Announced in October 2022, the first phase has a capex of around INR600 bn ($7.22 bn, €6.60 bn). Among the enlarged plant’s features will be a wider product mix.

Mittal was reported as telling conference delegates the Hazira expansion is in line with government policy of encouraging industrial growth, adding that ArcelorMittal is also investing in renewable energy and green hydrogen.

This article was first published by CRU. Learn more about CRU’s services at www.crugroup.com/analysis.

Steel Market Update sat down with Adler to peek behind the scenes of the GSCC.

Below is a lightly edited version of the interview

Steel Market Update: You just became the executive director of the Global Steel Climate Council. What does that mean?

Adina Renee Adler: The Global Steel Climate Council, or the GSCC, was created a little over a year ago by a collective of steel companies who want to tell a story about taking real action towards decarbonizing their industry. They want to offer products that can be marketed as green and as a part of that journey. The group created a standard to put them on an actual glide path towards a scenario that aligns with the Paris climate agreement. Now it’s time to promote the standard to help the companies implement it and get the word out. I was hired as the executive director to oversee those activities and to work closely with member companies to advocate in front of governments and customers and other stakeholders.

SMU: Can you tell me more about your background? Have you always been in the steel industry?

ARA: I came into this role with a pretty diverse career path that I didn’t plan on, but it’s there. I worked for 10 years in the US government as a trade negotiator. I worked for a couple of Fortune 500 manufacturing companies in the commodity space, both in metals, but also as a metals consumer.
I worked for the trade association that represents the recycling industry, so that’s really where I cut my teeth on circular economy matters. I also worked for a think tank talking about the importance of the circular economy, and where industries of all sorts, including the steel industry, can play a role.

SMU: What’s the most exciting part of coming into this position?

ARA: We’re still kind of in startup mode, so there’s a lot of work to do. I’m excited to cultivate this organization and bring all the various members and supporters together on this journey. Unfortunately, I wasn’t there from day one, but I still feel like I’m there from day 1.5. We do have a lot of base work to do, but for me it’s going to be outreach, getting different perspectives on what a decarbonization journey can and should and will look like. And then watching the progress take place I think will be very exciting!

SMU: What is one experience from past positions that you can apply in this position?

ARA: I don’t know if it’s a skill, but honesty and integrity come to mind. I don’t think everybody does that and maybe some people are successful for not doing that, but that’s just not my approach. For me, it’s about positive messaging rather than, “Choose us, don’t choose them.”  In my first six months I want to make sure that telling a positive story; we’re having constructive conversations about what we’re doing.

SMU: For companies and/or individuals who want to be more involved in the GSCC, or want to be more involved in decarbonization initiatives, what’s the first step?

ARA: Well, the first step is to give me a call and let’s have a conversation about what role will be the best fit. There are different viewpoints on what the decarbonization journey looks like. What’s required, how do you do that? What standards might or might not be the best way to do that? But having groups that see the GSCC and its vision as being a really, really important glide path for decarbonization, we’d love to have them on board as supporters.

SMU: Who are the members exactly?

ARA: Our members are the steel mills. We also have companies that consume steel to make products, such as in the transportation sector or the construction sector. The reason that you bring them into the fold is that they’re establishing their support, and they are or will be a buyer of steel that is certified against the steel climate standard. They’ll have an opportunity to help shape the future of the organization. Other supporters include several trade associations and companies in the recycling industry.

SMU: That’s great that the industry gets to have an input.

ARA: When the standard was drafted last year, we put that out for public comment.
We now have a draft of a technical guidance document. It’s intended for the mills to understand how to implement the standard itself and for third party verifiers to understand what they’re certifying. It’s currently out for public comment. The idea is, it doesn’t just have to be the steel producers, the consumer companies, or even the environmental NGOs, but really anybody is welcome to provide some feedback on the technical document.

SMU: What’s in store for this year?

ARA: We’re ready to bring everybody in. We’re ready for the companies to really start this journey.
It’ll take some time, obviously, but we have to start now. I’m always available for people to talk about how we make sure that it actually works. I’m always open to ideas and feedback. I have an amazing board. I don’t want to understate that these are people who are freely giving time, in an already busy schedule, to make sure that this endeavor works.

Namely, Nucor didn’t follow competitor Cleveland-Cliffs higher when Cliffs announced a price hike to start 2024. (Or at least the Charlotte, N.C.-based steelmaker hadn’t when this article was filed on Thursday evening.)

Combine that with an unsettling scrap market: Most people expected scrap to be up or sideways. Instead, it looks more likely to be soft sideways/down.

Add a collapse in the futures market (albeit with a rebound on Thursday after what was arguably an oversold market on Wednesday). It’s not a recipe for higher HR prices.

The question now seems to be less when HR prices will peak but instead where and when they will bottom – and how quickly or slowly it might take to reach that bottom.

Some of you might say that the futures market is driven more by financial players and less by the realities of the physical steel market. Even so, I’ve heard that mills aren’t strictly enforcing the $1,100-per-ton, pre-increase HR price. Some sources tell me mills are willing to settle for ~$1,050/ton or so for smaller orders. Others tell me that prices well below $1,000/ton are available from certain mills for buyers able to place thousands of tons.

What’s also struck me in conversations this week is how many of you say you’re not in the spot market, even at deep discounts to prevailing spot prices. You say you’re able to cover your needs under the terms of your contracts. And some of you say you also have a little more inventory than you might like.

Another thing that sticks out: Certain buyers in coastal areas tell me that they’ve lost their appetite for imports. And the shift has been abrupt enough to perhaps take traders by surprise. What happened? It’s not exactly rocket science.

One major EAF sheet mill, for example, has HR available for the week of Feb. 5, according to lead times published earlier this week. Some of its mills had CR available for the week of Feb. 12 – with galvanized available the week of Feb. 19 or Feb. 26.

Imports ordered today might not arrive until April or May. US HRC was at $835/ton for April and $840/ton for May when I last checked CME HRC futures. In other words, can you get cold-rolled delivered upriver to the Midwest at around current spot US HR prices? Yes. Will that still be a good price by the time that material arrives in the spring? That’s not so clear anymore.

I realize this is not uniformly the case. When it comes to cold-rolled and coated products, some of you tell me that demand remains good and prices firm. Others tell me that it’s not so much strong demand as it is production issue at some mills and late deliveries at others.

Whatever the reason, I’m not hearing much of deep discounting in tandem products. But if HR doesn’t perk up, it’s hard to see how CR and coated keep rising – unless we’re seeing a paradigm shift like we saw in plate starting in early 2022.

I also realize that the idea of things loosening up might seem strange to someone on the West Coast grappling with the idling of USS-UPI LLC in Pittsburg, Calif.

Could any downward direction reverse in a hurry? Yes. It’ll be -8F (-22C) in Chicago on Monday, warming to balmy -6F on Tuesday. The area is used to winter. But when temperatures get that cold for a few days, the potential for unplanned outages goes up.

Heck, lows will be below freezing in Houston next week. And as we learned in early 2021 (remember “Snowmageddon“?), freezing temperatures hitting the Gulf Coast can cause a lot of trouble.

Looking out to this spring, perhaps a lack of imports in May or thereabouts will present domestic mills with their next big opportunity to raise prices in dramatic fashion?

I think you can take this much to the bank. The US sheet market is probably in for another volatile year. Take a look at the charts in our latest comparison of domestic and foreign HR prices. No one does volatility like we do here in the US. We soar above prices in the rest of the world, and then plunge below them.

Or, on second thought, perhaps don’t take that to the bank. Your banker might be a little surprised if their last customer was more focused on, say, rebar or plate – bastions of stability compared to sheet.

The good news: US HR is not quite as volatile as Bitcoin. But there are also days when I wonder whether it’s becoming sort of like the Bitcoin of industrial metals.

The sharp selloff in the last week points to a lack of confidence in the HR market holding its gains of the last month or so. Some futures buying has come in for the nearer dates following the large price decline, but given the velocity of the down move, it has been suggested that the market experienced some CTA liquidation. A lot of ferrous hedgers have been quietly observing from the sidelines as they formulate their strategies for the 1H’24. 

How much of a bounce we see in futures depends on volume of imports headed our way given the $250 differential from the indexes, and how much of the demand for HR was pushed forward into December.  A clearer sign of lower interest rates should help boost demand expectations.

CME BUS settled at $518.10 for January. Leading up to the settlement, the market expectations were at first up $20 and later at down $40 to $50 per gross ton (gt). The market got a surprise as the index barely moved from December’s strong settlement. 

Interestingly, the BUS futures curve has recently been sold off just under $50/gt basis average settlement price for Cal’24 from Dec. 11, 2023, to Jan. 10, 2024. So the future sentiment points to weaker BUS prices. February is a short month, and some winter weather could keep BUS prices steady.^.

The metal margin HR minus BUS settled at $454/ton on Dec. 11 and settled at $389/ton on Jan. 10. This is another sign that HR price advances have decelerated rather quickly, even as the indexes remain little changed.

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 Jack Marshall 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.

U.S. Steel has refused to keep the union updated on the sales process, failing to provide information on the bids received, the union said.

The ‘right-to-bid’ clause in the BLA remains a top concern of the USW.

Union-represented members at U.S. Steel “are the only real long-term stakeholders at this company,” USW said. “That is why we, as the only long-term interest, negotiated our right-to-bid clause, so that we have the right to organize our own transaction or to assign our rights to a bidder of our choosing,” the union explained.

Having assigned its right to bid to Cleveland-Cliffs in August, the union maintains its support of the Cleveland-based steelmaker as the preferred bidder in the U.S. Steel sales process. Cliffs is “the most committed to both steelmaking here in the United States and to supporting USW jobs,” the union said.

USW has asked Burritt to provide “all of the information that the [USS] board of directors considered in choosing to pass over Cleveland-Cliffs’ bid and instead take the Nippon offer.”

“Our BLAs not only entitles us to this information but also spells out the factors the board must take into account, which means USS may have further violated our contract in how it selected Nippon,” the union added.

Nippon Steel has said its Houston-based holding company will assume all USW labor, pension, and retiree insurance agreements. The USW remains concerned, however, as “unlike U.S. Steel, which publicly reports its financials, there is no public financial information for Nippon’s holding company, leaving us with no idea how it would be able to stand behind our contracts.”

Nippon Steel representatives met with the USW in late December. But the union said it walked away from that meeting with more questions than answers.

A spokesperson for Nippon Steel told SMU it intends to recognize the USW as the bargaining representative for its union-represented employees, honor all collective bargaining agreements, and maintain a constructive relationship with the union – including making no layoffs as a result of the deal.

“We intend to continue this dialogue in good faith as we move forward with the transaction,” the spokesperson said in an email.

“As of today, the scrap market is still not settled as most mills in the North tier are still trying to buy busheling,” another scrap source said.

“Dealers are turning down prices at down $30 from December levels,” the second source noted. “This market should move sideways or close to it.”

A third source said, “Both mills and suppliers did NOT follow the initial price moves set forth by Delta, even after this mill came out with a second set of prices.”

Recall that a Detroit-area mill entered the January scrap market with lower offers, down $50 per gross ton on #1 busheling.

On the export front, the first source said that export continues to trade firmly, with US cargoes shipping in February last trading around $425-430/metric ton CIF for 80/20.  

“Looking forward, the strength of the US domestic market will depend on how strong export demand and infeed flows into dealer yards are over the next few weeks,” he said.

Last fall, Reibus founder John Armstrong took a step back from the company’s day-to-day operations. Remaining on as chairman of the board, he handed the company’s reins over to interim CEO Temy Mancusi-Ungaro. Although new to the metals world, Mancusi-Ungaro has more than 20 years of experience building software companies, bringing a different background and perspective to Reibus.

Chris Shipp, also an instructor for SMU’s Steel 101 courses, had been with Reibus for a year and a half, serving as VP of strategic partnerships and then as SVP of sales and procurement. He left the company last year to pursue another opportunity as president of Kingdom Pipe & Steel. However, he returned to Reibus at the end of 2023, this time as the company’s president.

Before joining Reibus, Shipp was an early adopter of the digital platform while working in the steel industry. “I believe in what we’re doing,” Shipp said on the chat. “That’s why I came back. I couldn’t be more excited in what we’re going to do.”

With Mancusi-Ungaro and Shipp at the helm, the new Reibus is moving forward with its goal of streamlining the steel and metals supply chains.

New Reibus

Mancusi-Ungaro said there have been many changes at Reibus in addition to the new management. The company, established in 2018, grew quickly, he said, but things started to take a turn last year in a high inflationary environment. Realizing that Reibus can’t be everything to everyone, the company made 50 layoffs last year, and additional layoffs were made more recently. While commenting on the more recent layoffs, Mancusi-Ungaro said the company is continually assessing how it can be more efficient and will continue to do so to bring more focus to the business.

One of the big things you’ll notice with the new Reibus is a focus on working with its customers, according to Mancusi-Ungaro. Shipp said they want to evolve with their customers by focusing on their customers’ specific needs. Service centers are Reibus’ biggest customers, and different-sized stockists have different needs. While there may be one solution for one company, another solution may be needed for another one. They will continue to evolve that, Shipp said.

Another change is that Reibus is moving away from having scrap metal on its platform. “It wasn’t a fit,” Shipp explained. “Some things work, some don’t. That’s business.”

The Atlanta-based company is very focused on logistics solutions at present. The real-time tracking of trucks has been a popular area on the Reibus platform. Reibus’ technology now provides instantaneous information on where those loads are and when they will arrive.

“Gone are the days of multiple phone calls of ‘When’s the truck going to be there?’” Shipp said – something that drove him crazy in the past when he ran the supply chain for a manufacturer and a service center.

To hear the full conversation, SMU members can access a replay on our website.

Be sure to join us for SMU’s next Community Chat on Jan. 24 featuring CRU’s principal analyst and iron ore expert, Erik Hedborg. You can register here.

We’d like to hear your thoughts, too! Contact david@steelmarketupdate.com to be included in our questionnaires.

Are steel prices near a peak? If not, when and at what price level do you think prices will peak, and why?

“I feel they are near a peak or possibly already peaked. In visiting with mills on galvanized coils, they have capacity to fill in February and even stock on hand.”

“Most likely at the peak, but it could still peak in the next few weeks or month. I don’t think they can hold these prices beyond first quarter.”

“Yes, I believe steel prices are at a peak. I figured the last increase sends the message, and news of scrap coming off, along with futures crashing, kind of validates that.”

“I feel prices will continue to increase through the end of February. They might try to push $1,300.”  

“I believe they are at peak right now as supply and demand ratios are higher with supply increasing and demand weaker.”

“I can see a discrete plate increase coming in Q1.”

Is demand improving, declining or stable, and why?

“Demand is remaining ‘stable,’ which is fun to say. We’re bullish for 2024.”

“For us, demand is declining which is normal for this time of year.” 

“Demand is stable, an improvement from Q4. It’s mainly driven by automotive and buyers replenishing stock on trailing contract prices.”

“It’s stable at best. We’re expecting a strong January.”   

“Our demand is weakening due to high interest rates.”

“Discrete plate demand is decent to good.”

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

“Slower, as our orders have stabilized. Domestic supply is becoming more in line with lead times.”

“Inventory is moving faster, but that is probably with regards to us getting more and more new customers (not necessary our legacy business spiking).”

“Our inventory is moving faster as people restock and do a little ‘panic buying,’ brought on by the mill increases.”

“I think it is a bit slower than last year. However, this year is demand driven while last year was raw material price driven.”

“Slower, due to high interest rates slowing the economy.”

Are imports more attractive vs. domestic material? Why or why not?

“Yes, 25% lower pricing than domestic.”

“With domestic set to fall in the coming weeks, not too attractive.”

“Imports are definitely attractive and have been for a while now. I worry about a wave coming in late Q1/early Q2.”

“They are from a pricing standpoint, but lead times are very extended.”

“Import discrete plate offers are not attractive for us at this moment for many justifications.”

“Depending on product and availability.”

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

“The purchasing index. It has been under 50 for 6+ months, and in November it was the lowest it has been in years. This index is normally six months out in front of moves in the market.”

“The lack of prime scrap.”

“There seems to be a decent amount of ‘dry powder’ on the sidelines. I think we could see plenty of M&A action in 2024 if the rate environment even improves just a little.”

“Offshore wind projects being canceled.”

“The impact of all the new capacity that has come online in the past two years.”

“In the last week I have seen mills get competitive for coated products, and from service centers for hot rolled pricing has been declining.” 

The UAW noted that this comes one month after workers at a Volkswagen plant in Chattanooga, Tenn., reached the 30% threshold and went public with their attempt to join the union. Additionally, it “comes just six weeks after non-union autoworkers across the nation started organizing to join the UAW,” the union said.

In December, UAW President Shawn Fain outlined the union’s strategy to unionize non-union auto workers in the US.

After declining in November, Russian exports of merchant pig iron increased in December as higher scrap prices made Russian pig iron more lucrative for buyers. Market participants report that demand for Russian material increased in early December, though deteriorated in the latter half due to the holidays.

In Europe, pig iron prices were unchanged MoM at $425/t CFR Italy due to a slow start to 2024 following Christmas and New Year holidays. Moreover, in December the European Union had imposed the 12th package of sanctions against Russia, which includes restrictions on Russian pig iron imports into the EU to 1.14 million t in 2024, 700,000 t in 2025, and prohibited in 2026.

Meanwhile, Brazilian pig iron prices increased $15/t MoM to $480/t and $450/t FOB for the North and South, respectively. Despite the rise in prices, increased cost of charcoal due to heavy rainfall in the southeast region of Brazil is putting pressure on producer margins.

In the US, pig iron prices increased $20/t MoM to $500/t CFR NOLA, in line with the historical average premium to scrap prices. Buyers report that availability of both Brazilian and Ukrainian material has loosened this month despite continued strong demand, though buyers are unwilling to increase order volumes for Ukrainian material due to continued risks.

This article was first published by CRU. Learn more about CRU’s services at www.crugroup.com/analysis.

This week, domestic HRC tags were $1,045 per ton on average based on SMU’s latest check of the market on Tuesday, Jan. 9. Prices were unchanged from the week before, but up $400 per ton from the lowest point of 2023, $645 per ton in late September. Back then, domestic prices were cheaper than offshore tags.

Methodology

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

We add $90 per ton to all foreign prices as a rough means of accounting for freight costs, handling, and trader margin. This gives us an approximate CIF US ports price to compare to the SMU domestic HRC price. Buyers should use our $90-per-ton figure as a benchmark and adjust up or down based on their own shipping and handling costs. If you import steel and want to share your thoughts on these costs, please get in touch with the author at david@steelmarketupdate.com.

Asian HRC (East and Southeast Asian ports)

As of Thursday, Jan. 11, the CRU Asian HRC price was $553 per ton, sideways from the previous week. Adding a 25% tariff and $90 per ton in estimated import costs, the delivered price of Asian HRC to the US is approximately $782 per ton. The latest SMU hot rolled average for domestic material is $1,045 per ton.

The result: US-produced HRC is still theoretically $263 per ton more expensive than steel imported from Asia. The spread is down just $18 per ton from a seven-month high of $281 per ton in late December.

Italian HRC

Italian HRC prices were up $11 per ton to roughly $693 per ton this week. With the marginal gain, Italian prices are now up $40 per ton over the past month vs. the $5-per-ton increases in the US. After adding import costs, the delivered price of Italian HRC is in theory $783 per ton.

That means domestic HRC is theoretically $262 per ton more expensive than HRC imported from Italy. The spread is down from $273 per ton the week prior but represents a $309-per-ton swing from late September when US HRC prices were $47 per ton cheaper than those for Italian hot band.

German HRC

CRU’s German HRC prices increased by just $4 per ton week over week to $719 per ton. After adding import costs, the delivered price of German HRC is in theory $809 per ton.

The result: Domestic HRC is theoretically $236 per ton more expensive than HRC imported from Germany. The spread is just $29 per ton below 2023’s widest spread of $265 per ton reached in mid-December.

Figure 4 compares all four price indices. The chart on the right zooms in to highlight the difference in pricing from the second quarter of 2023 to the present.

Notes: Freight is important in deciding whether to import foreign steel or buy from a domestic mill. Domestic prices are referenced as FOB the producing mill, while foreign prices are CIF the port (Houston, NOLA, Savannah, Los Angeles, Camden, etc.). Inland freight, from either a domestic mill or from the port, can dramatically impact the competitiveness of both domestic and foreign steel. It’s also important to factor in lead times. In most markets, domestic steel will deliver more quickly than foreign steel.

Effective Jan. 1, 2022, Section 232 tariffs no longer applied 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.

“As we embark on this new chapter as Metallus, we remain focused on achieving our near-term goals and further solidifying our leadership position in the high-performance metals industry,” Mike Williams, president and CEO, said in a statement.

TimkenSteel said “Metallus” was formed through a combination of the words “metallurgy” and “qualis,” derived from the Latin word for “quality.” “Us” was altered at the end of the name, “reinforcing Metallus’ longstanding partnerships and the power of what can be achieved together.”

Williams described the rebranding as Metallus as a “pivotal milestone in our evolution.”

The company said it “will continue to serve the automotive, energy, and a variety of industrial end markets, with targeted growth in aerospace and defense.”

With an annual melt capacity of 1.2 million tons, TimkenSteel makes carbon steel, alloy, and micro-alloy steel in the form of specialty bar, seamless mechanical tubing, value-add components, billets, and bottom-poured ingots.

If you need help accessing the webinars, contact info@steelmarketupdate.com.

January scrap, it’s messy

But then things got weird. One mill, typically the leader in US scrap price trends, offered down $50 per gross ton on prime last Friday. Another mill didn’t follow and instead bought sideways – or that’s my best understanding of where things stood when this article was filed.

It all seemed a little, well, unsettled. My colleagues and I checked with some of our scrap sources on whether the January scrap settlement was more chaotic than usual. They confirmed that it was.

“It’s hard to take the market that far down in January, especially with firming prices for export and pig iron,” one scrap market expert said.

Said another: “This is one of the strangest markets I have ever traded, especially for a January.”

“Where we are right now is … the US domestic market won’t commit to prices, with sellers expecting sideways prices and consumers bidding anywhere from sideways to down $10-$20 for shred and sideways to down $30 for prime grades,” he added.

Will the scrap market finally settle on Wednesday? Let’s hope so! I say that because we’re also seeing uncertainty over the direction of sheet prices. And unsettled scrap prices aren’t helping matters much.

HR going to $1,150 or below $1,000?

Take hot-rolled (HR) coil, for example. Certain mills might be offering $1,150/st. But we haven’t seen many takers at that price. And for larger consumers, prices in the $900s/st remain in the market, buyer sources tell us.

Meanwhile, HR futures for February fell just below $1,000/st on Tuesday. March briefly declined to below $900/st. Futures of course don’t predict the future. But they do reflect the opinion of respondents to our latest survey.

We asked folks when sheet prices might peak or whether they were near a peak already. I don’t want to steal too much thunder from ‘Market Chatter’ in our Thursday issue. But here are some responses:

• “If Nucor does not announce, yes.”
• “It certainly already felt like we were ‘peaking.’ And now with scrap looking soft to start ’24, I would say we are getting there for sure.”
• “I feel they are near a peak or possibly already peaked. Visiting with mills on galvanized coils, they have capacity to fill in February and even stock on hand.”

I’m not going to pin all that bearish/cautious sentiment on scrap. I think it also reflects the reality that HR imports could be available in the Q2 in the $800s per ton, or ~$200/ton below where current domestic prices are. CR imports, meanwhile, have been offered in the $1,000s per ton – roughly where domestic HR prices are now and ~$200/ton below current US spot prices for CR. We’re also told that imported plate could be landing in the spring at around $1,100/ton – or about $300/ton below current US prices.

“Now it’s, ‘Who blinks?’ And I think the mills will blink first,” an executive at a large distributor told me today. “My belief is we’ve hit the high and it’s starting its descent. How low it goes? I have no idea.”

Not everyone was on board with that prediction.

“This is a key week. At the end of the week or toward the end of it, we’ll know whether mill order books are getting a shot in the arm with new orders,” a service center executive said. He also suggested keeping a close eye out for unplanned outages with severe weather now gripping much of the US.

“I’m hoping that this is a big week for the mills so things can keep climbing,” he said. But he also noted that he wouldn’t be making any big, speculative spot buys in the meantime.

SMU Community Chat

Don’t miss the Community Chat on Wednesday at 11 am ET with Reibus. We’ll host new CEO Temy Mancusi-Ungaro as well as President Chris Shipp, who recently returned to the Atlanta-based digital marketplace for steel and metals.

We’ll talk about what new leadership means for the direction of Reibus, what the company sees in today’s market, and we’ll take your questions too. You can register here.

Flat HR prices might result in part from a still unsettled January scrap market, some sources said. That uncertainty could make it difficult for mills to enforce (or even to follow) a price hike announced by Cleveland-Cliffs last week, they said.

Recall that price increase was aimed at lifting spot HR prices to at least $1,150 per ton.

But it was a different story on the cold-rolled and coated side. SMU’s cold-rolled (CR) coil price stands at $1,325 per ton on average, up $40 per ton from last week. Following a similar trend, galvanized was at $1,330 per ton (up $45 per ton) and Galvalume at $1,345 (up $30 per ton).

It was not immediately clear why CR and coated prices would continue to move upward even as HR appears to have plateaued. The divergent trends have at least temporarily created an unusually wide spread between prices HR and those for tandem products.

Some sources said unexpected issues at certain mills might be to blame. Others said they weren’t aware of any production problems. They said supplies of tandem products were simply tighter than those for HR.

SMU’s plate price, meanwhile, was unchanged at $1,405 per on average.

With price trends mixed, our sheet and plate momentum indicators remain at neutral. They will remain so until a clear market direction emerges.

Hot-rolled coil

The SMU price range is $990–1,100 per net ton, with an average of $1,045 per ton FOB mill, east of the Rockies. The bottom end and the top end of our range were unchanged vs. one week ago. Our overall average is, as a result, sideways week on week (WoW). Our price momentum indicator for HRC remains neutral, meaning SMU is unsure of the direction prices will move over the next 30 days.

Hot rolled lead times: 6–8 weeks

Cold-rolled coil

The SMU price range is $1,300–1,350 per net ton, with an average of $1,325 per ton FOB mill, east of the Rockies. The lower end of our range was up $60 per ton vs. the prior week, while the top end of our range was up $20 per ton. Our overall average is up $40 per ton vs. the week prior. Our price momentum indicator for CRC remains neutral, meaning SMU is unsure of the direction prices will move over the next 30 days.

Cold rolled lead times: 6–12 weeks

Galvanized coil

The SMU price range is $1,300-1,360 per ton, with an average of $1,330 per ton FOB mill, east of the Rockies. The lower end of our range was up $60 per ton vs. the prior week, while the top end of our range was $30 per ton higher WoW. Our overall average is up $45 per ton vs. the week prior. Our price momentum indicator for galvanized remains neutral, meaning SMU is unsure of the direction prices will move over the next 30 days.

Galvanized .060” G90 benchmark: SMU price range is $1,397–1,457 per ton with an average of $1,427 per ton FOB mill, east of the Rockies.

Galvanized lead times: 6-11 weeks

Galvalume coil

The SMU price range is $1,300–1,390 per net ton, with an average of $1,345 per ton FOB mill, east of the Rockies. The lower end of our range was up $20 per ton vs. the prior week, while the top end of our range was also up $40 per ton. Thus our overall average is up $30 per ton vs. the week prior. Our price momentum indicator for Galvalume remains at neutral, meaning SMU is unsure of the direction prices will move over the next 30 days.

Galvalume .0142” AZ50, grade 80 benchmark: SMU price range is $1,594–1,684 per ton with an average of $1,639 per ton FOB mill, east of the Rockies.

Galvalume lead times: 6-15 weeks

Plate

The SMU price range is $1,380–1,430 per net ton, with an average of $1,405 per ton FOB mill. The lower end of our range was up $10 per ton WoW, while the top end of our range was $10 per ton lower vs. the prior week. Our overall average is unchanged vs. one week ago. Our price momentum indicator for plate remains neutral, meaning SMU is unsure of the direction prices will move over the next 30 days.

Plate lead times: 4-7 weeks

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.

The Price Momentum Indicator on plate, which had been pointing Lower since September, shifted to Higher, largely in response to mill increase notices at the close of November. The indicator remains Higher through December. Despite the improvement, signs of weakness due to waning demand persist.

Raw material prices have fluctuated somewhat but were again mostly sideways last month, except for scrap. Scrap prices improved on average in December, up between $60-85 per ton. Despite some movement midway through the month, zinc and aluminum spot prices were largely stable, remaining within historical levels. You can view and chart multiple products in greater detail using our interactive pricing tool here.

The SMU Steel Buyers Sentiment Index remained positive, edging up slightly during the month. Current Buyers Sentiment rose from +67 in November to +68 on average in December. Future Sentiment hovered at an average of roughly +69, down slightly from the prior month’s reading of +71.

Our Steel Buyers Sentiment 3MMA Index (measured as a three-month moving average) had been eroding over the past four months, falling to +58 in October, but recovered to +65 on average last month.

Hot rolled lead times averaged 6.83 weeks in December, down from 6.93 weeks the month prior. SMU expects lead times to hover around current levels, but market chatter suggests they could decline a bit more through January and further throughout the first quarter of 2024 as inventory management takes precedence at the end of the year. A history of HRC lead times can be found in our interactive pricing tool as well.

About 41% of HRC buyers reported in December that mills were willing to negotiate on prices, up marginally from roughly 31% in November as mills were still trying to move prices higher.

Key indicators of steel demand are still showing some signs of weakness overall and are nowhere near the bullish levels some had shown earlier in 2023. While there are some backlogs in the energy and construction sectors, demand for the early portion of 2024 remains rather controlled, especially as buyers appear to be pushing back a bit on the most recent round of mill price hikes.

See the chart below for other key metrics for December:

Year-to-date shipments through the first 11 months of 2023 stood at 82,255,551 tons, a drop of 0.4% from 82,567,565 tons in the same period in 2022, AISI said.

Comparing YTD 2023 vs. the first 11 months of 2022 shows the following changes: hot-rolled sheet, up 13%; cold-rolled sheet, up 3%; and corrosion-resistant sheet, up 1%.

Before joining Mill Steel, Powell served as CFO at ClarkDietrich Building Solutions. Prior to that, he spent 15 years in various finance roles at BlueScope Steel.

“We are thrilled to welcome Justin to our executive team. His extensive experience and strategic mindset make him an invaluable asset as we continue to expand our business. We are confident his financial acumen will contribute to Mill Steel’s success” said the CEO of Mill Steel, Pam Heglund, in a news release.

Powell’s background consists of flat rolled production, engineered metal buildings, and building products manufacturing.

“I am honored to be part of such a dynamic and forward-thinking organization. I look forward to the continued success and growth ahead for Mill Steel Company,” said Powell in the release.

In the review, the ITA preliminarily determined that the UAE made sales of the subject pipe in the US at prices below normal value during the period of review, Dec. 1, 2021, through Nov. 30, 2022.

The ITA set initial weighted-average dumping margins of 0.96% for the UAE’s Conares Metal Supply and 1.09% for Universal Tube and Plastic Industries, THL Tube and Pipe Industries, and KHK Scaffolding and Framework. Ajmal Steel Tubes & Pipes, KD Industries, and TSI Metal Industries were assigned margins of 1.06%.

These preliminary rates are lower than the ones the companies received in the prior one-year period of review: 5.06% for Ajmal; 2.63% for Universal, THL, and KHK; and 3.63% for Conares, KD, and TSI.

The agency is asking interested parties to submit comments by Feb. 7. It intends to make its final determination in this review by May 7.

A sunset review of these duties was completed in 2022. It was determined that the duties should remain in place for another five years on the pipe imports from the UAE, Oman, and Pakistan.

“The DMI averaged a reading of 184.3 in 2023, hitting levels of activity that haven’t been recorded since 2008,” Sarah Martin, associate director of forecasting for DCN, said in a statement.

“While ongoing labor and construction cost issues will persist in 2024, a substantive amount of projects are sitting in the planning queue and will support construction spending going into 2025,” Martin added.

Hotel and data center planning were particularly strong within the commercial sector. Stronger healthcare and public building planning drove the institutional side, reported DCN.

Overall, 23 projects valued at $100 million and up entered planning in December. Six of those projects have a $400 million value or higher, DCN said.

Dodge is the leading index for commercial real estate, using the data of planned nonresidential building projects to track spending in the important steel-consuming sector for the next 12 months. An interactive history of the DMI is available on our website.

The mill capability utilization rate was 76.9% to start the year, up from 73.1% a week earlier and 75.2% a year ago.

Production by region is shown below, with the week-over-week changes shown in parentheses:

• Northeast – 125,000 tons (unchanged)
• Great Lakes – 557,000 tons (up 12,000 tons)
• Midwest – 190,000 tons (up 7,000 tons)
• South – 771,000 tons (up 9,000 tons)
• West – 64,000 tons (down 1,000 tons)

“The deal poses no harm to America … as we will make investment in line with the economic security strategies of the United States and other Western nations,” Hashimoto added.

He also noted that the current labor pact with the United Steel Workers (USW) union would be upheld.

This comes amid the protests of some US politicians, as well as the White House, saying the deal needs “serious scrutiny.” Additionally, the USW said it wasn’t sold on the deal after meeting with Nippon Steel. Cleveland-Cliffs was its preferred buyer.

Despite strong demand, the Irving, Texas-based metals recycler and long product producer saw a 10% year-on-year (YoY) decline in sales to just over $2.2 billion in the quarter. At the same time, net earnings fell 33% to $176.3 million. Compared to the prior quarter, sales and earnings were down 9.3% and 4.3%, respectively.

“Performance in our North America Steel Group was supported by sustained healthy construction activity and near-record margins on our downstream products,” commented CMC’s President and CEO Peter Matt in the company’s quarterly earnings report.

“While steel product margins experienced compression in the quarter, market developments indicate this trend should halt or reverse in the coming months,” he added.

Q1 shipments within CMC’s North America Steel Group, which includes both steel and downstream products, registered a 1.1% YoY rise. Steel product margins were lower, however, as average selling prices declined while the cost of scrap rose, the company said.

Looking forward, Matt said CMC expects increasing infrastructure investments to drive strong construction activity in the spring and summer months.

The company expects its investment initiatives to broaden its exposure to the “favorable structural trends powering domestic construction.” These investments include its Arizona 2 micro mill, which started up last summer, as well as its Steel West Virginia project, currently under construction.

Recall that Commercial Metals Co. rebranded as CMC in October to reflect its growth beyond metals. In addition to running mini and micro mills, CMC fabricates rebar, cables, and fasteners, and offers construction services.

Visiting Tampa is a great way to beat the winter blues. In addition to hearing from our esteemed speakers, you can join the networking reception, a golf tournament, and take a harbor tour of Port Tampa Bay. Check out the full agenda here.

We currently have about 400 registrants, and are on track to beat last year’s record attendance. Though our blocked-off accommodations have filled, many alternatives remain nearby.

Below are some links for alternative hotels:

• The Westin Tampa Waterside
• Marriott Water Street
• Embassy Suites by Hilton Tampa Downtown Convention Center
• Hilton Downtown Tampa
• Sheraton Tampa Riverwalk Hotel
• Hyatt House Tampa Downtown
• Tampa Downtown Hampton Inn & Suites

We will have attendees from all over North America. And everyone will be talking about the latest steel industry news. Here’s a list of companies that have already registered. Those with an asterisk next to their name are sending more than one person to the event:

3GM Steel, Inc.*, A. Duie Pyle, A.R. Savage & Son, LLC*, ADM Investor Services, Al Ghurair Iron & Steel LLC, Alabama State Port Authority*, Algoma Steel Inc.*, All Metals, Alliance Steel LLC*, American Heavy Plates*, Ameristar Perimeter Security*, AMS Specialty Steel, ArcelorMittal*, ArcelorMittal Dofasco*, ArcelorMittal International, Argus, Assa Abloy Door Group, Associated Terminals, Atlantic Logistics*, Bailey Metal Products, Bank of America, Bayou Processing & Storage, LP*, BBC Chartering USA, LLC, BlueScope Coated Products,BMG Latin America, Inc., BNSF Railway*, BofA Global Research, Borroughs LLC, C. Steinweg USA, Inc., Carver Companies, Carver Maritime, Celtic Marine and Logistics, Century Metals & Supplies, Inc., Challgren International Iron Trade, Chancey Metals LLC, CIH*, Civil & Environmental Consultants, Inc., Cleveland Steel Container*, CloudForge, Coilplus, Inc., Cooper Consolidated LLC*, CRC Global Logistics*, C-River Logistics, Crown Products Co., Inc., CSN LLC, CSX*, Cyan Hill Capital Management, Dass Steel*, Diehl Tool Steel, Doosan Bobcat, Duferco Steel Inc, Duluth Seaway Port Authority, Dynamic Metals, Inc.*, Elgen Manufacturing, Ferrosource*, Friedman Industries*, General Kinematics Corporation*, Gibraltar Building Accessories, Gibraltar Industries, Inc.*, Goldman Sachs, Great Circle Shipping Corporation, Greenway Steel, Greystone Maritime International, Gulf & Atlantic Maritime Services, Gulf Stream Marine*, Headlight Solutions*, Heidtman Steel*, Heritage Capital Group, High Steel Service Center, Huntington Bank, Illinois Tool Works (ITW)*, Independent Stave Company, ITW Drawform, Janus International Group, LLC*, Jemison Metals, JIT Warehousing & Logistics, JSW Steel USA Inc.*, Kingdom Pipe and Steel, Klauer Manufacturing Company*, Kloeckner Metals*, Koch Minerals & Trading*, Koch Supply & Trading LP, Koppers, Lapham Hickey Steel*, LB Steel, Logistic Services, Inc., Macsteel International USA, Magic Coil Products, LLC*, Magswitch Technology Inc.*, Majestic Steel*, Marian Shipping Ltd.*, Marquette Transportation Company, Marubeni-Itochu Steel America*, Metal Edge Partners LLC*, Metal Master, Mid-Ship Logistics, Midwest Industrial Supply, Inc., Minova Global, Misetal Trading Solutions*, Misteelco Inc.,  Mitsubishi International Corporation*, NC State Ports Authority, Newgate Global Resources, Nippon Steel Trading Americas, Inc.*, NLMK*, North Shore Steel, North Star BlueScope Steel*, Northview Advisors, NSPS Metals*, Nucor Steel, Ohio Steel Sheet & Plate, Olympic Steel, Inc., OpenTug, Optima Steel International*, Optimus Steel*, Pacesetter Steel, Pacific Metals Trading, Inc., Pandos Recycling*, Peak Metals Inc., Pennsylvania Steel, PGT Trucking, Inc., PGT Trucking, Inc.*, Phoenix Steel Service, Inc., Pier 48 Stevedoring, Pisec Group America LLC*, Port Manatee, Port of Lake Charles*, Port Tampa Bay*, Primetals Technologies, PS Logistics, QSL America*, Quality Metal Stamping, Railroad Friction Products Corp*, Ram Steel Framing, Reynolds Services, Inc.*, Ryerson Singer Steel, Ryerson*,  S&P Global Platts, Second City Metals, Serviacero Planos S de RL de CV, Serviacero Worthington, SESCO Terminals, Sonoco Metal Packaging*, South Jersey Port Corporation*, SSAB*, SSAB Americas*, SSM Marine, State Plate LLC*, Steel Dynamics*, Steel Warehouse*, SteelSummit Holdings, Inc.*, SteelX, Strategic Resources – BlackRock Metals, Summit Global Trading*, Superior Steel Supply, LLC*, Symbol International Fortune Group Pte. Ltd., Tan Phat Production and Trading Co Ltd, Tata International*, Ternium USA, Inc., Texas International Terminals, The Bradbury Group*, The Kinetic Company, Thyssenkrupp Materials Trading NA*, Thyssenkrupp Steel North America, Inc., Timber Products Trucking*, Toro Company,Tri County Metals, Trinity Industries*, U.S. Steel*, UPG Enterprises LLC*, Varamar USA LLC, Watco Logistics, Webco Industries, Wesman Salvage*, West Coast Metals*, Weyland GmbH, Wheeling-Nippon Steel, Inc.*

We hope to see you there!

Below is a lightly edited version of the interview

Steel Market Update: You work for the Steel Manufacturers Association (SMA). What does the SMA do?

Gregg Walker: SMA is the largest trade association in North America, serving the steel industry. That is in terms of the number of member companies, and also in terms of the steel capacity production. We currently have 24 members, from the largest steel company in the US to members who operate just one facility. It’s great working with that range of member companies.

SMU: What does a trade association do exactly?

GW: Trade associations are organizations of like-minded people, and in our case like-minded companies. They operate on behalf of their members for things the members can’t easily do individually. At SMA we offer a kind of government relations that many of our member companies couldn’t really bring to bear with their own resources. But, by pooling their resources, they raise their profile and amplify their messages. It’s strength in numbers.

SMU: That sounds like a pretty good deal.

GW: Members also turn to associations like SMA for other kinds of support. For example, we have five committees: safety, environmental, transportation and materials handling, human resources, and occupational health. They’re among our most popular resources. The committees bring together experts in each of those disciplines to find ways to get better at what they do every day, whether it’s keeping workers safe on the job or moving steel from one place to another safely and efficiently.

SMU: So, what’s different about the steel industry compared to other industries that you’ve worked in?

GW: Well, I’ve been fortunate to work for industries where people are committed to making a good living for themselves, their employees, and their communities, while also pursuing larger aims. You know, the membership at SMA inspires me because they are doing what the steel industry need to do. They produce the steel that becomes our cars, appliances, bridges, roads, and buildings. But at the same time, they’re dedicated to finding ways to reduce their emissions. That’s part of what drew me to SMA; it’s inspiring.

SMU: You’ve been with SMA for a year now. What’s something you’ve learned about the steel industry that’s been surprising?

GW: Well, before I met Phil at SMA, I didn’t know that there are two primary ways to make steel. The old-fashioned way of steelmaking is such a big contributor to greenhouse-gas emissions. But learning about the low-emissions way that our members make steel, by melting scrap in electric-arc furnaces, was an eye opener. The hospitality of the steel industry is exceptional.

SMU: What exactly does the director of communications and media relations at SMA do?

GW: It involves staying on top of the ways that we talk to the wider world about what we do and what our members need to know. So social media, the website, and annual report, but most importantly, cultivating relationships with folks in the media. I make sure I understand what they need from me to do their jobs. They’ve got stories to tell, and I try to find out how I can help them there. Then also, to make sure they understand where we’re coming from. It’s more about giving them a little bit of education about the steel industry, about our association, and about our member companies. That way they’re well informed when they need to write something.

SMU: What are the biggest challenges of what you do?

GW: The biggest challenge is ensuring that the media gets the story right. Reporters have a tough job, and they seldom have enough time to master the details of important news about the steel industry. My job is to help them get what they need in time to meet their deadline while also getting the facts straight and helping their audience understand the important work that SMA members do. It matters to policy-makers, steel customers, maybe even the general public, but might not get the attention it deserves.

SMU: What does 2024 hold for SMA?

GW: I think 2024 will be a year of growth for SMA. I think our strategic plan is very ambitious and very exciting! It promises some good things. We’re definitely going to increase our level of service to our members, increase the kind of resources we make available, and increase our profile.

A scrappy surprise

Again, I’m not going to predict where things will settle. But to say that a potential drop in scrap prices this month would come as a surprise would be an understatement.

About 60% of respondents to SMU’s most recent survey predicted that prime scrap would be up. Roughly 40% said prime would be sideways. None predicted down:

That said, the commentary we received was not exactly bullish. Here is a sampling:

• “Up but just marginally. Typical winter logistics issues, but less.”
• “After a stronger-than-normal December, it will flatten out.”
• “Peak before a downward trend.”
• “Down February through … May?”

So while almost no one expected prime scrap to go down in January, there seemed to be something of a consensus that prime prices were at or near a peak following big gains in December.

On second thought, maybe I shouldn’t have been so surprised that scrap didn’t come out of the gate fast in 2024. We saw futures start out last week strong ahead of a Cleveland-Cliffs sheet price increase on Wednesday only to reverse course by the end of the week.

Are we near a peak?

A closer look at our survey data is also less bullish than I would have expected for the beginning of the year, which is traditionally expected to be stronger as buyers restock ahead of the busier spring months.

Case in point: As we reported on Thursday, sheet and plate lead times were down. That wasn’t a huge surprise. It might have reflected a typical holiday lull.

What surprised me was this: How many survey respondents (42%) predicting that lead times would be contracting two months from now:

Compare that to the start of 2023. Then, only 9% predicted that lead times would be contracting by early March. We didn’t see more than 40% of respondents predicting shorter lead times last year until April – just before a sheet price correction got underway.

Here is what some of our readers had to say about their expectations for lead times:

• “Having returned to 4-6 weeks, they will flatten out.”
• “They will gradually move back to under five weeks for HRC.”
• “Expecting lead times to come down in March with more spot available.”
• “Inventory will start to budge, and more foreign will be arriving.”
• “Between imports and domestic capacity coming on, we see things retreating.”

It’s a similar theme when it comes to predictions for finished steel prices. Expectations now compared to those at the beginning of 2023 are very different.

Nearly 80% of survey respondents now think prices have already peaked, or will later this month or next:

That’s a departure from this time last year, when about 50% of respondents thought HRC prices would peak in Jan.-Feb. while another roughly 50% thought they wouldn’t peak until March, April, or later.

Another big change: A narrow majority of service centers (53%) now tell us that they are keeping prices flat:

Compare that to Q4’23, when most service centers (~80% or more in the latter part of the quarter) told us that they were raising prices.

In my experience, if you ask a service center why they’re not increasing prices, they’ll tell you that they’re following the lead of their mill suppliers. And we have seen sheet prices flatten out over the last month, according to our pricing tool.

If other mills follow Cliffs and increase prices, then perhaps we’ll see more service centers raising price in tandem with mills in our next survey. But they don’t follow, or if scrap slides or goes sideways, it’s hard to see that increase announcement as a slam dunk.

Imports on the rise?

Another thing to keep an eye on is imports:

Large majorities of both manufacturer and service center buyers continue to tell us that they find import pricing attractive.

We saw imports increase in December. How many tons might arrive in the first quarter? It’s too early to say. But it’s worth keeping a close eye on government license data going forward.

Business is still good

The saving grace remains that most respondents (74%) continued to tell us that they met or exceeded forecast last month – a consistent trend throughout Q4’23:

We can worry about the prospect of shorter lead times, steel and scrap prices potentially peaking, and higher import volumes. But if business is as expected or better, these are concerns companies can probably take in stride.

Tampa Steel Conference

Get a better handle on what’s in store for 2024 at our Tampa Steel Conference, where we’ll have three industry analysts – Alex Hacking of Citi, Josh Spoores of CRU, and Timna Tanners of Wolfe Research – providing their take on the current steel market.

The event is coming up in just three weeks. Nearly 400 people have already registered, putting us on track to beat last year’s record attendance. So don’t delay, register today!

Based on what is publicly known about the deal, NSC agreed to buy U.S. Steel’s stock for a price of $55 per share. This was a considerable premium (more than 40%) over the U.S. Steel share price on December 15, one business day before the announcement. (In addition, NSC will assume $800 million in U.S. Steel debt, bringing the value of the deal to $14.9 billion.)

As many readers will recall, U.S. Steel has been in play for several months. Cleveland-Cliffs made an unsolicited offer valued at $7.3 billion ($35 per share) in July of last year, also a more-than-40% premium over the U.S. Steel stock price at that time. U.S. Steel has been a strong performer between July and December.

In rejecting the Cliffs offer, the board of U.S. Steel indicated that there were several offers to acquire the company that needed to be evaluated. The U.S. Steel stock price rose nearly 50% from late July to mid-December. Clearly, the market expected an acquisition to happen.

The reaction to the NSC purchase of U.S. Steel has been mixed. Several members of Congress – including senators Sherrod Brown (D) and J.D. Vance (R) of Ohio, senators Shelley Moore Capito (R) and Joe Manchin (D) of West Virginia – objected to the deal as an affront to U.S. Steel’s workers and a potential danger to US national security. Senators from other states – including Pennsylvania, Florida, and Missouri – have requested Treasury Secretary Janet Yellen, the chair of the Council on Foreign Investment in the United States (CFIUS), to study the merger as a potential national security issue. That will certainly happen, because NSC and U.S. Steel themselves asked for a CFIUS review.

Cleveland-Cliffs CEO Lourenco Goncalves issued a statement in December congratulating U.S. Steel and NSC for making the deal. But last week, at a hearing before the International Trade Commission (ITC), Goncalves joined the chorus of skeptics. He also criticized U.S. Steel for not participating in the trade case seeking new tariffs on tin mill products. The ITC is set to vote on imposing duties in early February. As SMU reported last week, consumers of tin mill products strongly oppose these new duties, which could drive a lot of business offshore in food packing and other industries.

Perhaps more pertinent was the objection to the NSC acquisition by the USW, which supported the Cliffs offer. Perhaps the USW wants Cliffs and U.S. Steel to merge so that only one company making steel in blast furnaces would remain in the United States. That may not be good for the country as a whole.

U.S. Steel management recognized that the company was not viable in the long run as an independent company and accepted the best available offer in the interest of its shareholders. U.S. Steel rightly acted in the interest of its shareholders.

The USW is also behaving in its own interest by advocating for as many protective trade measures as possible. Think antidumping and countervailing duties (on such products as tinplate), Section 232 tariffs and quotas, and Section 301 tariffs on Chinese products. These all make domestic production more competitive and will give more leverage to union negotiators at contract time.

Politicians are generally eager to weigh in on big policy issues, and U.S. Steel being sold to a Japanese company seems to strike them as a big policy issue. Japan was considered a serious economic threat to the United States in the 1980s and early ‘90s. But that landscape has fundamentally changed. China, not Japan, is the big threat now.

Former Trump administration officials took opposite sides on the acquisition. Former Commerce Secretary Wilbur Ross opined in the Wall Street Journal that the objections to the merger were at least partly xenophobic. On the other side, Robert Lighthizer, President Trump’s U.S. Trade Representative, said that he would not permit NSC to purchase U.S. Steel when “there is no free trade in steel.” There certainly isn’t free trade when it comes to access to the US steel market.

Is U.S. Steel so “iconic” that it can’t be sold to a foreign company? Some clearly feel that the sale would be a setback for the prestige of the US economy. This sense of decline is what drives many politicians to oppose the merger. But since Japan is a longtime ally of the US, the strategic security of our country is not really in jeopardy.

U.S. Steel was a major pathbreaker in U.S. history. But it is no longer the powerful symbol of American strength that it used to be. In 1901, when Andrew Carnegie, J.P. Morgan, and others created U.S. Steel, the $ 1 billion market value of the company was equal to nearly 5% of the gross domestic product of the country and was America’s (and the world’s) largest corporation. Today, U.S. Steel’s value of $14.9 billion represents 0.06% of US GDP. It is ranked No. 1,466 in market value among publicly traded companies. It is also less than 0.5% of the highest market value corporation (Apple). U.S. Steel’s “iconic” status is clearly from a bygone era.

It is rare for CFIUS to block an acquisition on national security grounds. And presidential action to block the acquisition, while permissible, is even more unlikely. Still, the next few months will create anxiety. The stock price for U.S. Steel is currently about $7 per share below the $55-per-share acquisition price.

This is a transition time for the steel industry as it adjusts to new technologies, clean steel, and the new realities of world trade. American manufacturers depend on imports because the US industry cannot make enough to satisfy domestic demand. And steel users employ many more workers than do steel producers. In short, the NSC deal on balance looks like a winner for the country, as well as U.S. Steel’s shareholders.

In its final ruling, Commerce determined the following dumping rates:

Country	Dumping rate
Canada	5.27%
China	122.52% (deposit rate set at 111.98%)
Germany	6.88%
South Korea	0-2.69%
Netherlands	0%
Taiwan	0%
Turkey	0%
United Kingdom	0%

In the CVD portion of the case investigating imports from China, Commerce set the following subsidy rates:

Company	Subsidy rate
Baoshan Iron & Steel	649.98%
Shougang Jingtang United Iron & Steel Co. and related companies	331.88%
China-wide entity	331.88%

The US International Trade Commission (ITC), the agency responsible for the injury determinations in trade cases, held a final hearing in this trade case on Thursday, Jan. 4. It will make its final injury ruling next month.

Since Commerce determined that the Netherlands, Taiwan, Turkey, and the UK did not dump tin mill steel into the US market, the ITC will not make injury determinations for those countries and imports from there will not face any duties.

Cliffs’ response

Cleveland-Cliffs applauded Commerce’s decision regarding Canada, Germany, South Korea, and China.

“Together with the existing Section 232 tariffs and quotas, these dumping calculations will provide a check against unfairly traded products from all the major sources of tin mill imports,” Cliffs said in a statement.

“With the heightened levels of both geopolitical uncertainty and supply chain disruptions in the world, we continue to expect disturbances in international trade. Today’s outcome should put importers on notice that the United States will not tolerate unfair trade that harms employers, workers and communities,” Cliffs’ chairman, president, and CEO Lourenco Goncalves added.

The Chicago area followed suit:

• #1 busheling: down $50/gt
• Shredded: down $20/gt
• P&S: down $20/gt
• #1 HMS: down $20/gt

Mills in the Great Lakes region sensed there was ample supply of most grades. Also, they all bought heavily last month and so had sufficient inventories to make this move, market participants said.

Still, the move surprised most dealers.  In the southern areas, the drop in busheling prices could be less because they did not go up as much as Detroit and Chicago last month, sources said.

Some historical context

Scrap prices don’t often fall in January because lower industrial activity in December typically slows generation of prime scrap. And winter weather in the North can slow collection of obsolete grades.

That said, scrap prices started out the year lower in 2022, which was not initially a good year for steel. The downward trend then reversed abruptly following Russia’s invasion of Ukraine in February and an ensuing panic about pig iron supplies.

Scrap prices also started January lower in 2019, a year characterized by mostly lower hot-rolled coil prices, according to SMU’s steel and scrap pricing archives.

The US International Trade Commission (ITC) has begun a fact-finding investigation on greenhouse-gas emissions in steelmaking at the request of US Trade Representative Katherine Tai. SMA testified at the commission hearing in December and fully supports the ITC investigation. This effort would enable any future trade deal to consider the carbon intensity of more than 50 categories of steel products and allow for more accurate global comparisons. The commission will gather the data and submit a report to the USTR by January 2025.

SMA members continue to lead the way with investments in clean steelmaking technologies. Nucor has broken ground on new low-emissions mills in Mason County, W.Va.—the single biggest investment by a company in the state’s history — and Lexington, N.C., among other projects. CMC continues making progress on a forthcoming EAF mill in West Virginia and melt shop expansions in Arizona. Steel Dynamics Inc. (SDI), whose steel customers are significant consumers and processors of aluminum flat-rolled products, continues a growth strategy aligned with its core steelmaking and recycling platforms.

SDI is constructing an aluminum mill in Columbus, Miss., demonstrating the synergies that can exist in this steel-adjacent space. U.S. Steel’s Big River Steel will soon commission another 3 million tons of capacity in Arkansas. And the list goes on. Between 2021 and 2025, SMA member companies will have invested over $18 billion of their own capital in new capacity that will result in the modernization, electrification, and decarbonization of the metals industry.

Steelmakers in other countries have not matched that level of private investment, but other nations are nevertheless taking steps to make their steel industries look more like ours. With billions in government subsidies, steelmakers around the world are replacing integrated furnaces with lower-emission electric-arc furnaces.

In 2023, the Global Steel Climate Council (GSCC) unveiled the Steel Climate Standard. It has changed the conversation about green steel by showing the wisdom of a single carbon-intensity standard for all steel products, no matter how or where they are made. It makes no special accommodations for integrated steelmaking. It also requires all steelmakers to get cleaner than they are today. The GSCC’s new executive director, Adina Renee Adler, brings a wealth of experience in international trade, public policy, and metals recycling to her new role.

Our domestic steel industry led by members of the SMA has transcended every type of economic, political, and technological challenge it has faced. At our core we are committed to safely and sustainably building better lives, companies, communities, and environments.