pittsburgh-based steelmaker, including from Congressional politicians, the United Steelworkers (USW) union, and even Biden himself.
Perhaps seeking to emphasize unity, Biden administration officials signaled that the sale of U.S. Steel to Nippon would not be on the official agenda for talks between Biden and Kishida. It appears, though, the issue was still on the agenda of some other parties, including the press.
As someone with some experience in these matters, I am well versed in the response of “No comment.” It can be employed verbally, in written/electronic form, or when one literally receives no response. The implication is clear: “We’re not going to be talking about this. Thank you kindly for your time.”
That was not exactly what happened at a joint press conference between the two leaders in Washington on Wednesday, as SMU has reported.
A reporter asked Kishida about the deal, and if he thought politics were influencing President Biden’s decision to oppose it.
“We understand that there are discussions underway between the parties. We hope that these discussions will unfold in directions that would be positive for both sides,” he said through an interpreter.
I would call the general tone of Kishida’s remarks “standard diplomatic.” It’s not hard to surmise that the positive outcome he imagined was one in which the deal gets approved.
Biden then chimed in to answer the question too.
“I stand by my commitment to American workers. I’m a man of my word, and I’m going to keep it,” he said. “And with regard to that, I stand by our commitment to our alliance,” he added, referring to the broader US relationship with Japan.
Personally, I would say the general tone of this response is, “I’ve got your back, USW. I’ve got your back too, Japan. Can we talk about something else now?”
Also on Wednesday, a Politico article said that the US Department of Justice opened “an in-depth antitrust investigation” into the Nippon deal. A preliminary investigation was announced last month, Politico said.
The article said the review was not about foreign ownership of U.S. Steel but about AM/NS Calvert, a sheet mill in Calvert, Ala., that is a 50-50 joint venture between ArcelorMittal and Nippon Steel. The plant “competes directly” with U.S. Steel, according to the Politico article.
Politico cites “two people with direct knowledge of the matter” as the source of the information.
Note that the Committee on Foreign Investment in the US review process (CFIUS) is a separate matter. That review is about potential national security issues, not about antitrust matters.
One doesn’t need to don a trench coat and take out a magnifying glass to see that there are a lot of moving pieces to the U.S. Steel deal, especially with several opposing interests.
It’s almost like a game of Tetris. How do you make these pieces fit together? Or will they? And variables like the presidential election mean the game is only moving faster.
Perhaps Tetris is too simple an analogy. It’s more like 5D chess trying to hazard an answer about what might happen. As far I know, though, the 5D chess app is not yet available, at least not on my iPhone.
The market appears to be taking a pause after the heavy buying that occurred in March.
Mill lead times for sheet contracted this week, with hot-rolled (HR) coil’s production time showing the smallest contraction from our last check of the market.
Meanwhile, lead times for plate continued to push out further, according to an analysis of SMU’s survey results this week.
Could contracting sheet lead times be an early indicator that demand is starting to slip? Steel buyers participating in SMU’s surveys continue to indicate solid demand, but what do you think?
We’d love to hear your thoughts, too. If you’re not already participating in our surveys, what are you waiting for? Shoot us an email at info@steelmarketupdate.com and let us know you want to take part in our surveys. And a big thank you goes out to the buyers who continue to participate.
Hot-rolled coil: 5.30 weeks
In this week’s check of the market, steel buyers reported HR lead times between four and seven weeks. This week’s average of 5.30 weeks is just slightly shorter than the 5.36-week lead time reported two weeks prior. HR lead times began the year at 6.26 weeks and have been hovering around five weeks since the start of February.
HR price: $810-860/short ton
Cold-rolled coil: 7.47 weeks
The range of lead times reported for CR sheet was five to 10 weeks. The average of 7.47 weeks pulled back by 0.37 weeks, or by 5%, from our March 26 market check. CR lead times started the year off at eight weeks and have remained below that threshold since.
CR price: $1,100-1,200/st
Galvanized coil: 7.33 weeks
Steel buyers said lead times for galvanized sheet are between five and 10 weeks, with an average of 7.33 weeks. Compared to two weeks ago, that average contracted by 0.29 weeks, or by 4%. Galvanized lead times have also been below eight weeks since the start of the year.
Galvanized price:$1,100-1,170/st
Galvalume coil: 7.60 weeks
Steel buyers reported lead times for Galvalume from seven to nine weeks. The average of 7.60 weeks contracted by 0.65 weeks, or by 8%, from the last market check. Galvalume lead times were highly extended for most of the fourth quarter, but started 2024 at an average of 8.33 weeks and have since remained between that point and seven weeks.
Galvalume price: $1,090-1,180/st
Plate: 5.91 weeks
Plate was the one product we track to see an uptick in lead times this week. Buyers said production times for plate are between four and eight weeks. Plate lead times pushed out by 0.25 weeks from our last market check to an average of 5.91 weeks. That’s the longest the average has been since the week of Dec. 20, 2023. Lead times for plate have been slowly pushing out since hitting a recent bottom of 5.38 weeks at the end of February.
Plate price: $1,160-1,290/st
Looking at the three-month moving averages (3MMA) of lead times can smooth out the variability seen in our biweekly readings.
On a 3MMA basis, lead times for all products fell back once again, a trend HRC, CRC, galv, and plate have been following since mid-January. Galvalume’s 3MMA has been falling back since starting the year at 9.79 weeks.
From the March 27 market check, the 3MMAs fell back slightly, to 5.40 weeks for hot rolled, 7.58 weeks for cold rolled, 7.56 weeks for galvanized, 7.63 weeks for Galvalume, and 5.70 weeks for plate.
In this week’s survey, SMU again asked steel buyers if they think lead times will be extending, flat, or contracting two months from now. Here are the results and responses to that question:
Flat – 58% (down from 65% two weeks ago)
“New normal.”
“Hot roll lead times [are] already fairly short.”
“There will not be big movements in next two months.”
“After extending, they will flatten out.”
“Flat to contracting.”
Contracting – 24% (vs. 26%)
“Mills will keep supply short, but I think they won’t be able to run on such reduced capacity for long.”
“Summer doldrums, imports, new capacity … all the buzzwords are pointing towards contracting domestic lead times in a few months.”
Extending – 18% (up from 9%)
“Pricing increase with extended lead times.”
Look for SMU’s next lead time update on Thursday, April 25.
Note: These lead times are based on the average from manufacturers and steel service centers participating in this week’s SMU market trends analysis survey. SMU measures lead times as the time it takes from when an order is placed with the mill to when it 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. If you’d like to participate in our survey, contact us at info@steelmarketupdate.com.
Steel buyers said mills are more willing to talk price on spot orders on all the products SMU covers, according to our most recent survey data.
Every other week, SMU polls steel buyers asking if domestic mills are willing to negotiate lower spot pricing on new orders.
This week, 72% of participants surveyed by SMU reported mills were willing to negotiate prices on new spot orders. This is a steep jump from 49% two weeks earlier. The 23-percentage-point increase is the largest bump we’ve seen between two surveys this year. This follows the largest drop we’ve seen so far in our previous survey, which was 35 percentage points. (Figure 1).
Figure 2 below shows negotiation rates by product. The rates for hot-rolled coil increased 19 percentage points to 73% this week; cold rolled stood at 62% (+30); galvanized was 72% (+19); Galvalume was 75% (+25); and plate stood at 79% (+9).
“It takes more than 1,000 tons to budge from $840 (on hot rolled), but they will move $20.”
“Believe you can get short lead times (on hot rolled) if needed with decent volume.”
“Depends on the starting point (for cold rolled).”
“Within reason. Not pushing for galv deals.”
“Giving us one week to place orders at old costs (on plate).”
Note: SMU surveys active steel buyers every two weeks to gauge their steel suppliers’ willingness 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.
Steel prices continued to ease lower in early March – a trend seen since mid-January – before showing signs of bottoming and inflecting up.
The SMU Price Momentum Indicator for sheet products shifted from lower to neutral mid-way through the month after Nucor, Cleveland-Cliffs, and ArcelorMittal all targeted new base minimums between $825-840 per short ton (st) during the first week of March.
Like sheet, the Price Momentum Indicator on plate shifted from lower to neutral in March, though not until the last week of the month.
We saw hot-rolled coil (HRC) tags start the month around $815/st. They edged down $20/st by March 19 before moving back up to $810/st to close out the month. Tandem products saw similar dynamics play out during the month, while plate prices were largely stable, easing just $10/st over the second half of March.
Raw material prices were stable to down across the month. Busheling scrap prices declined for a third consecutive month, slipping $45/gross ton from February. Shredded and HMS scrap prices were also down similarly. You can read our recent outlook on the April scrap market here. LME zinc and aluminum spot prices were largely flat, edging up halfway through the month before ticking back down. You can view and chart multiple products in greater detail using our Interactive Pricing Tool.
The SMU Steel Buyers’ Sentiment Index remained positive but fell to a 17-month low at the end of the month. Future Buyers’ Sentiment followed the same trend, slipping back down after shooting up to a near-six-month high the month prior.
Hot rolled lead times averaged five weeks in March, ticking up slightly throughout the month. Lead times for each product we track neared lows last seen in September of last year before turning upward slightly to close out March. SMU expects lead times to remain largely in a holding pattern in April due to flat demand. A history of HRC lead times can be found in our Interactive Pricing Tool as well.
About 70% of HRC buyers reported that mills were willing to negotiate on prices through late March. Buyers have reported mills’ willingness to negotiate declined following new pricing targets by most mills.
Key indicators of steel demand continue to show some signs of weakness overall, with most nowhere near the bullish levels seen in recent years.
See the chart below for other key metrics for March:
For those of you old enough to remember The King and I, the April scrap market seems to be a puzzlement. While it is now clear that everything went sideways, one could clearly make an argument for prices to have been down.
With the announcement of up to seven April outages in the flat rolled sector of the steel industry and several other mills not running at full capacity, it would not have been difficult to push prices down at least another $20 per gross ton (gt).
From what I have been able to determine, the plants feeding the auto industry have not backed off significantly their production of prompt industrial scrap. I have been told that the flow of shredder feed increased during March, and there has been an increase in demolition projects, especially in the Cleveland market. A number of dealers are not seeing robust flow of scrap across their scales but that is nothing new.
Putting this all together, one could certainly see at least some downward pressure on scrap pricing in April. Two weeks ago, I was hearing a “sloppy sideways to down 10-20.”
And then things started to change. I noted that the minions of a very large scrap company were not out making the rounds of the smaller dealers to talk the market down. This flew in the face of tradition, so something was up – or at least sideways.
In fact, I was told by several very reliable sources (aren’t they all?) that the aforementioned scrap company was actually pushing sideways very hard. ‘Tis a puzzlement!
So, what does this mean for May and beyond? I would like to say that I have good idea of what is to come but that would not be very accurate. My feeling at present is that we have reached a bottom, but steel imports increased in March, and I don’t have an optimistic view of the overall economy.
The best I can say is that without any significant pressure on either side of the steel/scrap divide, May pricing is probably not going to be drastically different from April.
The United Steelworkers (USW) union alleged that Nippon Steel was prioritizing its Japanese operations at the expense of American workers even as the steelmaker forges ahead with its proposed plan to purchase U.S. Steel.
The reason for the ruckus: USW said Nippon was seeking to lift tariffs on tin mill products in an April 10 letter to union members,
The US International Trade Commission (ITC) is currently conducting a five-year sunset review of the antidumping duties on tin- and chromium-coated sheet products from Japan, which have been in place since 2000.
“Nippon Steel was recently among the respondents seeking to lift tariffs on Japanese tin mill products,” said the letter, which was signed by USW International President David McCall and USW District 7 Director Mike Millsap. And that happened “even while hundreds of our union brothers and sisters lost their jobs in recent years as USS idled tin mill production at UPI and Gary Works.”
The union also claimed that workers at Cleveland-Cliffs’ tin mill in Weirton, W.Va., mill were “victims of dumping and illegal subsidies.”
Nippon Steel “cynically argues that these lost jobs are, in fact, a reason why the ITC should lift tariffs on Japanese goods. Obviously, this is complete nonsense, and we must continue to protect what’s left of our domestic tin mill industry,” McCall and Millsap said.
“For this and many other reasons … Nippon must not be allowed to acquire USS facilities,” the union leaders added.
Nippon did not respond to a request for comment on Thursday. U.S. Steel declined to comment.
Recall that in 2022, U.S. Steel cited increased imports and weaker demand as reasons to temporarily idling the No. 5 tin line at its Gary Works in northwest Indiana in 2022. The steelmaker then indefinitely idled the line later that year. (Note that U.S. Steel still produces tin mill products at its Midwest plant, a steel finishing facility in Portage, Ind., considered to be part of Gary Works.)
Late in 2023, USS idled its USS-UPI subsidiary in Pittsburg, Calif., which made tin mill products in addition to coated sheet.
Earlier this year, Cleveland-Cliffs announced it would indefinitely idle tinplate production at its mill in Weirton, W.Va. The steelmaker said the idling was a direct result of the ITC’s February decision not to impose duties on tin mill imports from Canada, China, Germany, and South Korea.
Cliffs’ CEO Lourenco Goncalves blamed the ITC’s unfavorable decision on U.S. Steel’s lack of participation in the case.
SMU asked U.S. Steel why it didn’t participate in the case given that it had blamed imports for the idling of some of its tin mills.
A USS spokesperson responded that “U.S. Steel has ample tin mill capacity to supply domestic demand. … We are open for business and happy to supply customers tin mill products that are mined, melted and made in the USA.” The spokesperson also noted that Gary’s idling was temporary.
According to U.S. Steel SEC filings, the company shipped more than 435,000 short tons of tin products in the US in 2023.
The Department of Commerce expedited its sunset review of the AD duties on Japanese tin products. In October, it determined that Japanese companies would likely continue dumping the products into the US at margins as high as 95.29% if the duties were allowed to expire.
Note that both Cleveland-Cliffs and U.S. Steel are interested domestic producer parties participating in the sunset review. Nippon Steel and JFE Steel are participating Japanese parties.
The ITC held a hearing on April 9 as part of its sunset review. It is scheduled to vote on the case on May 10 and to make its final determination by May 28.
The idling of Cleveland-Cliffs’ Weirton tin mill is scheduled for April 20.
“953 people are going to be laid off very shortly on the 20th of this month. 400 will be laid off, and then (more) will be laid off every week after that until the end of the year,” said Mark Glyptis, president of USW Local 2911, in a local media report on April 6.
McCall was in Weirton last week to talk to workers affected by the mill’s idling. “I’m confident that we’re going to do everything we can to restart production at this plant,” he said, according to a local report from April 2.
Glyptis has shown optimism regarding the mill’s restart. “An idling, you take down your equipment in a fashion where you can start it back up, and that’s what’s happening,” Glyptis noted in the April 2 report.
US hot-rolled (HR) coil has become increasingly more expensive than offshore hot band as stateside prices have moved higher at a sharper pace vs. imports.
Recall that the premium domestic product had over imports for roughly five months virtually dissipated in early March. But with US tags higher – even with a slight correction week on week (w/w) – and offshore prices still easing, stateside tags have gradually become more expensive.
US HR prices were roughly steady over the last week. That’s in part because Nucor’s introductory spot price at $830/short ton (st) might have temporarily stalled momentum in March stemming from a Cliffs’ price increase and expectations that other mills would follow.
All told, US HRC prices are now 13.3% more expensive than imports. The premium is down from 14.4% last week but still up from a low of just 4.9% less than a month ago.
In dollars-per-ton terms, US HR coil is now, on average, $111/st more expensive than offshore product, $11 lower w/w on average, though still up from a low premium of $40/st in early March.
This week, domestic HR coil tags were $835/st on average based on SMU’s latest check of the market on Tuesday, April 9, down $10/st w/w.
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.
As of Thursday, April 11, the CRU Asian HRC price was $499/st, up $5/st vs. the prior week. Adding a 25% tariff and $90/st in estimated import costs, the delivered price of Asian HRC to the US is approximately $714/st. The latest SMU hot rolled average for domestic material is $835/st.
The result: US-produced HRC is theoretically $121/st more expensive than steel imported from Asia. The spread is down $16/st vs. last week, and still far from a seven-month high of $281/st in late December.
Italian HR coil prices were up $2/st to roughly $632/st this week. Italian prices are now $55/st away from a recent bottom of $577/st last October. After adding import costs, the delivered price of Italian HR coil is in theory $722/st.
That means domestic HR coil is theoretically about $113/st more expensive than HR coil imported from Italy. The spread is down $12/st last week. The domestic hot band price premium over offshore product from Italy is still down $184/st from a recent high of $297/st in mid-December.
CRU’s German HR coil price ticked down $5/st from the week before to $647/st. After adding import costs, the delivered price of German HR coil is in theory $737/st.
The result: Domestic HR coil is theoretically $98/st more expensive than HR coil imported from Germany. The spread is down $5/st w/w and still down $167/st from 2023’s widest spread of $265/st.
Figure 4 compares all four price indices. The chart on the right zooms in to highlight the difference in more recent pricing.
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.
President Biden said on Wednesday he would stand by his commitment to US workers regarding the proposed sale of U.S. Steel to Japan’s Nippon Steel.
“I stand by my commitment to American workers. I’m a man of my word and I’m going to keep it,” he said at a joint press conference in Washington with Japanese Prime Minister Fumio Kishida, as seen on Bloomberg Television.
“And with regard to that, I stand by our commitment to our alliance,” he added, referring to the broader US relationship with Japan.
Biden’s remarks come as it was earlier reported that the Nippon deal for the Pittsburgh-based steelmaker would not be on the agenda during the prime minister’s visit.
President Biden came out against the sale of U.S. Steel to Nippon Steel last month.
Kishida also spoke of the proposed deal when questioned by a reporter at the press conference.
“We understand that there are discussions underway between the parties. We hope that these discussions will unfold in directions that would be positive for both sides,” he said through an interpreter.
After narrowing for three months, the spread between hot-rolled coil (HRC) and prime scrap prices widened this month, according to SMU’s most recent pricing data.
SMU’s average HRC price slipped this week, while the average April price for busheling scrap was flat month over month.
Our average HRC price stood at $835 per short ton (st) as of April 9, down $10 from a week earlier.
Meanwhile, busheling tags remained level at $410 per gross ton in April. Figure 1 shows price histories for each product.
After converting scrap prices to dollars per short ton for an equal comparison, the differential between HRC and busheling scrap prices is $469/st as of April 10, up $20 from a month earlier (Figure 2). This is the first time the spread has widened since December.
By the way, did you know SMU’s Interactive Pricing Tool can show steel and scrap prices in dollars per short ton, dollars per metric ton, and dollars per gross ton?
Figure 3 explores this relationship differently: We have graphed HRC’s premium over busheling scrap as a percentage. HRC prices now carry a 104% premium over prime scrap, up from 99% a month ago.
Over the last several years, I have noticed widening spreads between #1 Heavy Melting Steel (ISRI 201) and Shredded (ISRI 210,211), as well as Plate & Structural (ISRI 232).
Shredded has grown in popularity among EAF producers. It has its advantages. But does it warrant the kind of spreads we are experiencing in today’s scrap market?
These grades have about the same Fe content, and they all contain high alloy residual levels as compared to #1 Busheling (ISRI 207). Despite the chemical similarities of HMS, P&S, and shredded scrap, there seems to be a reluctance on the part of the EAF sector to use HMS – except at a much cheaper price.
These grades are not similar in physical characteristics. HMS and P&S are generally cut 5’ X 2’, thereby having less density than shredded scrap. Shredded scrap is much smaller and melts more uniformly than HMS. But does this fact make HMS worth that much less than shredded considering the Fe content?
| Grade | Fe Content (est) | Residuals | Density | Price April |
| Shredded | 94% | Cu, Cr | 50-70 lbs/cu ft | $415 gt Chicago |
| #1 HMS | 93% | Cu, Ni, Cr | 55 lbs/cu ft | $325 gt Chicago |
| 5′ P&S | 95% | Cu | 55 lbs/cu ft | $400 gt Chicago |
The spread between shredded and HMS in Chicago this month is at $90 per gross ton (gt)! Really? The spread between HMS and P&S is $75/GT. This is according to several scrap publications that follow local pricing. Basically, HMS has a similar specification to P&S, except it’s not true plate and structural steel. Both roughly have the same basic density. There may be a bit more residual alloys in HMS. But certainly not enough to justify this type of discount.
At this type of discounted price for #1 HMS in the Chicago/Detroit districts, integrated mills there must be enjoying using this grade as coolant in their basic-oxygen (BOF) furnaces as opposed to other much more expensive grades. The EAFs making the flat-roll could be losing some of their price advantage by not figuring out a way to incorporate HMS into their melts.
These wild price differences are less pronounced in the districts in the Southeast, where the price of #1 HMS is reported at $350/gt-$360/gt. This is more reasonable considering P&S and Busheling are at $375/gt and $400/gt, respectively. Still, it seems like too much of a spread if you review the specifications and consider the Fe yields.
The grade of #1 HMS was the bellwether scrap grade in the US for decades, until shredded scrap took over with the proliferation of the shredder over the last 20 years. However, it is still generated in vast quantities in the US.
The main export grade in the US and across the globe is a hybrid grade of 80% #1 HMS and 20% #2 HMS. In April, this grade is worth about $350/gt FOB USEC/USGC to deliver to Turkey in the low $390s. So, in Turkey, it’s worth $390/gt. But in Chicago it’s only worth $325/gt. And that’s with a 20% inferior blend bringing the Fe yield to a significantly lower level.
The spreads between shredded and HMS 80/20 in Turkey and Mediterranean Basin are not like those in US. Until two years ago, shredded carried only a $5-per-metric-ton (mt) premium over 80/20. Today, it’s risen to $20/mt. On the West Coast, it’s $5/mt-$10/mt.
So how come it’s so different here?
Given predictions of future increases in scrap demand and with new capacity being installed over the next several years, there should be a window to use #1 HMS to blunt runaway price increases. It would recapture its rightful status among the #1 grades of scrap in North America.
Next week, Las Vegas will host the largest recycled materials industry event. ISRI’s annual gathering at the Mandalay Bay Resort and Casino will unite more than 6,000 industry professionals to explore the latest trends in ferrous and nonferrous markets, provide networking opportunities, and support business growth.
SMU and RMU eagerly anticipate participating, connecting with fellow attendees, and absorbing insights from over 150 speakers covering diverse topics such as market dynamics, environmental concerns, and advocacy. RMU will be keeping everyone updated on its website and through its newly launched newsletter.
Additionally, experts from our parent company, CRU, will lead discussions on industry developments across various panels.
The event’s seven session tracks encompass advocacy, environmental safety, EVs, executive leadership, market trends, operations, and sustainability. You can view the details of the tracks and sessions on ISRI’s website.
On Tuesday, the “Spotlight on Ferrous” panel will reflect on the challenges and successes of 2023 and speculate on what lies ahead for 2024, with insights from CRU North America’s John Ball and others. Wednesday’s panels will focus on aluminum and copper, examining industry evolution, market outlook, and the impacts of global factors like trade measures and electrification.
With over 365 booths in the exhibit area, attendees will have ample opportunities to explore innovations and to network. Visit SMU and RMU at booth 2260, and don’t miss RMU’s session on Wednesday, April 17, from 3:00-3:20 p.m. in the Stage-Hospitality Lounge #5-Bayside B.
This event promises to be unforgettable. We hope to see you there!
The latest SMU Community Chat webinar reply is now available on our website to all members. After logging in at steelmarketupdate.com, visit the community tab and look under the “previous webinars” section of the dropdown menu.
All past Community Chat webinars are also available under that selection.
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.
Nucor made waves in the sheet market when it announced on Friday that it would begin publishing a weekly hot-rolled (HR) coil price.
The Charlotte, N.C.-based steelmaker arguably made even bigger waves on Monday when it posted its first weekly HR number: $830 per short ton.
That’s $70/st lower than the $900/st HR price Cliffs announced in late March. It’s also lower than prices in the mid-$800s that other mills were (less publicly) seeking.
What was the impact on steel markets?
At times on Monday, it felt like Nucor’s announcement had totally eclipsed just about all other steel news.
An immediate impact was on futures markets. Here is where things stood with CME HR futures on Monday afternoon, following Nucor’s $830/st announcement:
The consensus had been that HR prices would continue to inch upward on steady demand, a raft of mill outages, and additional mill price announcements – even if the gains wouldn’t be as steep as some predicted in March.
Many in the market expected a Nucor announcement last week. Namely, a price increase. A published weekly HR price, and one at $830/st, wasn’t the announcement that was expected.
The result: The move at least temporarily took upward momentum out of the sheet market. SMU has adjusted its sheet price momentum indicators from upward to neutral to reflect that.
“I am perplexed at what was accomplished by their $830. We found ourselves scratching our heads on Monday,” one mill source said. “We averaged more than that last week, which was also the best spot volume week in a little while.”
Another industry executive echoed that sentiment. He said his company had been selling HR for less than Cliffs but more than Nucor. That was not a problem as recently as Friday, he said.
“Since Nucor’s announcement, everything has changed. It really had a massive impact,” he said. “Now everyone believes the price is going down, not up.” But he questioned whether Nucor’s price would have as big an impact over the longer term.
A service center executive said that Nucor’s “Monday sticker price” has been, at least this week, a useful bargaining chip. “If another mill says $840, then I have the Nucor sticker price to come back and negotiate with,” he said.
That roughly dovetails with other sources, who said Nucor’s price would likely become a key reference point, among others, over time – as is already the case with its published plate prices.
A few suggested Nucor’s price could replace indices like those published by CRU, SMU, and others. But Nucor has publicly said that it does not intend to compete with the indices.
So what do folks in the broader SMU community have to say?
About 61% were indifferent to news of Nucor’s weekly HR price. Approximately 27% saw it as a positive development. And roughly 13% saw it in a negative light.
Here is what some of them had to say.
Positive
Indifferent
Negative
The survey results above are preliminary. We won’t have complete data posted until Friday. So make sure you take part in this week’s SMU steel market survey.
For those who have already responded, thanks! For those who have yet to, keep an eye on your inbox for an invitation to participate in this week’s survey. And for those who do not participate, ping us at info@steelmarketupdate.com to learn how to.
Don’t forget to join us for the next SMU Community Chat on Wednesday, April 10, at 11 a.m. ET with Anton Posner, CEO of Mercury Resources.
The live webinar is free. You can register here. A recording of the webinar and the slide deck will be available only for SMU members.
We’ll talk about military tensions on the Red Sea, the drought on the Panama Canal, and the collapse of the Francis Scott Key Bridge in Baltimore – and what it all means for steel and scrap.
We’ll also talk about inland truck, rail, and barge issues. How are volumes and business there? And we’ll take your questions too, so think of some good ones to bring to the Q&A on Wednesday.
Thank you for your continued interest in SMU!
Sheet prices saw a slight momentum shift this week after consecutive gains in the prior two weeks. Plate edged lower on greater competition and easing demand, according to our latest check of the steel market.
SMU’s average hot-rolled (HR) coil price ticked down by $10 per short ton (st) from last week to $835/st this week. The shift occurred in part because Nucor’s inaugural HR spot price ($830/st) resulted in a narrowing of our price range.
Reaction to the move was mixed. Most of those surveyed by SMU were indifferent to its impact on the HR market.
Cold-rolled (CR) and coated sheet price trends were mixed. CR inched up $10/st w/w to $1,150/st. Galvanized and Galvalume slipped $10/st and $15/st, respectively, falling to $1,135/st. Some market participants said CR prices have remained higher in part because of production issues at a mill that has also seen an influx of automotive business.
Plate prices fell, losing $25/st w/w to settle at $1,225/st this week. Sources have told SMU that sellers are undercutting published mill prices to win sparse spot business.
SMU changed its sheet price momentum indicators from higher to neutral this week. The adjustment in part reflects Nucor’s surprise announcement, which has made the near-term direction of sheet prices less certain. We changed our plate price momentum indicator from neutral to lower.
The SMU price range is $810-860/st, with an average of $835/st FOB mill, east of the Rockies. The lower end of our range increased $20/st w/w and the top end declined $40/st. Our overall average is down $10/st compared to last week. Our price momentum indicator for HR is now at neutral, meaning we see no clear direction for prices over the next 30 days.
Hot rolled lead times range from 3-9 weeks, averaging 5.36 weeks as of our March 28 market survey.
The SMU price range is $1,100–1,200/st, with an average of $1,150/st FOB mill, east of the Rockies. The lower end of our range remained unchanged w/w, while the top end increased $20/st. Our overall average is up $10/st from the previous week. Our price momentum indicator for CR is now at neutral, meaning we see no clear direction for prices over the next 30 days.
Cold rolled lead times range from 6-12 weeks, averaging 7.84 weeks through our latest survey.
The SMU price range is $1,100–1,170/st, with an average of $1,135/st FOB mill, east of the Rockies. The lower end of our range is $10/st higher w/w, while the top of our range declined $30/st. Our overall average is $10/st lower than last week. Our price momentum indicator for galvanized is now at neutral, meaning we see no clear direction for prices over the next 30 days.
Galvanized .060” G90 benchmark: SMU price range is $1,197–1,267/st with an average of $1,232/st FOB mill, east of the Rockies.
Galvanized lead times range from 6-11 weeks, averaging 7.63 weeks through our latest survey.
The SMU price range is $1,090–1,180/st, with an average of $1,135/st FOB mill, east of the Rockies. The lower end of our range declined $10/st w/w, while the top end decreased $20/st. Our overall average is down $15/st compared to the previous week. Our price momentum indicator for Galvalume is now at neutral, meaning we see no clear direction for prices over the next 30 days.
Galvalume .0142” AZ50, grade 80 benchmark: SMU price range is $1,384–1,474/st with an average of $1,429/st FOB mill, east of the Rockies.
Galvalume lead times range from 6-12 weeks, averaging 8.25 weeks through our latest survey.
The SMU price range is $1,160–1,290/st, with an average of $1,225/st FOB mill. The lower end of our range declined $40/st w/w, while the top end fell $10/st. Our overall average declined $25/st compared to the previous week. Our price momentum indicator for plate is now at lower, meaning we expect prices to decline over the next 30 days.
Plate lead times range from 4-7 weeks, averaging 5.67 weeks through our latest survey.
SMU note: Above is a graphic showing our hot rolled, cold rolled, galvanized, Galvalume, and plate price history. This data is also 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 info@steelmarketupdate.com.
Japanese Prime Minister Fumio Kishida will be in Washington to meet with President Biden this week amid tensions around U.S. Steel’s proposed sale to Nippon Steel.
The visit begins on Tuesday and includes an official visit and formal state dinner at the White House on Wednesday, as well as a joint press conference, according to a report on Tuesday from the Associated Press. Kishida will also address a joint meeting of Congress on Thursday, the report noted.
Reporters asked during a background call with senior Biden administration officials on Tuesday whether the president would raise concerns about the acquisition with Kishida. Two senior administration officials said the deal would not be discussed by the heads of state.
“Look, the relationship between the United States and Japan is far bigger and more significant than a single commercial deal,” one senior administration official said, according to a transcript of the call.
Rahm Emanuel, the ambassador to Japan and the former mayor of Chicago, made similar comments at Washington’s Center for Strategic and International Studies, according to the AP. “As we would say in Chicago, you got to chill,” Emmanuel said.
But recall that President Biden came out against the sale of U.S. Steel to Japan’s Nippon last month.
Other topics include the war in Ukraine and Chinese military action in the Pacific, the AP report said.
CLARIFICATION: A previous version of the article, and earlier mainstream media reports, said the topic of U.S. Steel’s sale to Nippon Steel would be discussed. As noted above, senior administration officials say discussion of the U.S. Steel-Nippon deal is not on the agenda of issues for Biden and Kishida to discuss.
The apparent supply of steel in the US fell 6% from January to February, according to data compiled from the US Department of Commerce and the American Iron and Steel Institute (AISI). Following the five-month high seen the month prior, apparent supply eased to 8.02 million short tons (st) in February, the third lowest monthly rate seen in the last three years.
Apparent steel supply is calculated by combining domestic steel mill shipments and finished US steel imports, then deducting total US steel exports.
Calculating supply levels on a three-month moving average (3MMA) basis can smooth out the month-to-month variability. The 3MMA through February eased to 8.23 million st. The 3MMA has been trending downward overall since peaking in late 2021 at 9.87 million st.
Apparent supply in February was 3% lower than the same month one year ago when the supply was 8.29 million st. This decline is primarily due to a decline in domestic mill shipments. Figure 3 shows a year-over-year (y/y) comparison for the month of February across the last four years.
Looking across the last four months, apparent supply had eased to a nine-month low in November, increased in December and January, then slipped in February (Figure 4). The decline in February was mostly attributed to a decline in domestic shipments, followed by a reduction in finished imports.
Figure 5 shows year-to-date (YTD) monthly averages for each statistic over the last four years. The average monthly supply level for the first two months of 2024 is up to 8.28 million st, 3% lower than the same period last year. 2020 holds the highest year-to-date (YTD) monthly average in our recent history at 8.97 million st.
To see an interactive graphic of our apparent steel supply history, click here. If you need any assistance logging into or navigating the website, contact us at info@steelmarketupdate.com.
Cleveland-Cliffs and the Global Steel Climate Council (GSCC) are two of the newest members of the World Steel Association (worldsteel).
Cliffs is now a regular producer member of worldsteel. President, chairman, and CEO Lourenco Goncalves will serve as the company’s worldsteel representative.
GSC is an affiliated member that will focus its participation on worldsteel’s environment and climate change committees. The organization’s executive director, Adina Renee Adler, is the organization’s representative.
GSCC said it plans to partner with worldsteel members to implement the GSCC Steel Climate Standard.
“The GSCC joins a dynamic network of steel producers, trade associations, and thought leaders to collaborate and drive the industry’s decarbonization efforts,” Adler said in a statement. “We appreciate the great support of worldsteel members to work more closely with us as we strive to help the global steel industry reduce carbon emissions while meeting demand for the steel that makes the modern world possible.”
Other companies that joined worldsteel as regular members this year include Turkey’s Özkan Demir Çelik Sanayi A.Ş., Morocco’s Maghreb Steel, and Iran’s Middle East Mines and Minerals Industries Development Holding Co. (MIDHCO). Belgium’s ESTEP also joined as an affiliated member.
Worldsteel has members, including steel producers, associations, and research institutes, in every major steel-producing country, representing about 85% of global steel production. The Brussels, Belgium-based association has 97 regular member companies and 56 affiliated members.
Nucor’s president and CEO Leon Topalian is the current chair of worldsteel. He was elected for a one-year term in October 2023. Besides Topalian, the only other person from a US company serving on worldsteel’s executive committee is U.S. Steel’s president and CEO David Burritt.
Steel Warehouse Co. announced the rebranding of its cold mill division as “Specialty Strip,” a boutique cold mill.
“This decision reflects the company’s commitment to exceeding the industry standard for precision cold-rolled strip through quality and innovation, including capital investments in its cold-rolling mill equipment,” South Bend, Ind.-based Steel Warehouse said in a statement on Tuesday.
The service center and steel solutions provider said “new state-of-the-art technology ensures repeatability and predictability of cold-rolled strip product — from the first coil to the thousandth.”
“We have been actively planning this rebranding and capital investment over the past several years and are eager to see this vision come to fruition,” CEO Ted Lerman said in the statement.
“Steel Warehouse is known for partnering with our customers, and this investment will allow us to expand our value added, metallurgical-driven niche product line,” added Mike Reach, business unit manager of Specialty Strip.
Specialty Strip is located on Steel Warehouse’s South Bend, Ind., location. It is part of the company’s Specialty Steel division, which also includes Chesterfield Steel (Cleveland), Siegal (Chicago), and Steel Warehouse Portage (Portage, Ind.).
Global steel demand will reach roughly 1.793 million metric tons (1.976 million short tons) this year, an increase of 1.7% over 2023, the World Steel Association (worldsteel) said in its updated Short Range Outlook report.
The gain will come after a 0.5% contraction in steel demand in 2023. Demand is forecasted to increase another 1.2% in 2025, reaching 1.815 million mt, the report said.
The global economic outlook continues to be impacted by monetary tightening. Worldsteel said the global economy has shown resilience despite the headwinds of tightening credit conditions and rising costs slowing construction and manufacturing sectors globally.
“After two years of negative growth and severe market volatility since the [Covid-19] crisis in 2020, we see early signs of global steel demand settling in a growth trajectory in 2024 and 2025,” commented Dr. Martin Theuringer, chairman of worldsteel’s Economics Committee.
Worldsteel expects emerging economies to grow at faster rates than developed economies. However, the developed world should still see growth of 1.3% and 2.7% in 2024 and 2025, respectively.
“While it seems the world economy will experience a soft landing from this monetary tightening cycle, we expect to see global steel demand growth remaining weak and market volatility remaining high on lagged impact of monetary tightening, high costs and high geopolitical uncertainties,” added Theuringer.
For the US, steel demand is expected to quickly return to a growth path in 2024 after a sharp drop in 2023 resulting from a slowdown in housing, the report said. The infrastructure bill and Inflation Reduction Act (IRA) should support the uptick in demand.
Following their 25% jump from December to January, US steel exports rose another 9% in February. The latest US Department of Commerce data shows 840,000 short tons (st) of steel left the country in February. This is the highest monthly export rate since August 2023.
Looking at exports on a 3-month moving average (3MMA) basis can smooth out the monthly fluctuations. Shipments had trended downward throughout the second half of 2023, falling to an 11-month low in December. The 3MMA changed course as it entered the new year, now up 5% month-on-month (m/m) to a three-month high of 742,000 st through February.
Exports can be annualized on a 12-month moving average (12MMA) basis to further dampen month-to-month variations and highlight historical trends. From this perspective, steel exports have steadily trended upwards since bottoming out in mid-2020. The 12MMA figure surpassed 800,000 st in January, now at 805,000 st through February figures and up to the highest 12MMA level since October 2018.
Exports of all major flat-rolled steel products showed significant increases from December to January, except for hot-rolled sheet, which declined 3%. Movement was mixed in February, with plate and hot-rolled products increasing, cold rolled flat and coated products declining. The most impressive mover in February was in hot rolled products, surging 43% m/m. Coiled plate saw a 15% increase in that span, while galvanized exports shrunk 10%.
Notable year-on-year (y/y) increases were seen in exports of cold-rolled sheet (+37%), hot-rolled sheet (+22%) and other-metallic-coated products (+13%).
On a 3MMA basis, each of the steel product exports we track saw increases from January to February. The largest m/m movers were hot-rolled sheet (+18%) and coiled plate (+15%).
Note that most steel exported from the US is destined for USMCA trading partners Canada and Mexico.
Evraz North America said there was no impact on production from a fire that broke out at its Pueblo., Colo., steel mill on Friday.
In a statement on Monday afternoon, the steelmaker said “manufacturing operations have resumed, all employees are safe, and there has been no hazardous-substance impact on the surrounding community.”
The company said the fire started on Friday “in a building used for staging and storage of non-hazardous materials.”
“The fire was 100% contained by Friday night and was limited to the storage building and surrounding area. The cause of the fire is under investigation,” Evraz NA said.
Evraz NA noted that the fire did not affect steelmaking operations or the onsite rolling mills. “The incident will not impact the company’s ability to fulfill customer orders on time,” Evraz NA said.
“Mill operations restarted on Sunday, April 7, following a 36-hour pause. Additionally, the fire did not affect the construction of Evraz North America’s new state-of-the-art long rail mill,” the company added.
Evraz commented that a number of air quality tests show there are no indications that any hazardous substances were released. The company said it “continues to closely collaborate with health officials as reviews continue and will work with those agencies to publicly release any additional findings as they become available.”
“We are deeply appreciative of the dedicated efforts of all involved in swiftly addressing the situation and safeguarding our employees and community,” James “Skip” Herald, president and CEO of EVRAZ NA, said in the statement.
Evraz Rocky Mountain Steel in Pueblo houses an EAF and makes rail, wire rod, and seamless oil country tubular goods (OCTG).
Domestic raw steel output moved higher last week after rebounding from a seven-week low just two weeks ago, reaching its highest total year to date, according to the latest release from the American Iron and Steel Institute (AISI).
Total steel output in the US was estimated to have been 1,745,000 short tons (st) in the week ending April 6, up 1.3% from the week prior. Raw production is down 1% compared to the same week last year, when production totaled 1,762,000 st.
The mill capability utilization rate was 78.6% last week, up from both the week prior (77.5%) and one year ago (78.4%).
Year-to-date production through April 6 was 23,497,000 st at a capability utilization rate of 76.4%. Annual production is down 2.4% from the same time frame last year, when 24,085,000 st were produced at a capability utilization rate of 77.7%.
Production by region is shown below, with the week-over-week changes shown in parentheses:
Editor’s note: The raw steel production tonnage provided in this report is estimated. The figures are compiled from weekly production tonnage provided by approximately 50% of the domestic production capacity combined with the most recent monthly production data for the remainder. Therefore, this report should be used primarily to assess production trends. The AISI production report “AIS 7”, published monthly and available by subscription, provides a more detailed summary of steel production based on data supplied by companies representing 75% of U.S. production capacity.
Martin Lindqvist will be stepping down as president and CEO of Swedish steelmaker SSAB.
The company has begun the recruitment process to find a replacement. Lindqvist agreed to stay on as leader until a successor has been named.
Lindqvist, who has been with SSAB for 26 years, has served as the company’s president and CEO since 2011.
During his tenure, SSAB acquired Finland’s Rautaruukki and began producing fossil-free steel using Hybrit technology.
“During Martin’s time as CEO, SSAB has developed into a publicly traded company with global markets and a strong financial position. He has been fundamental in building the company that SSAB is today and in driving the transformation to fossil-free production,” commented Lennart Evrell, SSAB’s chairman of the board, in a statement.
“I’m very happy to have had the privilege to be part of this incredible journey together with many proud and skilled employees at SSAB,” Lindqvist said. “At some point, you have to step down, and for me, that time has come.”
Lindqvist said he will now focus on board and advisory positions.
Nucor said its new weekly hot-rolled coil spot price is not meant as a substitute for any current price indices.
“Nucor’s intent is NOT to create or replace any of the indices available,” a spokeswoman told SMU in a statement on Monday (emphasis theirs).
She said the company’s aim “is to provide a real-time, relevant, and transparent price to our customers that enables them to reduce their reliance on speculation and risk.”
“We will support this by managing spot lead times to a 3-5 week window,” she said.
Further, she noted that the weekly price “is forward-looking and not directly based on transactions that occurred during the week(s) prior.”
“It doesn’t mean we won’t use information gathered from the week before to help determine our Monday CSP (consumer spot price) price, but that is not the driving influence,” she added.
Other “quantitative and qualitative data sources” will be used, she said. These include inventory levels, import activity, and underlying demand drivers.
The Charlotte, N.C.-based steelmaker released its first spot price of $830 per short ton earlier today. The move to CSPs was first announced last week.
Nucor said its spot hot-rolled (HR) coil price this week will be $830 per short ton (st).
The Charlotte, N.C.-based steelmaker said the new price would be effective immediately in a letter to customers on Monday morning, April 8.
The exception to that general rule is California Steel Industries (CSI), Nucor’s subsidiary in Fontana, Calif. CSI’s spot HR price will be $890/st.
Note that the West Coast market typically trades at a higher price than markets east of the Rocky Mountains.
Recall that Nucor made waves last week when it announced that it would publish a spot HR price every Monday.
The move is a break from traditional mill pricing practices for sheet products. Most sheet mills do not regularly publish prices.
But it aligns with Nucor’s approach to plate and merchant products. The steelmaker publishes prices for both.
They say all’s fair in love and war. But that doesn’t seem to be the case in steel. Being deemed “unfair” could get you slapped with shiny new Section 232 tariffs these days. Then again, “unfair” implies a judge. And people on opposing sides seldom agree with the judgment. Such seems to be the current case between the US and Mexico.
Sen. Sherrod Brown (D-Ohio) said in a press release on March 15 that “unfair imports keep coming” from Mexico. Legislation was introduced to Congress last month, the “Stop Mexico’s Steel Surge Act.” Whoever decided to name this one decided to get right to the point.
In an SMU Community Chat in March, Barry Zekelman, executive chairman and CEO of Zekelman Industries, weighed in on the issue.
“Adhere to the deal you signed onto, and we’ll be fine,” he said at the time, regarding the USMCA pact, which removed the tariffs on Mexico in 2019.
“But until then, I’m going to fight like a honey badger,” he added.
Unsurprisingly, the Mexican steel industry and trade associations see things differently.
Steel trade group Canacero disputed the characterization of a “surge” back in December.
I was recently at an event in Houston, and a lot of the conversation there centered around whether that introduced legislation would lead to action, or if it was election-year bluster.
Some seem to think tariffs could be imminent, while others think a resolution will be reached and the status quo will prevail.
Actually, there are quite a few topics of importance to the steel industry that are still up in the air.
Another is AHMSA. On Friday, SMU’s Laura Miller reported on an update given by the Mexican steelmaker on its timeline for a restart. (It’s been shuttered since December 2022). We’ve heard it before. Those in the market waiting for a definite, set-in-stone timeline will have to wait a little bit longer.
What about Evraz North America? Crickets seem to be the order of the day on the sale of the steelmaker’s assets in the US and Canada. (Evraz NA has been for sale since August 2022.)
Finally, the sale of U.S. Steel to Nippon. We’ve seen it swing from a foregone conclusion that only needed to be rubber-stamped, to many doubting it will be approved at all. And that’s all in the space of four months.
For the US-Mexico situation, if something concrete does materialize soon, will Mexico retaliate, as they have warned? What will it mean for the nearshoring trend in which North America is viewed as a single “neighborhood”?
More broadly, could this lead to a cascade effect with nations rolling up the drawbridge to imports? Whatever happens, the domestic steel industry has proved pretty nimble in reacting to pandemics, wars, and shifting domestic politics. We’ll see if this year might just put those skills to the test.
The Biden Commerce Department just issued a broad rewrite of regulations dealing with a host of antidumping and countervailing duty issues. From my perspective, it looks like Commerce made a wrong turn.
Long ago, Congress passed the first “countervailing duty” law that applied to any “bounty or grant” paid on exports of sugar to the United States. The law was expanded several times into the 20th century. By 1913, the law applied to all exports, not just sugar, and included government payments not only on exports but also on “domestic” subsidies to encourage production.
The law permitted the government to impose “countervailing duties” equal to the subsidies bestowed by the government of the exporting country. All this was before there were any statutes in the US that dealt with “dumping” – the selling products in the US below prices charged in the home market, or below the cost of production. Today, “countervailing duties” still refer to subsidies even though the term could literally apply to any duties in response to any disfavored practices.
In 1979, the original countervailing duty statute was repealed, replaced by the statute we basically have today. While the new statute did not expressly limit countervailing duties to subsidies bestowed by the country of manufacture, it defined a “subsidy” the same as a “bounty or grant” under the old law.
The pressure to expand the reach of trade remedy laws is constant. Last year, the Commerce Department proposed to eliminate its regulation limiting countervailing duties to subsidies granted by the government of the country where the goods were produced. Last week, Commerce published a final rule to do that.
The department said that the old rule was based on the statute repealed in 1979. The world, it went on, had changed since then, and some governments subsidize production not only in their own country but also in third countries. The “Belt and Road Initiative,” in which China made loans to developing countries to build infrastructure, was held out as an example of this.
The details of how this new authority operates have not yet been revealed. But there are numerous problems.
This is, to be sure, one of many potential disputes that could erupt between the US and its trading partners. But in a world where trade has already been weaponized and where the threat of war is increasing, we and our trading partners need fewer, not more, reasons to be at each other’s throats.
Personal Consumption Expenditures (PCE) inflation data was released on Friday, March 29, despite the stock market being closed for Good Friday. The year-over-year (y/y) PCE price index rose 2.5% in February, in line with market expectations but up from the 2.4% growth seen in January. The core PCE index, which excludes food and energy prices, rose 2.8% y/y in February, also in line with expectations and slightly down from 2.9% in January.
Overall, inflation risks remain contained after this report as the Federal Reserve’s Jerome Powell himself also anticipated a likely increase in the PCE index after last week’s meeting on interest rates. This means the possibility of a first cut in June is still possible.
The US Midwest aluminum premium rose over 2 ¢/lb and is trading between 20–20.5 ¢/lb. The recent bridge accident in Baltimore proved to be the catalyst to finally push the premium higher after sitting below 18 ¢/lb for much of 2024 Q1. There was a consistent contango building throughout much of this time due to both hopes of a Fed rate cut sparking demand, and cost pressure from the Red Sea conflicts. The disruption at the port helped support this week-over-week (w/w) increase, but ultimately this growing optimism and other cost pressures were already pushing the premium in this direction anyway.
The rest of the year is still uncertain as demand has started improving but there are concerns surrounding the likelihood of the momentum being sustained. One bright spot through Q1 has been a steadily improving residential construction market. Other major end-use segments are steady, with can sheet recovering, and automotive build rates moving higher. Demand stumbling on its road to recovery is still a risk to the premium, but overall it has built support firmly above 20 ¢/lb.
The Coca-Cola Company’s Glacéau smartwater brand has announced the release of 12-oz. aluminum cans with a new visual design. The new can aims at answering consumers’ environmental concerns while ensuring convenient consumption in the spring and summer months.
A creative campaign will start in early May to advertise the new packaging. Key visuals will be displayed across out-of-home, radio, and social/digital media, including close-up images of the new cans. Signs will also be displayed in stores to encourage consumers to “crack, sip, refresh”.
Other beverage companies have joined Smartwater in transitioning into aluminum packaging, especially in the travel sector. Diageo’s Baileys Original Irish Cream liqueur will be sold in 70cl aluminum bottles, designed to be five times lighter than glass and reduce carbon by 44%, at select airports; while Sustainaholics’ full range of spirits will be available in 100% post-consumer recycled aluminum bottles on select EasyJet flights.
The increase in China‘s photovoltaic (PV) solar power continues to be strong so far this year, with a record-breaking installation of 36.72 GW in the first two months of 2024, as per the latest data released by the National Energy Administration.
At the end of February, China’s total power capacity reached 2.97 terawatts (TW), up by 14.7% y/y. Solar power alone contributed to about 650 GW – a sharp increase of 56.9% y/y. Wind power installations also showed a solid growth, reaching 450 GW, up by 21.3% y/y.
This additional 36.72 GW of solar capacity in China underscores China’s accelerating shift towards solar energy. In 2023, China’s PV power generation capacity saw a significant surge, with newly added grid-connected capacity hitting 216.3 GW, marking a 147% increase from the previous year. The country is now set to break another record in newly installed capacity this year.
This article was first published by CRU. Learn more about CRU’s services at www.crugroup.com/analysis.
The Dodge Momentum Index (DMI) fell again in March, marking one of the lowest index readings of the past two years according to Dodge Construction Network data released Friday.
The DMI fell 8.6% last month to 164.0, down from February’s revised reading of 179.5 and 12% lower than the same month one year prior.
“In 2023, commercial planning decreased while institutional planning notably improved,” said Sarah Martin, associate director of forecasting for Dodge. “While strong market fundamentals should support institutional planning this year, this side of the Index is more at risk for a substantive correction after last year’s growth.”
Martin noted that slower growth on the commercial side pulled down that portion of the index again this month. The commercial segment was down 14% from a year earlier, while the institutional segment fell 10%.
Dodge reported that a total of 14 projects valued at $100 million or more entered planning in March, down from 17 in February.
Dodge is the leading index for commercial real estate. It uses the data of planned nonresidential building projects to track spending in this important steel-consuming sector for the next 12 months. An interactive history of the DMI is available on our website.