The latest SMU market survey results are now available on our website to all premium members. After logging in at steelmarketupdate.com, visit the pricing and analysis tab and look under the “survey results” section for “latest survey results.”
Historical survey results are also available under that selection.
If you need help accessing the survey results, or if your company would like to have your voice heard in our future surveys, contact david@steelmarketupdate.com.
The US International Trade Commission (ITC) held a hearing on Thursday, Jan. 4, to consider arguments for and against the imposition of antidumping and countervailing duties (AD/CVDs) on tin mill products from a handful of countries. Both sides made compelling arguments.
Recall that the ITC is tasked with determining if the domestic industry has been injured by the allegedly dumped and/or subsidized products. A final affirmative injury ruling will result in AD and CVDs being placed on the subject imports, while a negative injury finding will result in the termination of the trade case with no duties applied. The ITC is scheduled to make its final vote in this case next month.
Cleveland-Cliffs Inc. and the United Steelworkers (USW) union filed the trade case last January. Their petition alleges the dumping of tin- and chromium-coated sheet steel from Canada, China, Germany, the Netherlands, South Korea, Taiwan, Turkey, and the United Kingdom. They are also seeking CVDs on the same products from China.
The Department of Commerce made its final ruling in its portion of this case on Friday afternoon.
Cliffs’ chair, president, and CEO Lourenco Goncalves was present at the hearing to offer his remarks on why an affirmative injury determination is needed.
“I want to make this point as clearly as possible: The success or failure of this trade case will determine whether the United States will continue to produce tin mill steel,” he stated.
He touted the investments Cliffs has made at its Weirton mill in West Virginia since acquiring it from ArcelorMittal in December 2020: More than $50 million in just three years, including $10 million to rebuild the number 6 line and the installation of a new tension leveler on the number 4 line.
While the outlook for the Weirton mill was hopeful in the first half of 2022, that changed by mid-year when “imports were pouring back into the US market,” he said. The market had become “drastically oversupplied” by late 2022, and the mill was forced to cut production by 30% while it operated at less than 50% of capacity. Cliffs laid off 300 Weirton workers last year citing unfair imports.
Goncalves noted that an existing order on tin mill products from Japan has been in place since 2000 and that the ITC has chosen to keep it in place on three separate occasions “to prevent further material injury to domestic producers.”
In his closing prepared remarks, Goncalves said, ”In Cleveland-Cliffs and the United Steelworkers, you have two entities that recognize the strategic importance of what we have in this country, that was built on the hard work of previous generations. As stewards of these strategically important assets, it is our solemn responsibility to fight back against threats to the continued viability of mills like Weirton. … We ask that the Commission … find that the domestic industry has been materially injured by the surge of dumped and subsidized imports in our market. Please allow us the tools we need to fight back and preserve this industry.”
Mark Glyptis, president of USW Local 2911, and Mike Millsap, director of USW District 7, were also present at the hearing, offering their comments on the importance of an affirmative injury finding for hundreds of union workers, their families, and communities. Workers from USW Local 2911 in Weirton were also in attendance at the hearing in Washington, D.C.
A handful of congressional delegates testified in support of the imposition of duties.
Sen. Joe Manchin (D-W.Va.) said trade relief is clearly needed after a third of the workforce was laid off last summer at the Weirton mill. He said AD/CVD laws need to be enforced to the fullest and that the US should show its support for the domestic industry.
Sen. Sherrod Brown (D-Ohio) commented that the domestic food supply chain is at risk should tin mill product end-users become completely dependent on imports. If the duties are not imposed, and Cleveland-Cliffs is forced to stop producing these kinds of steels, he said, “A link in our domestic supply chain would be lost, maybe forever.”
Sen. Shelley Moore-Capito (R-W.Va.) also noted that steel production has been happening at the Weirton plant for more than a century, but that is now at risk because of these unfairly traded imports. If this case is lost, the Weirton plant will close in a “crushing blow” to the industry, she said.
Rep. Bill Johnson (R-Ohio) said there has not been an increase in demand for tin mill products to justify the increase in imports that has taken place. The import surge has contributed to oversupply in the US, forcing both Cliffs and U.S. Steel to lay off workers.
One attorney pointed out that only one of the three domestic tin mill producers is involved in this trade case. U.S. Steel and Ohio Coatings are the other two producers. The domestic industry has been moving away from the tin plate market for years, and the “modest rise of imports is a consequence of decisions freely made by the domestic industry,” she argued.
Rep. David Rouzer (R-N.C.), with soup-making facilities in his district, was the sole legislator testifying against the imposition of AD/CVDs. He said soup companies rely on imports because no domestic producer will make the cans needed at the specifications required. If duties are imposed, can makers and food manufacturers will be forced to pay more for imports and consumers could see up to a 30% increase in prices, he warned.
Carlos Vanderloo of the Embassy of Canada spoke at the hearing on behalf of Canada. He said the Canadian steel industry has been a reliable supplier for tin mill customers in the food industry who are concentrated in the US. Imposition of the duties would result in food manufacturing being less competitive, higher food prices for US customers, and would also contribute to inflationary pressures, he said. He urged the ITC to consider the “real world consequences” of imposing these duties.
Peter Young testified for the European Union, saying they are concerned that World Trade Organization (WTO) rules are not being respected in this case.
Representatives from the can-consuming industry were present to support the arguments against the duties. The Can Manufacturers Institute joined a coalition last month voicing their concerns about how the potential tariffs would hurt US manufacturing and raise consumer prices.
Active domestic rotary rigs dipped slightly this week, but Canada’s firms increased their count significantly, according to Baker Hughes.
The US rig count dropped by one from the week prior to 621. Active oil rigs increased by one to 501, gas rigs fell from 120 to 118, and miscellaneous rigs went unchanged at two.
Compared to the same period one year ago, the US rig count is down 151. Oil rigs are off by 117, gas rigs declined by 34, and miscellaneous rigs are unchanged.
Canadian drilling firms boosted their active rig count, moving the overall count up by 39 to 125. Oil rigs moved up by 31 to 58 and gas rigs increased by eight to 67.
Year over year, Canada’s active rigs are down by 64. Oil rigs fell by 55, while gas rigs dipped by nine.
The international rig count is updated monthly. The total number of active rigs during the month of December was 955, down 23 from the previous month, but increasing by 55 from December 2022.
The Baker Hughes rig count is important to the steel industry as it is a leading indicator of demand for oil country tubular goods (OCTG), a key end market for steel sheet.
A rotary rig rotates the drill pipe from the surface to either drill a new well or sidetrack an existing one. Wells are drilled to explore for, develop, and produce oil or natural gas. Baker Hughes’ rotary rig count includes only those rigs that are significant consumers of oilfield services and supplies.
For a history of the US and Canadian rig counts, visit the rig count page on our website.
SMU’s Steel Buyers Sentiment Indices both fell this week, with current sentiment taking a large dive to begin the new year, our most recent survey data shows.
Every other week, we poll steel buyers about sentiment. The indices measure how steel buyers feel about their companies’ chances of success in the current market and three to six months down the road. (We have historical data dating to 2008. You can find that here.)
SMU’s Current Buyers Sentiment Index stood at +56 this week, tumbling 13 points from +69 two weeks earlier (Figure 1). It last hit this level in the middle of September and started 2023 at +67.
SMU’s Future Buyers Sentiment Index measures buyers’ feelings about business conditions three to six months in the future. This week, the index dropped six points to +62 from the previous market check (Figure 2). This is the lowest reading since the start of August. The Future Sentiment Index stood at +68 at the beginning of last year.
Measured as a three-month moving average, the Current Sentiment 3MMA decreased to +64.67 from +66.40 two weeks prior. (Figure 3).
This week’s Future Sentiment 3MMA fell to +69.33 vs. +71.33 at the previous market check (Figure 4).
“Positioned well for the first quarter of 2024.”
“Rising costs…”
“It’s been a robust spot market.”
“Demand starting January is great, compared to holiday shipments being down.”
The SMU Steel Buyers Sentiment Index measures the attitude of buyers and sellers of flat-rolled steel products in North America. It is a proprietary product developed by Steel Market Update for the North American steel industry. Tracking steel buyers’ sentiment is helpful in predicting their future behavior.
Positive readings run from +10 to +100. A positive reading means the meter on the right-hand side of our home page will fall in the green area indicating optimistic sentiment. Negative readings run from -10 to -100. They result in the meter on our homepage trending into the red, indicating pessimistic sentiment. A reading of “0” (+/- 10) indicates a neutral sentiment (or slightly optimistic or pessimistic), which is most likely an indicator of a shift occurring in the marketplace. Sentiment is measured via SMU surveys twice per month. If you would like to participate in our survey, please contact us at info@steelmarketupdate.com.
SMU polled steel buyers on a variety of subjects this past week, including purchasing practices, steel sheet prices, scrap, and the future market.
Rather than summarizing the comments we received, we are sharing some of them in each buyer’s own words.
We’d like to hear your thoughts, too! Contact david@steelmarketupdate.com to be included in our questionnaires.
$950-999 per ton:
“Assuming the current trend continues, the increases will play out by early February and possibly earlier.”
“Hot rolled pricing should peak for February with New Year’s demand and then ease back to Earth. I hope.”
“In two months, buyers will be pushing back on prices, and March will be a full five-week month with spot to sell.”
“We’re anticipating numbers drift back down throughout H1.”
$1,000-1,049 per ton:
“Prices could start softening in February/March.”
$1,150-1,199 per ton:
“I believe there is still room for sheet prices to continue increasing.”
“Suez and Panama Canal capacity.”
Already peaked:
“Demand is not strong, and mills are not running full.”
January:
“I think we are close. The mills pushed it too hard and too fast.”
“Demand is strong.”
“Even though the mills may go for one more increase, I think that this month will be the last chance to increase.”
“Demand vs. supply will move to downward pressure on pricing.”
February:
“Things are slowing down.”
“Expect mills to jump in with price increase announcements as they continue to squeeze capacity utilization.”
“Supply will pick up while demand does not. Imports.”
“Inventories are light, and companies must replenish.“
“Because the dynamics appear similar to 2023, running approximately two months ahead. Many stocked up on the lows, demand is not significantly better, and lead times are starting to roll over.”
Up:
“The demand for finished products will drive up the prices of raw materials.”
“Could be stable earlier than steel prices.”
“Soft sideways to up. Weather may be used to support.”
On the sidelines:
“Already concluded 2024 contracts.”
“Inventory too high.”
“We have all the steel we need.”
“Looking for deals.”
Active buyer:
“But becoming less bullish.”
“Need to replenish depleted inventory and restock contract tons.”
“Good customer demand.”
Improving:
“Demand starting January is great, compared to holiday shipments being down.”
Stable:
“Stable at best, but too early to tell.”
“Ask me next month!”
The LME aluminum 3-month price was moving further down on the morning of Jan. 5 and was last seen trading at $2,287 per metric ton (mt) as of this article’s writing, already down 6% from its recent peak. SHFE cash also concluded the first week of the year on a weaker foot. The cash contract settled at RMB19,265/mt and last traded at RMB19,280/mt.
Global equity markets have been under renewed selling pressure since Wednesday after minutes from the Fed’s December meeting showed policymakers had a high level of uncertainty around their interest-rate projections and did not rule out further rate hikes. Indeed, the minutes from the Dec. 12-13 meeting showed a cautious Fed, even though almost all of the top officials had penciled in some easing in their 2024 forecasts. In general, officials stressed the need to move carefully.
The latest non-farm payrolls for December were set to be released the afternoon of Jan. 5. The US is expected to have created an additional 170,000 new jobs in December, according to the consensus forecast, below the 199,000 reported for November. The Fed is closely watching employment indicators as policymakers wait for signs of a cooling labor market before cutting interest rates.
The US Midwest premium now sits between $0.188–0.194 per pound as 2024 kicks off. The bump higher can be attributed to the slight contango that had built for January 2024 throughout Q4. Overall, fundamentals remain the same, and the new year is expected to bring a crawl back to steady growth as opposed to a sprint higher. This should limit the upside risks to the premium and extend this period of low volatility.
Macroeconomic and geopolitical disturbances continue to be part of normal conversations, as recent disturbances in the Red Sea are on everyone’s mind. The attacks on shipping vessels have forced them to take a longer route, which takes more time and resources. Oil prices are starting to rise, and the price of insurance is also increasing. With shipping costs being one of the largest inputs into the premium, these increases will raise the replacement cost of metal coming into the US even if no shipments are directly affected. As of now, the fallout has been minimal but there is potential for premiums to jump higher as a result.
According to the latest Index of Net New Orders of Aluminum Mill Products released by the US Aluminum Association (AA), total orders in November 2023 were up 0.2% compared to November 2022. This is better than the 1.5% year-over-year (YoY) decline reported in October. It is worth noting that new orders for October were revised higher in this latest report, with October orders now showing a decline of 1.5% versus a decline of 3.4% YoY previously. The sectors that were upgraded are new orders of non-heat-treatable sheet (-10.8% YoY) and foil (+13.6%).
Back to the November report, there were improvements in most of the sectors. New orders of non-heat-treatable sheet, which include the 1xxx, 3xxx, and 5xxx series alloys, improved from -10.8% YoY in October to -0.4% YoY in November. New orders of heat-treatable sheet, which contain the 2xxx, 6xxx, and 7xxx series alloys – popular in automotive and aerospace applications – moved back to 3.9% YoY growth from a decline of -2.1% YoY in the previous month. There was also a noticeable improvement in new orders for plate, from a decline of -6.6% YoY in October to growth of 25% YoY in November.
Another key sector that continued to improve in November was extruded products. New orders of extruded shapes were up 9.2% YoY in November, better than the 4.4% growth reported in October. The only products that showed a worse performance versus October were domestic can stocks, down 1.5% YoY in November from 3.2% growth previously, and foil, down almost 40% YoY versus growth of 13.6% in October.
According to a notice posted on the Hong Kong Exchange website, Rusal has announced a new sales contract between one of its units, JSC, and an associate company of En+ called KraMZ Ltd. The contract runs until Dec. 31, 2024, and involves a volume of 101,400 mt, representing a total value of $247.5 million.
JSC is principally engaged in the production and sale of aluminum, including alloys, value-added products, and alumina, while KraMZ Ltd is principally engaged in aluminum processing. En+ is an international vertically integrated aluminum and hydropower producer. Details of the filing can be found here.
President Joe Biden has extended the suspension of tariffs on EU steel and aluminum for an additional two years, lasting until Dec. 31, 2025. The move is intended to facilitate ongoing negotiations on issues like overcapacity and eco-friendly production. Initially imposed by former President Donald Trump, these tariffs have been replaced by a tariff rate quota (TRQ) system, allowing specified quantities of EU steel and aluminum into the US without tariffs. The decision also affects the EU’s retaliatory tariffs on various US products, suspending them until 2025. This extension is seen as a significant development in US-EU trade relations, particularly with upcoming elections in both regions.
This article was first published by CRU. Learn more about CRU’s services at www.crugroup.com/analysis.
The iron ore price has edged up further from the already high level seen last week. The market is generally slow, meaning that the moderate price increase came from the bullish outlook from the market following last week’s stimulus announcements from China and expectations of restocking picking up.
Supply fell w/w from both Australia and Brazil as operations slowed down over the Christmas holiday period. Port Hedland volumes edged up by 0.2 million metric tons to 11.9 million metric tons, outperforming last year’s volume by almost a full 1 million metric tons, but Rio Tinto’s volumes declined by much more. FMG announced that there was a train derailment close by the Cloudbreak mine on December 30, which is expected to be resolved by January 2. Shipments have held steady, though the drawdown in port stocks will affect future outflow. Mine stocks are generally low so production is likely to continue as normal. Shipments from northern Brazil held steady w/w while shipments from southern Brazil declined.
Elsewhere, Ukrainian shipments have continued throughout December, primarily from Yuzhney Port. The derailment in Sweden is now believed to be worse than previously expected, with the impacts expected to last for the entirety of Q1. Indian exports were at the highest level in December in two years, with the high international price and low-grade preference incentivizing exportation.
Chinese domestic steel prices fell slightly by $3–4 /metric tons through the week prior to the New Year holidays. Our assessed HRC and rebar price on the last working day in 2023 was ~$11 /metric tons and ~$21 /metric tons lower than that in the year-beginning respectively. In the last week of 2023, long products demand remained weak and, in fact, was weaker than that in 2022 when China was yet to recover from nationwide Covid-19 infections. In contrast, flat products demand was stable and stronger than in previous years based on sample data.
Lower steel margins resulted in more BF idlings, with the surveyed capacity utilization rate falling to 83%. Lossmaking steelmakers remained reluctant to massively restock. As a result, iron ore port inventories rose to 120 million metric tons. Operating restrictions were heard to have tightened in Hebei province, leading to increased demand for direct charge materials.
Future price increases will be limited as the price is already at a very high level and the supply disruptions will have limited effects on the market as a whole. However, restocking will pick up in China and Europe, preventing the price from falling down significantly, meaning that we expect further stability from here onwards.
This article was first published by CRU. Learn more about CRU’s services at www.crugroup.com/analysis.
Join us on Jan. 24, 2024 for a Community Chat with CRU principal analyst and iron ore expert Erik Hedborg. Click here to register.
After a brief decline in the price of scrap for the Turkish market, which peaked in December at approximately $424 per metric ton (mt) for HMS 80/20, the market has bottomed at $405/mt on cargoes from Europe. Since then, a European cargo was sold at $414. Scrap exporters from North America have not sold at these levels. The lowest is $419/mt CFR Turkey done a week ago. This reflected the strength in the US scrap market. On Thursday, another cargo from the US changed hands at the same price.
SMU reached out to an executive for a large scrap exporter. He believes the next round of purchases for the US will be no lower than that level. The executive said the rebar market has improved in Turkey, noting prices have increased into the low $600s. This should give Turkish mills enough of a cushion to be able to afford to buy at where the North American price has gone lately.
Looking across to the US West Coast, bulk activity has picked up a bit. There have been regular sales into South America. The Southeast and South Asian markets have also been buying, with the latest prices being about $420/mt CFR.
Not so in the containerized scrap export market. SMU contacted long-time industry veteran Phil Hoffman, chairman of Hoffman Iron & Steel. He said West Coast prices are weakening lately.
Hoffman continued that last month dealers could expect prices going to Taiwan to be in the neighborhood of $375/mt CFR CY. Currently, “$360, maybe $365 .”
He added that Vietnam has basically dropped out of the export market due to an influx of imported steel from China and competition from domestic integrated producers. Hoffman expects more weakness in these markets.
With the US scrap settlements expected within days, it should be interesting to see how domestic steel mill buyers interpret this dichotomy in the export markets.
Trading slowed across the Midwest hot-rolled coil (HRC) futures curve in the final weeks of 2023, with prices drifting mostly sideways through the month of December.
After the turn of the calendar and return to business on Tuesday, volume jumped to almost 30,000 tons, with sizeable gains in the months of February through May.
The scuttlebutt around the virtual trading pit was the buying was in response to iron ore making new highs and trading $143/t that day in Asia. Seemed a little suspect, but OK. The market has been anticipating mills would announce another price increase. Did somebody know something the market didn’t?
Wednesday morning brought the weekly CRU monitor followed shortly by said price increase with Cliffs announcing a $50 flat rolled price increase.
By 9:00 a.m. the market was adding to Tuesday’s gains, pushing the February future to a new recent intraday high of $1,140, with the market trading 49,420 tons all day. However, as the day continued, the market softened, giving up the mornings gains and then turning red in some months as shown by the market on the right side below. The virtual trading pit rumor mill explained the late-day selling was in response to a report out of Platts that a service center bought 150 tons from a Canadian producer at $1,010.
However, the futures continued to be under pressure again on Thursday with almost 30,000 tons traded all day. However, I ain’t buying that explanation. All of this scuttlebutt has me confused. This reminds me of the time I went to the fancy seafood restaurant in downtown Chicago. I made a reservation and when I showed up, the manager said to me, “Do you mind waiting a bit?” I said, “Sure.” He said, “Thanks, can you please take these two martinis to table nine?” As if I don’t get enough confusion at my day job.
Rumors and excuses aside, the first week’s moves are concerning, especially in light of Cliffs’ price increase announcement. Will another mill or mills join Cliffs? Are the EAFs waiting for next week’s scrap settlement before raising their prices, and will we see a price increase to $1,200? It has been quite a move since mid-October, with the January and February futures gaining almost $300, even with today’s declines.
Open interest (the number of outstanding futures contracts, or tons in this case, across a product’s curve) stood at a paltry 376,000 tons as of Wednesday night’s close. Where are all the tons? Are they being held in OTC or off-exchange accounts at a bank or banks? There has been a 16,000 ton increase in open interest over the first two trading days of this week, but still open interest is suspiciously low.
Perhaps the selling of the past day-and-a-half was service centers and/or importers simply rushing in to capture the big gains of Q4, with their focus on quickly getting a position on rather than trying to get a better price? Could it be financial players anticipating the service centers and importers’ need to hedge and getting ahead of them? Maybe it has been financial players that had been sidelined by the year-end now able to establish their 2024 positions? So far this week, there has been a risk-off tone across financial markets, with sell-offs in products, including base metals and equities, so possibly the move in HRC is part of a larger trading strategy?
Regardless, 2024 is not even 96 hours old and it is likely too soon to tell how things will unfold in January. Will these sellers get squeezed in the days and weeks ahead by another round of price increases or moves higher in the HRC indices? Or has the market peaked and thus sitting on the precipice of a correction? One thing that is certain is that 2024 is going to be another wild ride, so buckle your chinstrap and get those feet choppin’!
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 Mr. Feldstein 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.
Cleveland-Cliffs didn’t wait long to roll out the first price increase of the year – $1,150 per short ton (st) for hot-rolled coil. That’s up $50/st from the steelmaker’s last published price.
Will anyone follow? I’ve heard some mills are meeting this week but that any announcement might not come until next week. We’ll see.
Also, will the announcement raise prices or merely succeed in stabilizing them at high levels? I haven’t asked a question like that in a while because late last year prices went mostly nowhere but up. You know the story – people anticipated a price spike after the resolution of the UAW strike. So they bought ahead of that expected spike during the fall, a period that also coincided with significant mill maintenance outages.
I ask it now because some of the data we track has been mixed over the last month. That includes prices. HR has been roughly flat since mid-December. Cold rolled and coated prices kept rising into mid/late-December but have more recently slipped.
Another thing: I’ve heard that larger buyers, those ordering thousands of tons, could get prices in the mid/high $900s/st for HR. I’ve also heard that smaller buyers, those ordering hundreds of tons, were closer to $1,100/st mill list prices.
Were those deals in the $900s/st representative of the discounting that sometimes occurs shortly before an increase is announced? (You know, the big deals offered to a handful of buyers to stretch out lead times and put mills in a better position to enforce increases.) In that case, they might be out of the market soon. Or will three-figure HR prices become more prevalent in the market as prices in the $900s/st slowly trickle down to smaller buyers?
Lead times contracted across the board this week. Is that something meaningful, a sign that supplies have improved as fall maintenance outages have concluded and as new capacity continues to ramp up? Or is it just a post-holiday lull, in which case we might see lead times rise later this month as buyers return to the market in earnest?
We’ve also seen a shift in the percentage of buyers who say mills are willing to negotiate lower prices. It’s not like September when nearly all mills were willing to negotiate lower. That said, buyers tell us that more mills are willing to negotiate now than they were in November – when prices were rising.
Another shift that has occurred just this week. CME HRC futures started off the week strong. They have since shifted lower. What changed in just a few days?
I can’t answer that for certain. But I think it’s worth considering whether we’re already seeing the impact of import competition. US HR remains much more expensive than foreign hot band. And import licenses were at a five-month high in December. Will that trend continue into January?
It’s possible. I’ve seen offers for foreign CR from Southeast Asia, including for material delivered into the Midwest, that are lower than domestic HR prices. That material might not arrive until late Q1 or early Q2. Such long lead times could deter US buyers. But in my experience, it’s not a bullish sign for domestic tags when foreign CR is cheaper than domestic HR.
Also, looping back to HR prices in the $900s/st. There might be another reason for that. Korean HR was offered to US buyers last month in the mid/high $900s/st. Our understanding is that offers could move lower this month. We haven’t seen anything in writing yet to say that with certainty.
Then there is simply the matter of timing. Rewind a year. HR prices bottomed in late November and peaked in mid-April. This year, HR prices bottomed in late September. Is it possible that the peak has been pulled forward two months as a result the UAW strike disrupting normal buying patterns – i.e., into mid-February?
Look, I’m not saying that everything is going to come crashing down. A 6+ week lead time for HR and a HR price of more than $1,000/st would have been a dream for any steelmaker in just about any year before 2021. Still, it’s worth considering whether the downside risk now is more than the upside risk. Just as in late September the upside risk was clearly greater than the risk of prices falling.
It’s not too late to register for the Tampa Steel Conference. The event kicks off on Sunday, Jan. 28 at the JW Marriott Tampa Street. You can register here.
We’ve got a good group of speakers. You can find the agenda here. Some could prove to be very timely. I’m interested to hear, for example, what our logistics and trade panels have to say about escalating tensions in the Red Sea. Could disruptions there have an impact on steel, even if an indirect one?
Steel mill lead times pulled back across the board this week but are still said to be at healthy levels, according to SMU’s market survey this week.
Buyers have not reported production times this short since October for sheet products and early November for plate.
Hot-rolled coil lead times were reported by buyers in SMU’s survey this week to be between 4 and 9 weeks. The average of 6.26 weeks was 0.63 weeks shorter than our last market check on Dec. 21, 2023. To compare, HRC lead times were 5.0 weeks in the first week of 2023.
Buyers reported lead times for cold-rolled coil ranging from 6 to 10 weeks. This week’s average of 8.00 weeks was a contraction of almost a week from 8.94 weeks in our last market check. At this time last year, CRC lead times averaged 6.7 weeks.
Lead times for galvanized sheet were said to be between 6 and 10 weeks in this week’s check of the market. The average of 7.93 weeks is also nearly a week shorter than the 8.88-week lead time reported during the week of Dec. 21. Galv lead times were 6.7 weeks during the same week of 2023.
After being extended in our previous five market checks, lead times for Galvalume sheet saw a large pullback this week, with the average of 8.33 weeks contracting by 1.67 weeks from two weeks earlier. Buyers reported Galvalume lead times from 6 and 12 weeks. The average lead time remains stretched compared to the 7.5-week lead time seen in the first week of 2023.
Note that our data for Galvalume is more volatile due to the smaller sample and market size. If you are a buyer of Galvalume and would like to share your lead time and pricing data with SMU, please contact david@steelmarketupdate.com.
Plate buyers reported a lead time range of 4 to 8 weeks this week. The average of 5.80 weeks contracted by 1.09 weeks from two weeks prior and is the shortest plate lead time since mid-November. Plate’s average lead time is comparable to the 5.7 weeks reported at the start of 2023.
To smooth out the variability in SMU’s biweekly readings, we can look at lead times on a three-month moving average (3MMA) basis.
Lead times for all flat-rolled steel products tracked by SMU continue to trend upward, based on their 3MMAs (Figure 2).
The 3MMAs were calculated this week to be 6.5 weeks for hot rolled, 8.2 weeks for cold rolled, 8.4 weeks for galvanized, 9.8 weeks for Galvalume, and 5.9 weeks for plate.
Half of buyers in SMU’s survey this week said they believe current lead time levels are ‘slightly longer than normal,’ while 40% categorized them as ‘normal.’
Buyers were split on whether lead times will be flat from current levels (43%) or contracting (42%) two months from now.
Here are a few comments from survey respondents on whether lead times will be extending, flat, or contracting two months from now:
“Mills are in no rush to catch up but can’t let the slag continue for long. Customers are tight and will be pressuring for throughput.” – Service center predicting flat lead times
“Inventory will start to budge, and more foreign material will be arriving.” – Service center foreseeing contracting lead times
“Expecting lead times to come down in March with more spot availability.” – Service center predicting contracting lead times
“Behind imports and domestic capacity coming on, we see things retreating.” – Manufacturer expecting contracting lead times
“Mills will curtail working against themselves by offering shorter lead times.” – Manufacturer foreseeing flat lead times
“Having returned to 4-6 weeks, they will flatten out.” – Manufacturer expecting flat lead time times
“They will gradually move back to under five weeks for HRC.” – Supplier forecasting contracting lead times
One manufacturer noted the election cycle and market concerns as reasons for predicting contracting lead times.
Note: These lead times are based on the average from manufacturers and steel service centers participating in this week’s SMU market trends analysis. SMU measures lead times as the time it takes from when an order is placed with the mill to when 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.
| First quarter ended Nov. 30 | 2023 | 2022 | % Change |
|---|---|---|---|
| Revenues | $673 | $599 | 12% |
| Net earnings (loss) | ($18) | ($18) | 0% |
| Per diluted share | ($0.64) | ($0.64) | 0% |
Radius Recycling reported a net loss in its fiscal first quarter of 2024 on tighter supply flows for recycled metals and lower average selling prices for the company’s products.
The Portland, Ore.-based scrap recycler, formerly known as Schnitzer Steel Industries, posted a net loss of $18 million in its fiscal Q1 ended Nov. 30, 2023. This is even with the same period last year but narrowed from a loss of $26 million in Q1’23. Revenues stood at $673 million in Q1’24, off 6% from the prior quarter but up 12% from a year earlier.
“While the current market environment is challenging, we have demonstrated our ability to navigate effectively through periods of volatility and tight scrap availability by focusing on what we can control,” Tamara Lundgren, chairman and CEO, said in a statement on Thursday.
She said this includes “higher nonferrous volumes from our strategic investments and delivering on our $30-million productivity improvement program that we announced last October.”
Radius said market conditions for recycled metals remained challenging in the quarter. The company cited “lower manufacturing activity in the US, and the impact across Asia of the economic slowdown in China, including elevated levels of Chinese steel exports.”
The company noted that Q1 average net selling prices for ferrous, nonferrous, and finished steel products were down sequentially by 1%, 3%, and 3%, respectively.
For Q1 sales volumes on a sequential basis, Radius said that for ferrous they were higher by 4%. On nonferrous they were lower “by 11% due to timing of sales, and lower for finished steel products by 15% due to seasonality.”
In an earnings conference call on Jan. 4, both Lundgren and CFO Stefano Gaggini noted a strengthening of ferrous scrap prices since mid-November in both the export and domestic markets, with a similar trend in non-ferrous prices.
“We expect second-quarter results to benefit from these higher prices and to improve sequentially,” Gaggini said.
Because of volatile current market conditions, “including from tight scrap availability, which can be compounded by winter weather,” Gaggini said the company plans to provide a more detailed Q2’24 outlook at a later date. However, he again noted that Radius anticipates “improved financial performance.”
Another uncertainty is shipping, especially with the conflict in the Middle East, and specifically through the Red Sea.
Gaggini said that what “we have heard through market intelligence very recently is that there could be certain surcharges that might be added on certain routes to container freight rates at some point going forward for those containers that go through conflict zones.”
He said that if that were to happen, “there could be an impact.”
The percentage of steel buyers saying mills were willing to negotiate spot pricing on the products SMU surveys was mixed this week. Overall, though, the mill negotiation rate dipped slightly, according to our most recent survey data.
The biggest slip was in plate, with the negotiation rate dropping 17 percentage points from two weeks earlier to 57%. This was followed closely by galvanized sheet, whose rate tumbled 16 percentage points to 28% in the same comparison.
Every two weeks, SMU asks steel buyers whether domestic mills are willing to negotiate lower spot pricing on new orders. This week, 40% of participants surveyed by SMU reported mills were willing to negotiate prices on new orders, down from 44% at the previous market check (Figure 1). This is the lowest reading since Thanksgiving. At the start of 2023, the rate stood at 50%.
Figure 2 below shows negotiation rates by product. Hot rolled’s negotiation rate fell nine percentage points to 33% from two weeks earlier. Meanwhile, cold rolled’s rate rose two percentage points to 23% and Galvalume’s increased six percentage points to 44%. We have averaged Galvalume with the previous market check because of fewer market participants and to reduce volatility.
“Not seeing much negotiation just yet (for hot rolled).”
“Pricing is more of a range of $1,300-1,350 (on cold rolled).”
“Depending on the size of the buy, bigger orders can get some competition (on galvanized).”
“(Willing to negotiate on) large hot rolled orders.”
Note: SMU surveys active steel buyers every other week to gauge the willingness of their steel suppliers to negotiate pricing. The results reflect current steel demand and changing spot pricing trends. SMU provides our members with a number of ways to interact with current and historical data. To see an interactive history of our Steel Mill Negotiations data, visit our website.
US hot-rolled coil (HRC) prices moved up again this week and remain significantly more expensive than offshore product. Imported hot bands have also seen repeated price increases, but the gains remain far behind those for domestic material.
All told, US HRC prices are still roughly 25% more expensive than imports, a premium that is down only slightly from our last analysis in late December.
US HRC tags are now $1,045 per ton on average based on SMU’s latest check of the market on Tuesday, Jan. 2. That’s up $5 per ton from the week before, and up $400 per ton from the lowest point of 2023, $645 per ton in late September – a time when domestic prices were cheaper than offshore tags.
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.
As of Thursday, Jan. 4, the CRU Asian HRC price was $553 per ton, up $9 per ton from the previous week. Adding a 25% tariff and $90 per ton in estimated import costs, the delivered price of Asian HRC to the US is approximately $782 per ton. The latest SMU hot rolled average for domestic material is $1,045 per ton.
The result: US-produced HRC is theoretically $263 per ton more expensive than steel imported from Asia. The spread is down just $19 per ton from a seven-month high in late December.
Italian HRC prices were up $3 per ton to roughly $682 per ton this week. With the marginal gain, Italian prices are up just $33 per ton over the past month vs. the $25-per-ton increases in the US. After adding import costs, the delivered price of Italian HRC is in theory $772 per ton.
That means domestic HRC is theoretically $273 per ton more expensive than HRC imported from Italy. The spread is up from $271 per ton the week prior and represents a $320-per-ton swing from late September, when US HRC prices were $47 per ton cheaper than those for Italian hot band.
CRU’s German HRC prices increased by just $2 per ton week over week to $715 per ton. After adding import costs, the delivered price of German HRC is in theory $805 per ton.
The result: Domestic HRC is theoretically $240 per ton more expensive than HRC imported from Germany and is just $25 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.
Canadian flat-rolled steelmaker Algoma Steel Group Inc. guided toward lower earnings in its fiscal 2024 third quarter, citing the United Auto Workers (UAW) strike and lower steel prices last fall.
“Due to the lagging nature of our order book, UAW strike-driven soft demand and pricing in the previous quarter and through October impacted our fiscal third-quarter results,” company CEO Michael Garcia said in a statement released with earnings guidance on Wednesday.
All told, the Sault Ste. Marie, Ontario-based company expects third quarter adjusted Ebitda to be anywhere from breakeven to a loss of CAD $10 million (USD $7.5 million) on shipments of approximately 515,000 tons.
Both figures are significantly lower than the CAD $81 million in adjusted Ebitda that Algoma posted in its fiscal second quarter on shipments of 548,998 tons.
Garcia said he expects results to improve in the company’s fiscal fourth quarter.
“In October, steel pricing began to recover in anticipation of a strike settlement, and since the strike’s end pricing has continued to improve, currently sitting near 12-month highs,” Garcia said.
“We expect this pricing strength, coupled with continued solid market fundamentals, to drive significantly improved realized pricing and overall fiscal results starting with our fiscal fourth quarter,” he added.
On the operations side, Algoma placed a “heavy focus” on seasonal maintenance in the third quarter, including a reline of its basic oxygen furnace. The company also remains on track and within budget in its project to convert from integrated steelmaking to EAF steelmaking, Garcia said.
He told SMU in November that construction of two new EAFs should be completed by the end of 2024. The new furnaces are expected to ramp up in 2025.
New Reibus CEO Temy Mancusi-Ungaro and company President Chris Shipp will join SMU for the inaugural Community Chat of 2024 on Wednesday, Jan. 10, at 11 am ET. You can register here.
Reibus recently changed leadership with company founder John Armstrong stepping away from the day-to-day. Mancusi-Ungaro became CEO on Nov. 29 and Shipp rejoined Reibus as president on Dec. 18.
We’ll talk about how the Atlanta-based digital marketplace for metals will evolve and change under their stewardship. We’ll also discuss why changes to how steel is bought and sold could be revolutionized by new technologies.
With tools like AI, Reibus thinks transformations to traditional business practices and logistics could come at “light speed” – and bring a bright future to steel in the process. “No industry is immune to technological revolutions. Walls will be brought down, and historic shifts will take place – reshaping the foundations of the steel industry,” Shipp said.
In short, Mancusi-Ungaro, a software executive, knows tech. And Shipp, an industry veteran, knows steel.
Before joining Reibus, Mancusi-Ungaro was CEO of Reachdesk, a data-driven corporate gifting firm. He was responsible for strategy and operations, ultimately leading the company to quadruple revenue in two years.
Shipp served 22 years in the U.S. Navy, deploying all over the globe. After retiring from the U.S. Navy in 2010, he worked for more than 11 years at Priefert Manufacturing/Priefert Steel in Mount Pleasant, Texas. There he served in multiple roles, including VP of sales, procurement, and supply chain – where he drove unprecedented revenue growth. Shipp has also held positions as SVP at Reibus International and as president of Kingdom Pipe & Steel in Texas. Additionally, he is an SMU Steel 101 instructor.
Editor’s note: If you’d like to see recordings or slide decks from past Community Chat’s – including some very good ones from 2023 – you can find those here.
An increase in residential construction brought total construction spending up by 0.4% in November, according to a report from the Associated General Contractors of America (AGC). The uptick offsets a slowdown in public spending.
Construction spending totaled $2.050 trillion in November, a 0.4% increase over October.
“Private construction spending is showing renewed vigor in homebuilding and selected private nonresidential categories, while developer-financed spending languishes,” AGC’s chief economist Ken Simonson said in a statement on Jan. 2.
Private residential construction increased by 1.1% while multifamily builds inched up 0.1%.
Spending on private nonresidential construction increased for the fifth consecutive month by 0.2%, AGC said. However, the largest segment was manufacturing construction, which rose by 0.5%. Overall commercial construction fell by 0.5%.
Decreased funding for public construction on education, transportation, and other infrastructure categories led to a 2.2% drop in November, according to AGC. But highway and road construction increased by 0.1%.
The AGC is set to release its 2024 outlook on Thursday, Jan. 4.
After falling in November, steel imports appear to have bounced back to a five-month high in December.
Licenses to import steel into the US totaled 2,308,235 net tons, according to a license count from the US Department of Commerce’s International Trade Administration as of Jan. 1.
Note that license counts can differ from preliminary and final figures, as import licenses are required to be obtained before actual importation occurs.
December’s license count is 14% higher than November’s preliminary count of 2,109,590 tons. For 2023, the fewest amounts of imports came in during the month of November.
Compared to the same month last year, December licenses are 5% higher than December 2022’s imports of 2,203,980 tons.
Semi-finished steel imports rose 8.5% month on month (MoM) to 560,487 tons – the highest monthly amount in the final quarter of 2023. The license count shows Brazilian slab shipments remaining high and slab shipments from Canada and Mexico rising.
Finished steel import licenses, meanwhile, rose 16% from November to 1,747,748 tons. Compared to the last month of 2022, however, December’s finished steel import license count was 7.1% lower.
The flat-rolled and pipe and tube product categories showed significant MoM increases.
December flat rolled licenses of 853,424 tons were 12.8% higher MoM and 6.1% higher year on year.
Pipe and tube imports of 447,212 tons jumped from November’s recent low of 286,537 tons to 447,212 tons of licenses for December. While the December license count was at a six-month high, it was still 28% lower than December 2022’s final tally.
We’ll take a closer look at December imports when preliminary figures are released later this month.
Cleveland-Cliffs has appointed private-equity executive Ron Bloom to its board of directors, effective immediately.
Bloom, also a labor and political advisor, is the 11th member of Cliffs’ board. Ten are independent advisors, Cliffs said. Bloom is currently a managing partner and vice chair of Brookfield Asset Management’s Private Equity Group.
“We are honored to welcome Ron Bloom to our board of directors,” Lourenco Goncalves, Cliffs’ chairman, president, and CEO, said in a statement on Wednesday.
“Ron’s distinguished career represents the Cleveland-Cliffs culture perfectly, which includes fierce negotiating skills, fighting for the resilience of American manufacturing, and a deep appreciation for organized labor and a thriving middle class,” Goncalves added.
Domestic manufacturing activity receded for the 14th straight month, according to the latest Institute for Supply Management (ISM) Manufacturing PMI report.
The ISM Manufacturing PMI registered 47.4% in December, up 0.7 percentage points from 46.7% reported in November. A reading above 50 indicates the manufacturing economy is growing, while a reading below 50 indicates contraction. The last time it was above 50 was in October 2022 when the reading was 50.2.
“The share of sector GDP registering a composite PMI calculation at or below 45% — a good barometer of overall manufacturing weakness — was 48% in December, compared to 54% in November and 35% in October,” Timothy R. Fiore, ISM chair, said in a statement on Wednesday.
A manufacturing PMI above 48.7% over time generally indicates an expansion of the overall economy, the report noted.
Supplier deliveries are up 0.8 percentage points from 46.2% in November, while the inventories index dropped by 0.5 percentage points.
Overall demand moderated with new orders contracting faster than the previous month, according to the report.
“None of the six biggest manufacturing industries registered growth in December,” Fiore said.
“We are seeing stronger demand from our American Automotive OEM customers now that the United Auto Workers (UAW) strike has been resolved. Looking at a very strong first quarter of 2024,” a producer of primary metals said.
Another survey respondent who produces fabricated metal products said, “We are forecasting a somewhat strong year for 2024. We’re currently mildly optimistic for how next year will play out.”
Likewise, a transportation equipment provider noted that demand is up across the board and orders are increasing.
The only manufacturing industry that reported growth in December was primary metals, ISM said.
Olympic Steel has promoted Zachary Siegal to the newly created role of president of manufactured metal products.
Siegal joined the Cleveland-based metals service center in 2007 as a quality engineer and most recently served as vice president of strategic development. He will remain involved in the company’s mergers and acquisitions work, Olympic said.
“Zach’s appointment marks a significant milestone in Olympic Steel’s history, as we distinguish our growth and continue to diversify into manufactured end-use products,” Olympic CEO Richard T. Marabito said in a statement on Wednesday.
Siegal will head Olympic’s newly created manufactured metal products business group, the company said. This includes its McCullough Industries, Metal-Fab, Shaw Stainless & Alloy, and EZ-Dumper operations.
In this role, he will report directly to Andrew S. Greiff, president and COO. The operations in this new business group will continue to financially report through their respective carbon and specialty metals business segments, Olympic said.
Cleveland-Cliffs is now targeting base prices of $1,150 per ton for hot-rolled coil (HRC), according to a press release on Wednesday morning, Jan. 3.
Cliffs said the move was effective immediately on all new orders and that it had also increased tags for cold-rolled and coated products.
The latest move by the Cleveland-based steelmaker represents an increase of $50 per ton from its previous notice on Dec. 6, according to SMU’s steel mill price increase calendar.
SMU’s HRC price stands at $1,045 per ton ($52.25 per cwt) on average, according to our check of the market on Jan. 2. Tags are up $5 per ton from last week and up $400 per ton from a 2023 low of $645 per ton in late September, according to our pricing tool.
The move was in line with what some in the market had told SMU, with another round of mill price hikes expected. The expectation from some is that while a price increase may not succeed, it would at least stabilize prices in the interim.
Time will tell what happens next.
SMU doesn’t do forecasts. We leave that to our colleagues at CRU. But we’re pretty good at surveys, and we’ve got a great group of readers.
That’s why we decided to ask you what’s in store for 2024. The results are below, along with some insightful comments in italics. (You can also find the results here.)
For starters, many of you think US HRC prices will be roughly the same as they were last year, or perhaps slightly higher. Only 16% predicted steep declines:
There was a broad consensus that prices would peak in the first quarter:
In fact, many of you think that prices, after peaking in Q1, won’t bottom until Q3 – which is what we saw in 2023:
Similarly, many of you predict that mill capacity utilization will be 75-79%, at or slightly above 2023 levels.
On the scrap side, consensus was that prime scrap prices might be marginally higher than they were last year. That could tighten profit margins at the margins. But it’s a far cry from prime becoming the next precious metal.
Opinion was evenly split on whether additional consolidation at the mill level would be good for the steel industry. But more saw such consolidation as negative rather than as positive.
Note, too, that additional consolidation is unlikely if Nippon Steel succeeds in buying U.S. Steel for more than $14 billion:
And, finally, my favorite question – one to which there are no corresponding charts: What is something that will impact the market in 2024 that nobody is talking about yet?
It surprised me that most people predicted that the new year would look roughly like 2023. But that’s not uncommon in our surveys. People often predict that the future will look like the past.
So why did it surprise me this time? Well, we could have a newsy year given tensions in the Middle East – ones already impacting shipping, an upcoming presidential election, and with the proposed sale of U.S. Steel to Nippon Steel becoming a political football.
Perhaps steel prices will be a bastion of stability in an otherwise volatile news year? That would be something different!
I’m looking forward to getting the latest on these and other subjects at the Tampa Steel Conference. The event, a joint production between SMU and Port Tampa Bay, will run Jan. 28-30 at the JW Marriott Tampa Water Street. It’s not too late to register. You can do so here.
Sheet prices were mixed in SMU’s first assessment of the market in the New Year. Hot-rolled coil (HRC) prices inched up modestly while prices for cold-rolled coil (CRC) and coated products slipped.
SMU’s HRC price now stands at $1,045 per net ton on average, up $5 per ton from our last assessment in December. CRC and galvanized base prices both average $1,285 per ton. That’s down $20 per ton for CRC and down $10 per ton for galv. Galvalume averages $1,315 per ton, also down $20 per ton from our prior assessment.
Plate prices, meanwhile, average $1,405 per ton on, down $5 per ton for our last assessment.
Market commentary was also mixed. Some sources voiced concern about sheet lead times not extending or extending only modestly at one major sheet mill. They said that could point toward domestic supply increasing and prices plateauing.
Some also noted that foreign CRC from Southeast Asia is cheaper than domestic HR. That material might not arrive until Q2, a lead time that might be too long for some domestic buyers. The price might still appeal to buyers along the coasts, something that could chip away at domestic mill order books.
But others pointed to an uptick in CME HRC futures for February and March as evidence that a feared January inflection downward might not happen. Some suggested that another round of mill price hikes might be imminent. Even if they don’t succeed in raising prices, they should at least stabilize them, these sources said.
Recall that we also saw mixed directions in sheet prices in our last check of the market in December. We have therefore adjusted our sheet price momentum indicator to neutral. That’s the first time since Oct. 3 that it has not been at higher. Our plate price momentum indicator is also at neutral.
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 of our range was up $10 per ton, while the top end of our range was unchanged vs. one week ago. Our overall average is up $5 per ton week on week (WoW). Our price momentum indicator for HRC moved from higher to neutral, meaning SMU is unsure of the direction prices will move over the next 30 days.
Hot rolled lead times: 6–8 weeks
The SMU price range is $1,240–1,330 per net ton, with an average of $1,285 per ton FOB mill, east of the Rockies. The lower end of our range was down $20 per ton vs. the prior week, while the top end of our range was also down $20 per ton. Our overall average is down $20 per ton vs. the week prior. Our price momentum indicator for CRC moved from higher to neutral, meaning SMU is unsure of the direction prices will move over the next 30 days.
Cold rolled lead times: 6–12 weeks
The SMU price range is $1,240-1,330 per ton, with an average of $1,285 per ton FOB mill, east of the Rockies. The lower end of our range was down $20 per ton vs. the prior week, while the top end of our range was unchanged. Our overall average is down $10 per ton vs. the week prior. Our price momentum indicator for galvanized moved from higher to neutral, meaning SMU is unsure of the direction prices will move over the next 30 days.
Galvanized .060” G90 benchmark: SMU price range is $1,337–1,427 per ton with an average of $1,382 per ton FOB mill, east of the Rockies.
Galvanized lead times: 6-11 weeks
The SMU price range is $1,280–1,350 per net ton, with an average of $1,315 per ton FOB mill, east of the Rockies. The lower end of our range was down $20 per ton vs. the prior week, while the top end of our range was also down $20 per ton. Thus our overall average is down $20 per ton vs. the week prior. Our price momentum indicator for Galvalume moved from higher to 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 $1,574–1,644 per ton with an average of $1,609 per ton FOB mill, east of the Rockies.
Galvalume lead times: 6-15 weeks
The SMU price range is $1,370–1,440 per net ton, with an average of $1,405 per ton FOB mill. The lower end of our range was unchanged WoW, while the top end of our range was $10 per ton higher. Our overall average is down $5 per ton vs. one week ago. Our price momentum indicator for plate moved from higher to 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.
Raw steel production in the US fell to a 38-week low to close out the last week of 2023.
US mills produced an estimated 1,680,000 net tons of raw steel in the week ending Dec. 30, according to the latest data from the American Iron and Steel Institute (AISI). The mill capability utilization rate was 73.1% for the week.
Output was down 0.8% from the previous week when mills operated at 73.7% of capability. However, output was 6.6% higher compared to the same week last year when mills produced 1,576,000 tons.
Production by region is shown below, with the week-over-week changes shown in parentheses:
Adjusted raw steel output for the 2023 calendar year through Dec. 30 totaled 88,727,000 tons, AISI said. Annual production was 0.2% higher than the 88,528,000 tons produced during the same period of 2022.
For the year, the mill capability utilization rate was 75.4% compared to 77.5% in 2022.
Output in the last week of 2023 was 5.3% higher than the 1,595,000 tons produced in the first week of the year. Figure 1 shows production trending higher in the first half of the year and then trending slightly lower in the latter portion of the year.
Nucor Corp. announced in a letter to customers on Friday, Dec. 29, that its plate mill group would hold prices unchanged for as-rolled discrete plate, normalized, and quenched-and-tempered plate with the opening of its plate mill order book for February.
The Charlotte, N.C.-based steelmaker said tags would retain the price “set forth” in its Nov. 28 notice, when it increased prices by $40 per ton to $1,430 per ton.
The move was effective with new orders received on Saturday, Dec. 30, the letter said.
“We reserve the right to review and re-quote any offers that are not confirmed with either a Nucor sales acknowledgment or written acceptance by both parties,” Nucor said in the letter.
To keep track of the latest mill price increases, visit SMU’s price increase calendar.
Wilbur Ross doesn’t believe the proposed sale of U.S. Steel to Japan’s Nippon Steel poses any threat to the economic or national security of the US.
Wilbur L. Ross Jr., the business tycoon and former US secretary of commerce, has instead said, “There is no real cause for concern other than xenophobia…” in a New Year’s op-ed in the Wall Street Journal.
He said objections or concerns from politicians are due to 2024 being an election year. Recall that a number of politicians on both sides of the aisle have spoken out with their concerns on the proposed takeover of the iconic Pittsburgh-based steelmaker by a foreign-owned entity.
In the op-ed, Ross said national security could be a real threat if American mills were closing because of unfairly subsidized Japanese exports to the US. But this isn’t the case, and “There’s nothing in the deal from which the US needs defending. Attacks by Washington pols only create unnecessary geopolitical tensions, and those, not the acquisition itself, could endanger American national security,” Ross wrote.
Ross added that Japan is a major ally of the US, ranking first in terms of foreign direct investment in the US.
To close, Ross pointed out that no concerns were expressed in 2005 when he sold the International Steel Group (ISG) to India’s Lakshmi Mittal, nor when Russia’s Severstal bought the bankrupt Rouge Steel in 2004.
In another Jan. 1 op-ed, this one in The Washington Times, another former government official offered an alternative view on the national security issue of the U.S. Steel sale.
Manisha Singh, an attorney who served as assistant secretary of state for economic and business affairs for the Trump administration, wrote that lessons learned from the pandemic should be remembered.
“The inability to procure emergency goods here was traced back to America’s excessive reliance on China,” Singh said, noting that US officials pleaded with allies during the pandemic for medical supplies to save American lives. However, “Even friendly partner nations were unable to meet American requests due to their own exigent circumstances,” she pointed out.
Additionally, with Trump’s invocation of Section 232 of the Trade Expansion Act of 1962, “It was determined that [global steelmaking] overcapacity hindered the ability of domestic producers to meet the needs of domestic defense,” she wrote.
“The US military falls short of the strategic numbers of equipment previously identified to maintain “peace through strength,” much less prevail if attacked. To build back full military capacity in order to meet existential defense needs, relying on anyone else, even an ally, compromises the national security of the American people,” Singh said.
Singh’s op-ed allows one to imagine how America’s national security could be at threat in the future should Nippon Steel purchase U.S. Steel now: Imagine if “regional conflicts spark a global catastrophe in which America requires large amounts of steel to build weapons and infrastructure for the defense of its citizens. Simultaneously, Japan, currently with far less military equipment than the United States, needs the same,” she wrote.
Domestic rig counts creeped up in the last 2023 report from Baker Hughes. However, Canadian firms cut back significantly on their active rotary rigs.
The US rig count inched up by two from the previous week’s count, to a total of 622, as of Dec. 29. Oil rigs increased by two to 500, while the number of gas rigs went unchanged at 120. Miscellaneous rigs also remain unchanged at two.
Compared to the same period one year ago, the US count is down by 157. There are 121 fewer oil rigs, 36 fewer gas rigs, while miscellaneous rigs are unchanged at two.
Canada’s drilling firms dropped active rigs from 146 to 86, off 60 from the previous week. Oil rigs dropped by 54 from 81 to 27 and gas rigs moved down from 65 to 59.
Year over year there are two more oil rigs and the same amount of gas rigs. Overall, there are two more rigs than there were at the same time in 2022.
The international rig count is updated monthly. The total number of active rigs during the month of November was 978, up 16 from the previous month, and increasing by 68 from November 2022.
The Baker Hughes rig count is important to the steel industry as it is a leading indicator of demand for oil country tubular goods (OCTG), a key end market for steel sheet.
A rotary rig rotates the drill pipe from the surface to either drill a new well or sidetrack an existing one. Wells are drilled to explore for, develop, and produce oil or natural gas. Baker Hughes’ rotary rig count includes only those rigs that are significant consumers of oilfield services and supplies.
For a history of the US and Canadian rig counts, visit the rig count page on our website.
The Mexican government has placed anti-subsidy (CVD) duties of almost 80% on cold-rolled (CR) sheets from Vietnam, with the caveat that if the importer can prove the steel comes from a country other than China then it is exempt from the levy.
Following an investigation lasting nearly two years, the Ministry of Economy concluded there was sufficient evidence imports of CR steel originating in Vietnam were conducted under conditions of price discrimination, causing a threat of injury to the domestic industry, according to media reports.
The probe was requested by local producer Ternium Mexico claiming unfair international trade practices by way of price discrimination.
The ministry imposed CVD tariffs of 11.64% for imports from Hoa Phat, 25.64% from Posco Vietnam, and 79.24% from all other exporters.
This article was first published by CRU. Learn more about CRU’s services at www.crugroup.com.
After meeting with Nippon Steel, the United Steelworkers (USW) union remains wary of the company’s proposed acquisition of U.S. Steel.
On Friday, Dec. 29, USW leaders had an introductory meeting with Hiroshi Ono, a Nippon Steel North America representative, and his team at the union’s headquarters in Pittsburgh.
In a letter to members after the meeting, Mike Millsap, USW District 7 director and chairman of the negotiating committee, and USW International President David McCall said they still have concerns about Nippon’s buy of U.S.Steel. Among those concerns are the extensive commitments in union contracts, the future of steelmaking operations, and a lack of commitment to capital expenditures, among others.
The union said, “neither Nippon or USS contacted the union prior to the [sale] announcement, which is a violation of many sections of our labor agreement that require USS to provide us information about critical developments.”
Combined with U.S. Steel’s history of breaking commitments, “This rocky start and lack of communication only deepens our concerns that Nippon would be no better than USS,” the letter states.
Additionally, there have been intentions made to shift production away from USW-represented facilities to non-unionized Big River Steel. This is “obviously also of grave concern to us,” the letter says.
Since Nippon Steel is a private company, U.S. Steel would no longer publicly report its financial results after being acquired. This also makes the union uneasy as it would directly impact its ability to verify profit-sharing payments.
The letter notes that the union is asking elected representatives to scrutinize the proposed acquisition as to how it will affect global trade, domestic steelmaking, national security, and supply-chain reliability.
Additionally, the letter says that Japanese steelmakers have been dumping products into the US market at unfair prices for many years. There are currently 12 antidumping duty orders on steel products from Japan, they say, including on hot-rolled and cold-rolled steel, tin mill products, and seamless pipe.
“In these cases – or any others where U.S. Steel may have an interest – Nippon Steel could order U.S. Steel to change its longstanding position and support revocation of the antidumping order,” the union leaders warn.
Neither Nippon Steel nor U.S. Steel could be reached for comment at the time of this story’s publication.