News - Steel Market Update - Steel Market Update Wed, 29 Mar 2017 16:56:45 -0400 Joomla! - Open Source Content Management en-gb SMU Price Ranges & Indices: Mostly Unchanged

As we moved around the industry trying to gauge where flat rolled steel prices are this week, we found most buyers as being optimistic but perhaps not as many as two weeks ago. There seems to be a growing question about whether the market has "peaked" or not. Everyone wants to know where prices will go from here and there are never any easy answers to that question.

A steel service center executive complained to us about the current high spot prices and their inability to close business at the new numbers, "Using those numbers it is very difficult to get business. I am convinced that we have peaked. Some moderation is in order."

A steel buyer told us, "I am seeing pricing beyond HRC a little skewed depending on product.  We are seeing the HRC market as pretty strong with the resurgence of the energy market.  So not a lot of negotiating when it comes to that.  CR seems fairly weak with the Russian offers and I am hearing there are South African offers also... Galvanize is 40.50 up depending on the product, what need the mill has, etc.  Most of the mills are inquire only so they love to give an all in price and factor the price to what they need in their book."

]]> (John Packard) Price Indices Tue, 28 Mar 2017 18:48:53 -0400
The Data Shows the Trade Cases Have Failed: The Question is Why?

If the goal of the 2015 CORE, cold rolled and hot rolled trade cases was to reduce the number of foreign steel tons coming into the United States, well, the data says the cases did not complete their mission. There is one exception, hot rolled steel imports did indeed move lower and continue to move lower so far this year (compared to last).

If the goal was to take U.S. flat rolled steel prices to today's lofty world leading prices - well, then they succeeded.

Imports of foreign flat rolled steels peaked in 2014 prior to the launching the antidumping (AD) and 2014 to 33 million net tons by the end of last year. However, from a flat rolled standpoint the victory is hollow at best and in some cases nonexistent.

In the table below, we are showing total imports for the years 2012-2016. We are also displaying the hot rolled, cold rolled, galvanized and other metallic (mostly Galvalume) and it is important to review the data to see how successful the trade cases have been at stopping the flow of foreign steel into the U.S.

Hot rolled tonnage surged to 4.3 million tons in 2014 and remained quite high the following year. When we get to 2016 we see HRC imports dropping back to the levels seen in 2012/2013.

Cold rolled imports also surged up to 2.5 million tons in 2014. Since then there has only been a modest decline reaching 2.2 million tons last year which is still 900,000 tons above 2012/2013 levels.

]]> (John Packard) Trade Cases Tue, 28 Mar 2017 17:44:02 -0400
Selected Domestic Steel Mill Lead Times

We are getting mixed messages regarding “real” lead times coming out of the domestic steel mills. The information we are sharing below comes from actual mill lead times coming directly from the producing mills to their customers. This is different than the lead time averages collected by Steel Market Update and shared with our readers last week after we had concluded our most recent analysis of the flat rolled steel industry.

Below is a sampling of a few domestic steel mill lead times as presented to their customers within the past few working days:

]]> (John Packard) SMU Mill Lead Times Tue, 28 Mar 2017 16:27:11 -0400
Currency Update for Steel Trading Nations

Please see the end of this report for an explanation of data sources.

The Broad Index value of the US $ is reported several days in arrears by the Federal Reserve, the latest value published was dated March 17th (Figure 1).

]]> (Peter Wright) World Economy Tue, 28 Mar 2017 15:40:55 -0400
Another Slight Decrease in Weekly Raw Steel Production

For the week ending March 25, 2017, the American Iron & Steel Institute (AISI) estimated the U.S. steel industry produced 1,725,000 net tons of raw steel, a 1.3 percent decrease over the previous week but a 2.4 percent increase over the revised rate from the same week one year ago. The estimated capacity utilization rate for steel production is 72.8 percent, down from 73.7 percent last week but up from 72.1 percent this time last year.

]]> (Brett Linton) Weekly Raw Steel Production Tue, 28 Mar 2017 14:05:55 -0400
AISI Capacity Adjustments: Q1 2016 Through Today

Steel Market Update is being asked whether Big River Steel's production has been added to the raw steel capacity that the AISI uses when calculating capacity utilization rates. The short answer is we don't think so. The AISI did make a change and increased quarterly capacity for the 4th Quarter 2016 from 30.7 to 31.2 million tons. The Q1 2017 continues to be 31.2 million tons.

]]> (Brett Linton) Weekly Raw Steel Production Tue, 28 Mar 2017 13:26:08 -0400
Global Scrap Trade through Q4 2016

This is only our second ever write up of global scrap trade. In future we will report quarterly because we believe that to understand the gyrations of the domestic scrap market we should be aware of where the US stands as a global player. This data is not very current because some nations are slow to report but we still believe it gives a valuable perspective of global trends and is the foundation of where we are today.

]]> (Peter Wright) Steel Data Tue, 28 Mar 2017 12:31:07 -0400
February 2017 Steel Imports

The American Institute for International Steel reports steel imports in February were 21.3 percent higher than a year ago. AIIS cautions against U.S. protectionist policies that may hurt manufacturers who depend on global value supply chains. The press release from AIIS follows:

Falls Church, VA. March 27, 2017. Steel imports dipped 3.1 percent in February, giving back an equivalent gain in January to total 2.68 million net tons.

]]> (Sandy Williams) Imports Tue, 28 Mar 2017 11:03:31 -0400
Federal Reserve Manufacturing Indexes Indicate Expansion

Manufacturers are optimistic in the Texas and Richmond area, according to Federal Reserve surveys. Factory activity is expanding so far in 2017 and manufacturers continue to expect improvement during the next six months.

Texas Manufacturing Outlook Survey

Manufacturing in Texas experienced a ninth month of expansion in March, according to the Federal Reserve Bank of Dallas. The production index in the Texas Manufacturing Outlook Survey gained two points to register 18.6. New orders were softer in March after an unusually strong February, dipping 2.1 points to 9.5. Shipments decreased 5.7 points to a reading of 6.5.The growth rate for new orders increased 1.2 points and has been increasing for the past three months. Unfilled orders were flat in March and delivery times increased. Inventories were unchanged for raw materials while finished goods inventories decreased.

]]> (Sandy Williams) Federal Reserve District Indexes Tue, 28 Mar 2017 10:09:46 -0400
Consumer Confidence in March 2017

The source of this data is the Conference Board with analysis by Steel Market Update. Please see the end of this piece for an explanation of the indicator.

The March report was excellent and handily beat expectations by rising to 125.6 from an upwardly revised 116.1 in February. The three month moving average (3MMA) has improved for ten consecutive months and was the strongest since July 2001. The low point for consumer confidence last year was May with a value of 92.4. Consumer confidence is the driver of consumer spending which is the largest component of GDP and which ultimately drives a large portion of steel consumption.

]]> (Peter Wright) Economy Mon, 27 Mar 2017 10:30:41 -0400
Final Thoughts

I had a couple of conversations earlier today regarding the status of trade and, in particular, whether or not there could be further trade cases filed by the domestic steel mills or by the U.S. Department of Commerce. At least one mill is hearing that there could be new trade cases. This could become an even bigger topic after the conversation that I had with a buyer of foreign steel who told me, “Prices are coming down a little in Asia but the experienced companies are being very careful how they approach the US market because they are afraid of further trade issues.  I am seeing more and more offers from Vietnam.”

A smaller steel mill suggested to me this morning that the flat rolled mills may be considering either another round of AD/CVD cases or a “straight 201” suggesting the mills may ask for the U.S. Department of Commerce to intervene.

A couple of weeks ago I asked Steel Manufacturers Association (SMA) President Philip Bell if the domestic mills would consider more trade action on cold rolled and coated steels which have not responded the same way to the AD/CVD cases as hot rolled has. He told me that he did not think there would be new cases due to the fact that the mills are making plenty of money right now.

In my opinion, if there is a new move against countries such as Vietnam who, as the steel buyer suggests above, continues to offer more and more steel into the U.S. market, then we might get to see the first use of “self-initiation” by the U.S. Department of Commerce.

]]> (John Packard) Final Thoughts Mon, 27 Mar 2017 08:00:00 -0400
We Are 5 Months into Current "Up" Cycle

Last week, Steel Market Update (SMU) conducted our mid-March flat rolled steel market trends survey. We invited 670 people to participate in the gathering of data and opinions which resulted in our flat rolled steel market trends analysis presented to our Premium level members last Friday in the form of a Power Point presentation.

It is Steel Market Update opinion that for there to be further price increases by the domestic steel mills they need the support of the steel service center community. We recently went through a short period of time similar to what we saw last year during 1st Quarter when price support briefly waned (small dip in 1Q ’16 in below graphic) and then came storming back. The biggest difference a year makes is the starting HRC price point of the cycles ($360 in December 2015 vs. $470 in October 2016). 

]]> (John Packard) Steel Prices (North America) Sun, 26 Mar 2017 18:03:03 -0400
Steel Prices at a Peak or Do We Have More Room to Run?

Buyers and sellers of flat rolled steel having been bouncing like the proverbial rubber ball over the past six weeks as they try to make sense of where steel prices are heading over the near term. Steel Market Update (SMU) asked those responding to our flat rolled steel market trends survey last week where they felt prices were headed over the next few weeks. As you can see by the graphic below their opinions have been anything but consistent.

]]> (John Packard) SMU Steel Survey Results Sun, 26 Mar 2017 13:26:44 -0400
Comparison Price Indices: Modest Moves

Flat rolled steel prices saw modest moves this past week according to Steel Market Update (SMU) and Platts steel indexes. The two strongest products were cold rolled and galvanized each up $15 per ton for the week.

Benchmark hot rolled pricing was up $5 per ton on Platts to $650 per ton and $10 per ton on our own index which is now averaging $655 per ton.

]]> (John Packard) Price Indices Sun, 26 Mar 2017 12:05:24 -0400
Forbes Article Suggests Nucor* Responsible for Demise of Steel Industry

The article title is “Dan DiMicco’s Nucor Has Killed Off More Of The American Steel Industry Than China Ever Has” and was written by Tim Worstall, a Fellow at the Adam Smith Institute in London, England. The article, which can be seen in its entirety online, points out, “That American steel industry which has suffered more from the competition of Dan DiMicco’s Nucor than it has from anything the Chinese have done.”

His main theme in the article is the growth of the electric arc furnace (EAF) segment of the steel industry has come at the expense of the less nimble fully integrated industry that uses blast furnaces and BOF’s. Technological change, not trade with China, has been the downfall of the integrated steel industry.

Mr. Worstall says about Dan DiMicco’s belief that the American steel industry needs trade protection:

“…Have a look at any particular steel mill you want to think about, one that has closed, gone bust, whatever, and you'll almost always find that it was a blast furnace site.

]]> (John Packard) Nucor Sun, 26 Mar 2017 11:10:32 -0400
Essar Steel Algoma Gets DIP Extension

Essar Steel Algoma will get a third loan extension while it continues to hash out an agreement to emerge from CCAA protection. The company has another thirty day extension before its debtor-in-possession financing expires on April 30.

]]> (Sandy Williams) Essar Steel Algoma Sun, 26 Mar 2017 10:35:04 -0400
Permit Approved for Keystone XL

TransCanada received the go-ahead from the White House on Friday to complete the long-delayed Keystone XL pipeline. During remarks at the White House announcing the approval of the presidential permit, President Trump said:

“It’s a great day for American jobs and a historic moment for North American and energy independence. This announcement is part of a new era of American energy policy that will lower costs for American families -- and very significantly -- reduce our dependence on foreign oil, and create thousands of jobs right here in America.”

]]> (Sandy Williams) Oil Sat, 25 Mar 2017 15:31:58 -0400
Active Gas & Oil Rig Counts: US Increasing, Canada Decreasing

According to Baker Hughes data from March 24, 2017, the U.S rig count for the week was 809 rigs exploring for or developing oil or natural gas. This is up 20 rigs compared to last week, with oil rigs up 21 to 652 rigs, gas rigs down 2 to 155 rigs, and miscellaneous rigs up 1 to 2 rigs. Compared to this time last year, the 809 count is up 345 rigs, with oil rigs up 280, gas rigs up 63, and miscellaneous rigs up 2.

]]> (Brett Linton) Energy Sat, 25 Mar 2017 11:36:53 -0400
Durable Goods Orders Up 1.7% in February

Durable goods orders rose in February by 1.7 percent after gaining 2.3 percent the prior month. The increase beat the Bloomberg estimate of a 1.4 percent gain. Excluding the volatile transportation category, orders gained 0.4 percent. Aircraft led the increase with a jump of 47.6 percent for civilian aircraft.

Core capital goods orders (excludes aircraft and defense) fell 0.1 percent in February. Shipments of core capital goods were up 1 percent in February and may help boost GDP for first quarter 2017.

February’s report indicates that demand continues to rise and manufacturers are optimistic about future growth.

]]> (Sandy Williams) Durable Goods Sat, 25 Mar 2017 09:28:36 -0400
Germany Seeks EU Help in Opposing US Trade Case

Germany is seeking help from the European Union in its dispute with the United States regarding the alleged dumping of steel into the U.S. market.

In a letter to EU trade commissioner Cecilia Malmstrom, German foreign minister Sigmar Gabriel asked the Commission to urge the United States to follow World Trade Organization rules when deciding trade cases.

]]> (Sandy Williams) Trade Cases Fri, 24 Mar 2017 14:31:40 -0400
Final Thoughts

"Fair and Free Trade" is something that those of us who have been in the steel industry since 2000 have heard over and over again from the domestic steel industry. What exactly is "fair" trade and who should decide? The steel mills have done an exceptional job of determining the talking points through lobbying efforts and the use of the U.S. trade laws. Manufacturers, on the other hand, have generally been mute on the subject. Right now, Steel Market Update is attempting to get a manufacturing industry association representative to speak at our conference. We are finding associations like the National Association of Manufacturing (NAM) aren't able to find someone within their group to be part of a panel at this year's SMU Steel Summit Conference. We are now working with the U.S. Chamber of Commerce and we hope their schedules are able to accommodate our conference. They would join Philip Bell, President of the Steel Manufacturing Association (members are the EAF steel mills), Dan Pearson, Fellow at the Cato Institute and former chairman of the International Trade Commission and trade attorney Lewis Leibowitz who is well know to past Steel Summit attendees for his support of free trade.

I struggle with the topic of free and fair trade as I personally have been on both sides of the street having represented a domestic steel mill as well as a couple of international trading companies. The Chinese seemingly lack of understanding of the laws of supply and demand have taken the conversation of what is fair to new heights. To me, it was obvious 10 years ago that the Chinese were on a path of self-destruct for the steel industry by building too many steel mills; growth and employment at the expense of the health and well-being on their citizens and exporting unemployment to the United States and elsewhere.

]]> (John Packard) Final Thoughts Fri, 24 Mar 2017 08:00:00 -0400
SMU Steel Buyers Sentiment Index 3MMA Sets New Highs

Steel Market Update concluded our analysis of the flat rolled steel markets earlier today. One of the proprietary products produced out of our twice monthly analysis is the SMU Steel Buyers Sentiment Index which consists of Current and Future Sentiment Indices.

Our Current Sentiment Index as a single data point came in at +73. This is down 4 points from the +77 reported at the beginning of the month. Our Current Sentiment Index has consistently been over +70 for the past three months. Buyers and sellers of flat rolled steel continue to be very optimistic about their companies’ ability to be successful in the existing or current market environment.

Our preference is to smooth out the data we receive so that we can present a better view of the over-all trend for the market. We do this by using a three-month moving average (3MMA). Our 3MMA for Current Sentiment is +73.50 which is the highest it has ever been improving on the +73.0 reported at the beginning of the month of March 2017.

]]> (John Packard) SMU Steel Buyers Sentiment Index Thu, 23 Mar 2017 16:55:09 -0400
April Ferrous Scrap Prices: No Dramatic Shifts in Pricing Seen

Early indications (and we should put special emphasis on the word “early”) are for ferrous scrap prices to trend slightly lower on shred and obsolete grades while prime grades (busheling/bundles) are expected to trade sideways due to strong demand from sheet mills.

In March, prices for prime grades of scrap rose $60-$65 per gross ton while products such as heavy melt and shredded scrap were up by $40 per ton. One of the reasons for the increase in prime grades was due to Nucor’s DRI plant in Louisiana being down for a few weeks for repairs. SMU sources are advising the pig iron markets are also tight which puts upward pressure on prime grades.

Here is what we heard from one of our pig iron sources this morning, “The offers from little tonnage is still made in Northern Brazil are at about $380 - $385/mt CFR NOLA.  The Ukraine production has been interrupted so the Russian pig iron offers probably are $385 – 390/mt CFR.” 

]]> (John Packard) Scrap Prices Thu, 23 Mar 2017 16:07:14 -0400
Steel Mill Lead Times Moving Out

Flat rolled lead times, which had been stuck in a rut over the past couple of months, have started to move out according to those responding to our flat rolled market trends survey. We are now seeing average lead times on hot rolled close to five weeks (4.81 weeks). We also saw movement in cold rolled, galvanized and Galvalume lead times.

Lead time is the amount of time, referenced in weeks, that it takes a new order to be produced by the domestic steel mills.

]]> (John Packard) SMU Mill Lead Times Thu, 23 Mar 2017 14:24:23 -0400
Steel Mills Somewhat Willing to Negotiate HR, CR, GI Pricing

The aggressiveness of the flat rolled steel mills was minimal on Galvalume steels this week but other products appear to be open for discussion, according to those taking the SMU flat rolled market trends analysis survey just completed earlier today (Thursday, March 23, 2017).

We found 47 percent of our respondents reporting the domestic mills as willing to negotiate HRC pricing. This is up from the 33 percent level we reported at the beginning of March. At the same time, it is a long way away from the 79 percent we saw one month ago.

]]> (John Packard) SMU Mill Negotiations Thu, 23 Mar 2017 14:04:23 -0400
Hot Rolled Futures: Backwardated to the Future

The following article on the hot rolled coil (HRC) futures markets was written by David Feldstein. As the Flack Global Metals director of risk management, Dave is an active participant in the hot rolled coil (HRC) futures market and we believe he will provide insightful commentary and trading ideas to our readers. Besides writing futures articles for Steel Market Update, Dave produces articles that our readers may find interesting under the heading "The Feldstein" on the Flack Global Markets website

]]> (Dave Feldstein) Hot Rolled Futures Thu, 23 Mar 2017 13:51:13 -0400
ABI Back on Track at 50.7 in February

The Architecture Billings Index increased modestly to 50.7 in February pulling out of its dip into negative territory in January. The new projects Inquiry index was 61.5, up from 60.0 the previous month, and the design contract index climbed to 54.7 from 52.1.

“The sluggish start to the year in architecture firm billings should give way to stronger design activity as the year progresses,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “New project inquiries have been very strong through the first two months of the year, and in February new design contracts at architecture firms posted their largest monthly gain in over two years.”

]]> (Sandy Williams) AIA Billings Index Thu, 23 Mar 2017 12:23:14 -0400
New Home Sales Up 6.1 Percent in February

The U.S. Census Bureau and the U.S. Department of Housing and Urban Development reports sale of new single-family homes jumped in February to a seasonally adjusted annual rate of 592,000, a 6.1 percent increase from January and 12.8 percent year-over-year.

The median sales price of new houses sold in February 2017 was $296,200 and the average sales price was $390,400.

]]> (Sandy Williams) Housing Thu, 23 Mar 2017 12:03:36 -0400
Canadian Chamber of Commerce Recommends “Buy Local Steel” to Canadian Government

Three Canadian Chambers of Commerce presented their concerns about unfairly traded steel to the Federal Government’s Standing Committee on International Trade on March 21. The Sault Ste. Marie Chamber of Commerce and its counterparts from Windsor-Essex and Hamilton were joined by key Canadian steel producers including Essar Steel Algoma, Stelco Inc., Gerdau Long Steel North America and Evraz to discuss how challenges to the steel industry have impacted its ability to compete globally.

]]> (Sandy Williams) Steel Mills Thu, 23 Mar 2017 11:14:15 -0400
Existing Home Sales Retreat 3.7% in February

Existing home sales slowed in February, declining by 3.7 percent from the previous month to a seasonally adjusted annual rate of 5.84 million. According to the National Association of Realtors, the rate continues to exceed year ago levels and was 5.4 percent above the sales pace reported in February 2016.

]]> (Sandy Williams) Housing Thu, 23 Mar 2017 09:24:45 -0400
SMU MoMo Index: Fourth Week into Positive Territory

The Steel Market Update Steel Price Momentum Index (MoMo) for hot rolled steel in the United States remained in positive territory for the fourth consecutive week after briefly dipping into negative territory last month. MoMo is a trailing indicator and shows the relationship between the current U.S. hot rolled coil price movements against the previous 12-week average price as a percentage. A positive MoMo index indicates hot rolled steel prices are moving in an upward direction compared to the previous 12 week period, while a negative index number indicates a downward direction in prices.

MoMo should not be confused with the SMU Price Momentum Indicator which is a forward looking indicator. The SMU Price Momentum Indicator is currently at Higher indicating that steel prices are expected to rise over the next 30 days.

]]> (Brett Linton) SMU Momentum (MoMo) Model Wed, 22 Mar 2017 10:05:39 -0400
Final Thoughts

First, a note about our price ranges and indices published on Tuesday evening. One of the things that I saw during my collection process was what I perceived as strength or weakness in the numbers on certain products. What do I mean by that? When checking our flat rolled steel market trends survey results I look for hints as to the direction prices are moving. In other words I review OEM and Service Center data and try to see if I can find a trend. Hot rolled out of the service centers, were leaning toward the high end of our range. We found 23.5 percent of the service centers reporting HRC spot prices as being over $660 per ton. On the manufacturing side we found the bulk of the numbers at the lower end of the range with the biggest group (36 percent) reporting their spot HRC numbers at $620 per ton. There were more data points for the service center group but we need to be cautious when reporting the numbers over the next few weeks.

]]> (John Packard) Final Thoughts Wed, 22 Mar 2017 08:00:00 -0400
SMU Price Ranges & Indices: Price Move Higher but Questions Increasing

Flat rolled prices moved higher over the past week based on SMU sources. Even so, there is much discussion as to what direction prices will go from here and we will have more on that subject later this week. We did receive comments from a large service center that our readers might find of interest as you think about the markets and what may happen next:

]]> (John Packard) Price Indices Tue, 21 Mar 2017 16:27:55 -0400
HARDI Wholesalers Worried About Disconnect Between Mill & Downstream Pricing

Demand for HVAC products was coined as being “good” or “very good” by the wholesalers who participated in the monthly HARDI galvanized steel conference call. The wholesalers who spoke on the call earlier today reported strong first quarter sales for their full product line but a few complained of lower steel sales compared to year ago levels.

Over the past five weeks since the last conference call, there have been two price increase announcements on flat rolled steel totaling $60 per ton and an increase in the zinc coating extras charged by the galvanizing mills.

The HARDI wholesalers were concerned about the base price increases coupled with changes in the coating extras which is hitting their customers doubly hard. They reported having difficulties moving the needle and convincing their customers (who are HVAC mechanical contractors) of the need to pay higher prices. They attributed that resistance on full inventories at the galvanized service centers many of whom have been willing to sell steel based on “floor cost” versus replacement cost.

The discussion about competition and competitive pressures from “non-traditional” suppliers to the HVAC markets had been relatively muted over the past few months. The wholesalers at that time were reporting not seeing as many non-traditional competitors in the markets with the assumption being made that inventories were tight or there was a concerted effort to sell at, or close to replacement prices. This changed in today’s discussion as every wholesaler who spoke on the call brought up the subject of lower margins and lost sales to these non-traditional steel service center competitors.

]]> (John Packard) HARDI Tue, 21 Mar 2017 15:22:58 -0400
March Imports Trending Over 3 Million Tons

The U.S. Department of Commerce released March license data this afternoon that shows foreign steel imports trending toward a 3.5 million net ton month. SMU does not believe the month will come in at that level when all is said and done, but it appears it will be the first month to reach or exceed 3 million tons since August 2016. Last March the U.S. imported a total of 2.6 million tons. The data just released shows import licenses totaling 2,384,400 net tons through the 21st of March.

]]> (John Packard) Imports Tue, 21 Mar 2017 13:29:08 -0400
Weekly Raw Steel Production Dips After Last Week's High

For the week ending March 18, 2017, the American Iron & Steel Institute (AISI) estimated the U.S. steel industry produced 1,747,000 net tons of raw steel, a 2.5 percent decrease over the previous week but a 3.7 percent increase over the revised rate from the same week one year ago. The estimated capacity utilization rate for steel production is 73.7 percent, down from 75.6 percent last week but up from 72.1 percent this time last year.

]]> (Brett Linton) Weekly Raw Steel Production Tue, 21 Mar 2017 12:01:54 -0400
Shipping Season Open on the Great Lakes

The shipping season opened on the Great Lakes this month. In general, freight shipments within the U.S. are moving without complications in March. Rate increases have been noted for most seaborne freight with the Baltic Dry Index approaching highs last seen in November 2016.

]]> (Sandy Williams) Shipping and Logistics Tue, 21 Mar 2017 11:00:12 -0400
US Vehicle Sales and NAFTA Vehicle Production through February 2017

The unseasonably warm weather in February resulted in vehicle sales being stronger than expected. On a seasonally adjusted annual basis, sales were 17.58 million units. Truck sales continued to capture market share as gas prices remained steady and incentive spending remained high. Moody’s expect auto sales to settle in at about 16.5 million units later this year or early next year. Figure 1 shows auto and light truck sales since January 2004.

]]> (Peter Wright) Automotive Tue, 21 Mar 2017 10:17:28 -0400
Steel Dynamics Expecting Stronger Q1

Steel Dynamics expects a meaningful increase in first quarter profits. Earnings per diluted share are expected to be in the range of $0.77 to $0.81 compared to $0.08 per diluted share in Q4 2016 and $0.26 per diluted share in Q1 2016.

In first quarter guidance comments, SDI attributed stronger results to higher shipments and metal spread expansion. Higher average steel prices in Q1 are expected to offset increased ferrous scrap costs.

]]> (Sandy Williams) Steel Dynamics Mon, 20 Mar 2017 17:26:36 -0400
Final Thoughts

Galvanized steel buyers need to continue to watch LME zinc pricing as there are reports out there suggesting higher zinc prices as 2017 progresses and into 2018. This will be one of the subjects touched on during our 7th SMU Steel Summit Conference at the end of August. With the mills just having announced new extras my expectation is we are probably "safe" for at least three months. But, if you start to see zinc trading above $1.30 and as high as $1.40 per pound then be prepared for more changes.

]]> (John Packard) Final Thoughts Mon, 20 Mar 2017 08:00:00 -0400
SMU Steel Summit Conference 2017 Speakers to Date

We continue to reach out to the most qualified speakers we can find on a wide range of topics that we feel will provide value to our SMU Steel Summit Conference attendees. This will be our 7th Steel Summit Conference and we are burning the midnight oil as we firm up our agenda and speakers.

Steel Market Update (SMU) tries to vary our conference agendas from year to year based on what is happening with the economy, steel using and producing industries as well as those who distribute steel both domestic and foreign. Over the past couple of years, politics has become a big issue for the steel industry and it is a subject that cannot be ignored.

We would like to share the speakers we have confirmed to date and to advise those interested in attending that there are a few more segments where speakers are “to be determined,” but we have invitations out there and we will advise as those are resolved.

]]> (John Packard) SMU Steel Summit Conference Sun, 19 Mar 2017 18:59:31 -0400
Steel Mill Lead Times: Watching Changes Closely

Steel mill lead times are one of the key indicators of future direction of steel prices. Steel buyers must be aware of the amount of time it takes a supplier to produce and ship a new order. Lead times and balancing inventories go hand in hand. When lead times shrink, buyers can pull back on ordering steel. However, when lead times move out (extend) steel buyers have to increase purchases to make sure their company does not run out of product.

There are two ways to look at mill lead times. A buyer’s primary focus is on the suppliers being used or considered. They would review the lead times sheets (or verbal promises made by their salesperson) sent to them by their suppliers. The second way is to review the industry average which is produced by Steel Market Update during our flat rolled steel market trends analysis which is produced twice per month.

We last finished a market trends analysis on the 10th of March. At that time, we saw hot rolled averaging 4.38 weeks, cold rolled 6.53 weeks, galvanized 6.86 weeks and Galvalume 6.93 weeks. As we look at the graph produced at that time we found lead times as being the same or slightly lower than year ago levels. One year ago lead times were surging and prices were on the move (albeit from very low levels) before peaking during the first week of June at $635 per ton (last week SMU average on HRC was $645 per ton).

]]> (John Packard) SMU Mill Lead Times Sun, 19 Mar 2017 16:38:43 -0400
US DOC Asks for Public Comment on Buy American Memorandum

Trade attorney Lewis Leibowitz asked Steel Market Update if he could comment on the recent request for comments on the Buy American rules suggested by President Trump on private projects that require government approval. The U.S. Department of Commerce was charged with telling the President what could be done under current law. Here is the full article (including the expanded version of the headline) produced by Mr. Leibowitz:

Commerce Department Request for Public Comment on President’s Buy American Memorandum for Oil and Gas Pipelines
by Lewis Leibowitz
March 19, 2017

Last week, the Commerce Department asked for public comments regarding whether American oil and gas pipelines must be made with American-produced pipe and steel.  As the Steel Market Update previously reported, Commerce must give President Trump an answer to his January memorandum directing the Commerce Department to tell him what could be done under current law to require pipe used in American oil and gas pipelines to be made in the United States.

The two most recently approved pipelines, Dakota Access and Keystone XL, will probably not be required to use American steel, because the pipes and other equipment were purchased long ago.  Trump officials have admitted that it would be unfair in the extreme to require these companies to throw away pipe they already bought and buy new, more expensive pipe to finish their projects.  There is no official pronouncement on these two new pipelines; but the President’s deputy Press Secretary, Sarah Sanders, said the Executive Order is “specific to new pipelines or those that are being repaired.”  Because the Dakota and Keystone pipelines are neither new nor under repair, the Buy American requirement is not applicable, she said.

The President’s Buy America directive had a clear objective: to find a way to ensure that all American pipelines will be made with American-produced steel pipe, made from steel that was itself produced in America, “to the maximum extent possible” and “to the extent permitted by law.”  If, as may well be the case, current law does not allow the Administration to require American pipe for pipelines built by private companies, it is not clear what the President’s next move might be.

]]> (Lewis Leibowitz) Pipe & Tube Sun, 19 Mar 2017 15:53:47 -0400
SMU Survey Results: Fickle Steel Buyers Change Their Minds

Over the course of a few weeks, buyers and sellers of flat rolled steels changed their view of the direction of flat rolled steel price direction. In the middle of February only 14 percent of those responding to our flat rolled steel market trends analysis survey reported prices would move higher with the majority (52 percent) believing steel prices would remain where they were and about one third (34 percent) believing prices would move lower. We got a strong push on scrap prices which prompted the domestic mills to push prices higher. The price announcements should not have come as a surprise as mills like Nucor were advising their customers of another round of increases should scrap move more than $30-$40 per gross ton. Prime grades ended up moving higher by about $65 per gross ton (+/- depending on regional market factors).

]]> (John Packard) SMU Steel Survey Results Sun, 19 Mar 2017 15:48:06 -0400
Comparison Price Indices: Changes in Galvanized & Plate

You will notice a couple of changes in our Comparison Price Indices (CPI) report. The U.S. and Canadian steel mills have adjusted their extras for placing zinc on the surface of steel (galvanized). One of the items referenced in the CPI is .060” G90 which prior to this week was based on a $3.45/cwt ($69 per ton) extra. This was based on U.S. Steel galvanized coating extras which many mills tend to follow. The extras changed to $3.90/cwt ($78 per ton) effective with April 2017 orders and we are reflecting that change in the galvanized number shown in the CPI table below.

A second change of note to our readers is we are beginning to provide a range and average for plate. We will provide our new plate pricing on Tuesday evenings with our hot rolled, cold rolled, galvanized and Galvalume indices. The plate prices referenced below and in our Tuesday evening newsletter issue will be FOB Mill, east of the Rocky Mountains.

This week flat rolled and plate prices rose once again as the domestic mills tighten their spot pricing positions.

]]> (John Packard) Price Indices Sun, 19 Mar 2017 13:51:24 -0400
SMU Survey Results: Concerns Growing About Supply - Especially Coated Steels

When we conducted our flat rolled market trends analysis during the middle of February we found 20 percent of our respondents had concerns regarding supply during calendar year 2017. The majority of respondents (63 percent) expressed no concerns about supply. As we move forward to last week the majority is still expressing no concerns about supply (62 percent) but the percentage of those having concerns has grown to 30 percent of our respondents. We will need to watch and see if there is cause for this concern either by extending lead times, shrinking imports or rapidly improving demand.

]]> (John Packard) SMU Steel Survey Results Sun, 19 Mar 2017 13:22:10 -0400
Producer Price Indexes of Sheet Steel, Aluminum, Plastic and Transportation

Last Tuesday the Bureau of Labor Statistics (BLS) released its series of producer price indexes (PPI), for more than 10,000 goods and materials. For an explanation of this program see the end of this piece. The latest release reported results through February. We run this analysis every three or four months to provide information for subscribers of any changes in the competitive position of steel against other materials and rail vs. truck transportation. The PPI data are helpful in monitoring the price direction of steel and steel products against competing materials and products.

]]> (Peter Wright) Economy Sun, 19 Mar 2017 13:03:51 -0400
More Challenges for Essar Steel Algoma

More complications for Essar Steel Algoma as it nears a deadline to emerge from the CCAA protection. Union disputes and lawsuits continue to frustrate the process.

Labor Negotiations

Union workers were reportedly outraged by a mandate by Superior Court Justice Frank Newbould requiring parties involved in the collective agreement negotiations to keep a lid on mediation discussions.

]]> (Sandy Williams) Essar Steel Algoma Sat, 18 Mar 2017 18:43:18 -0400
Active Gas & Oil Rig Counts in March

According to Baker Hughes data from March 17, 2017, the U.S rig count for the week was 789 rigs exploring for or developing oil or natural gas. This is up 21 rigs compared to last week, with oil rigs up 14 to 631 rigs, gas rigs up 6 to 157 rigs, and miscellaneous rigs up 1 to 1 rig. Compared to this time last year, the 789 count is up 313 rigs, with oil rigs up 244, gas rigs up 68, and miscellaneous rigs up 1.

]]> (Brett Linton) Energy Fri, 17 Mar 2017 15:24:11 -0400
Final Thoughts

We will begin a new analysis of the flat rolled steel market on Monday with our invitations set to go out at 8 AM on Monday morning. If you receive an invitation please take a moment to click on the link/button contained in the message which will take you to which hosts our questionnaire. If you would like to be added to our invitee list please send me your name, email address, position and phone number. Please send it to:

]]> (John Packard) Final Thoughts Fri, 17 Mar 2017 08:00:00 -0400
Trump Announces Rollback of CAFE Standards

President Trump announced on Wednesday the rollback of fuel economy standards that were established by executive action near the end of the Obama administration.

Speaking to automotive executives and workers in Detroit, MI, Trump said, “Today, I am announcing that we are going to cancel that executive action. We are going to restore the originally scheduled mid-term review, and we are going to ensure that any regulations we have protect and defend your jobs, your factories.”

]]> (Sandy Williams) Automotive Thu, 16 Mar 2017 17:11:42 -0400
U.S. Steel Service Center Inventories Hit Bottom, Slowly Bouncing Back

Steel service centers in the United States have seen inventories reach a bottom after years of decline and appear to be slowly bouncing back (see graphic below). This appears to be true for all steel products combined as well as flat rolled, plate, and pipe & tube segments.

During the month of February 2017, U.S. steel service centers shipped a total of 3,126,500 tons of all steel products. This is 1.7 percent below last February and has to be considered a disappointment after the 9.4 percent growth seen the prior month.

Distributors shipped 156,300 tons per day which is much better than the 151,400 tons per day reported by the Metal Service Center Institute (MSCI) last year.

]]> (John Packard) MSCI Thu, 16 Mar 2017 16:47:08 -0400
Hot Rolled Futures: Futures Curve Remains Backwardated

The following article on the hot rolled coil (HRC) steel and financial futures markets was written by Jack Marshall of Crunch Risk LLC. Here is how Jack saw trading over the past week:

]]> (Jack Marshall) Hot Rolled Futures Thu, 16 Mar 2017 15:05:18 -0400
Canadian Distributor Flat Rolled Shipments/Inventories in February

Total Canadian steel shipments for all products in February were 365,700 net tons, a decrease of 11.2 percent from the month before and a decrease of 7.8 percent from February 2017. Do keep in mind that total January shipments were at an 18 month high. Total steel inventories at the end of the month stood at 1,171,400 tons, down 0.6 percent from last month and down 3.3 percent from the same month one year ago.

]]> (Brett Linton) MSCI Thu, 16 Mar 2017 14:43:07 -0400
Analysis of Foreign vs. Domestic Hot Rolled Coil Prices

The following calculation is used by Steel Market Update to identify the theoretical spread between foreign hot rolled steel export prices and domestic (USA) hot rolled coil prices. We want our readers to note that we have made a decision to replace SteelBenchmarker as the primary data provider of foreign hot rolled coil prices. We were finding the comparison between Platts European (Ruhr) number (as well as other Platts foreign export numbers) to be much closer to the actual quotes we are seeing on HRC out of various steel trading companies than using the SteelBenchmarker "world export" number we did previously. We will continue to use SteelBenchmarker as a secondary number provider which we will note further down in this article.

Our primary numbers for this exercise are from Platts, with a comparison of European HRC (FOB Ruhr), Turkey HRC export pricing (FOB Turkey), and Chinese HRC export prices (FOB Chinese port). Be aware that Chinese hot rolled is not available to the U.S. market so the Chinese spread is nothing more than an exercise of what if...

]]> (Brett Linton) International Steel Prices Thu, 16 Mar 2017 13:42:56 -0400
Updated Galvanized G90 Mill Coating Extras Comparison

Steel Market Update received information from the last couple of mills missing from our galvanized coating extras analysis and we wanted to make sure that everyone gets to see the finished product. This analysis is also on our website and can be found under the Resources tab (Resources > Steel Mills > Galvanized > Coating Extras Comparison).

]]> (John Packard) Galvanized Thu, 16 Mar 2017 12:57:35 -0400
Next Steel 101 in Ontario, California with tour of California Steel Industries

Steel Market Update is pleased to announce the location and dates for our next Steel 101: Introduction to Steel Making & Market Fundamentals workshop. We will be taking our workshop to Ontario, California on June 22 & 23, 2017 and we will tour California Steel Industries as part of our program.

We want to take a moment and thank CSI President & CEO Marcelo Botelho and Executive Vice President Ricardo Bernardes for the opportunity to have our attendees visit and tour the CSI steel mill.

]]> (John Packard) Steel 101: Introduction to Steelmaking & Market Fundamentals Thu, 16 Mar 2017 11:54:27 -0400
Nucor Guides to Higher Earnings for Q1

Nucor Corporation increased its earnings guidance for first quarter 2017 to $1.10-$1.15 per diluted share, more than double its consolidated net earnings of $0.50 per diluted share in fourth quarter and well above analyst consensus of $0.69 EPS.

Increased profitability is due to stronger performance of Nucor’s sheet and plate mills. Nucor said in its earnings guidance that it is encouraged by the renewed demand in nonresidential construction and energy markets. Automotive remains strong, noted Nucor, while the heavy equipment market remains weak.

]]> (Sandy Williams) Nucor Thu, 16 Mar 2017 10:35:20 -0400
Oil and Gas Prices and Rotary Rig Counts through March 2017

The prices of oil and natural gas drive the consumption of oil country tubular goods (OCTG) and related steel products. The energy markets represent a large portion of the hot rolled coil used to make welded tubular goods as well as equipment used to drill and pump oil and natural gas.

]]> (Peter Wright) Energy Wed, 15 Mar 2017 15:06:45 -0400
March Empire State Survey Shows Steady Expansion for Manufacturing

The March Empire State Manufacturing Survey showed business continuing to expand at a sound pace in New York State. The general business index registered 16.4, a decline of two points from its two year high last month. The new orders index gained 7.8 points, climbing to 21.3 for its highest reading since 2009.

]]> (Sandy Williams) Federal Reserve District Indexes Wed, 15 Mar 2017 13:00:32 -0400
Single Family Housing Starts Make Gains in February

Housing starts in February jumped 3 percent from January to a seasonally adjusted annual rate of 1,288,000. Single family starts gained 6.5 percent to a rate of 872,000 for its highest level in nearly ten years. Housing starts for buildings of five units or more were down 7.7 percent to 396,000.

]]> (Sandy Williams) Housing Wed, 15 Mar 2017 11:42:54 -0400
SMU MoMo Index Continues to Trek Back Into Positive Territory

The Steel Market Update Steel Price Momentum Index (MoMo) for hot rolled steel in the United States remained in positive territory for the third consecutive week after briefly dipping into negative territory three weeks ago. MoMo is a trailing indicator and shows the relationship between the current U.S. hot rolled coil price movements against the previous 12-week average price as a percentage. A positive MoMo index indicates hot rolled steel prices are moving in an upward direction compared to the previous 12 week period, while a negative index number indicates a downward direction in prices.

MoMo should not be confused with the SMU Price Momentum Indicator which is a forward looking indicator. The SMU Price Momentum Indicator is currently at Higher indicating that steel prices are expected to rise over the next 30 days.

]]> (Brett Linton) SMU Momentum (MoMo) Model Wed, 15 Mar 2017 10:16:35 -0400
Final Thoughts

A quick note about our galvanized index: Effective today we are adjusting the coating extra being used on our .060” G90 galvanized benchmark items from $69 per ton to $78 per ton. We are continuing to use the US Steel extra for guidance. So, the change that you see in our G90 item is a reflection of the new coating extras and not a jump in the base prices (which, by the way, remain the same as what we reported on Tuesday evening). I did check with CRU and they are also using the $78 per ton coating extra.

I receive lead times for a number of steel mills during the course of the week. I am seeing coated lead times out into late April and into May. In some cases we are even seeing some late May lead times for specialty products. SDI is on an Inquire basis for many of their items in both Columbus and Butler (note: we are talking about “spot” lead times and not those related to their contract customers where the mill most likely has blocked tonnage or production space).

On Monday, we will begin our mid-March flat rolled steel market trends analysis (a long-winded way of saying survey).  If you have not been invited to participate and you would like to, please contact me with your name, email address, phone number, company and position.

You may have noticed I have started collecting price ranges and coming up with an average on plate products. Our range on Tuesday was $720-$770 per ton with an average of $745 per ton. I would like to expand our plate coverage so I am looking for plate people to participate in our surveys and to identify themselves so I can communicate with you on a regular basis. We never attribute company names or individual identities in our publication or website (or outside of our company).

If you have any questions or would like to be added to our survey invitation, please contact me at

]]> (John Packard) Final Thoughts Wed, 15 Mar 2017 08:00:00 -0400
SMU Price Ranges & Indices: Reacting to Increase Announcements

Flat rolled steel prices are reacting to the two $30 per ton price announcements made by the domestic steel mills over the past month. The culprit (or scapegoat depending on your perspective) has been the rapid rise in ferrous scrap prices which are the primary inputs for electric arc furnace (EAF) steel mills and is also used in the integrated steelmaking process.

Prices for hot rolled, cold rolled and coated products are higher than week ago levels. However, we want to point out that our index average is not a weighted average. If it were, the average would be higher than what we are showing in tonight’s report.

Steel buyers reported most mills as offering hot rolled at, or slightly above, $660 per ton ($33.00/cwt). That is at the high end of the range that we are publishing this evening and buyers should be aware that our number could adjust higher later this week depending on the data collected as the week continues.

Cold rolled and coated product base prices have been consistently pointing toward $860 per ton on cold rolled and trending even higher on coated products.

Even so, there were a number of comments made to Steel Market Update over the course of the day (Tuesday, March 14th) regarding stability in lead times (although SDI had put a number of their items on an “inquire” basis at both their Butler and Columbus mill – buyers were still not concerned).

When asked about lead-times one large service center told us earlier today, “Difficult to say on lead-times. CSI just closed April yesterday, which is only 6 weeks, which is “normal” for them. Last year at this time I think they were in June or later, as a comparison. My sense is that, so far, lead-times overall have not measurably extended as a result of the price increases. Perhaps this changes but I’m having doubts that they will, as we move into May and later lead-times. The question becomes, who would want to “load up” at these prices, which would be the normal reason lead-times would extend?”

]]> (John Packard) Price Indices Tue, 14 Mar 2017 16:54:53 -0400
Robert Lighthizer at Hearing for US Trade Rep Today

Robert Lighthizer faces the Senate confirmation hearings today without the congressional waiver needed to take the post of U.S. Trade Representative.

A waiver is required because of a provision prohibiting individuals who worked on behalf of foreign governments in trade negotiations with the United States from becoming the U.S. trade representative. Lighthizer’s work on behalf of Brazil and a government controlled entity in China put him in this category.

]]> (Sandy Williams) Economy Tue, 14 Mar 2017 15:33:42 -0400
Ryerson Sees Opportunity for Steel Prices to Go Higher Over Next One to Two Quarters

Ryerson Holdings saw a challenging year in 2016 with demand contracting but pricing improving. CEO Edward Lehner noted, “Carbon steel prices recovered from decade lows at the end of 2015, peaked in June of 2016, and deflated again in October of 2016 before starting in upward trajectory that has continued into the first quarter of 2017. Through 2016, we also saw double-digit underlying commodity price improvements in nickel and aluminum which continued into early 2017, until very recently seen some retracement.”

]]> (Sandy Williams) Service Centers/Distributors/Wholesalers Tue, 14 Mar 2017 14:57:09 -0400
Dr. Kuehl: Does Business Have a Friend in the White House?

The election of President Donald Trump uncovered a wound that has been festering for many years with both Democrats and Republicans in the White House.

At the recent Fabricators & Manufacturers Association, International (FMA) annual meeting, Dr. Chris Kuehl of Armada Corporate Intelligence had this to say about the Obama Administration, “The frustration was we had an administration that was at best ambivalent to business to at worst downright hostile.” He pointed out that the Bush Administration before Obama was not much better.

The question we need to ask ourselves now is, as a country “how patient are we?” The United States has always been a nation of instant gratification and that is not how politics and governance works.

]]> (John Packard) Economy Tue, 14 Mar 2017 13:08:13 -0400
AIIS: January 2017 Steel Exports

US steel exports rose in January according to the latest data analysis by the American Institute for International Steel. The press release from AIIS follows:

Falls Church, VA. March 13, 2017. Steel exports started the year off strong, increasing 12.6 percent from December to January.

]]> (Brett Linton) Exports Tue, 14 Mar 2017 12:37:33 -0400
January Apparent Steel Supply Rises to 1.5 Year High

According to the latest data released from the U.S. Department of Commerce and the American Iron and Steel Institute, apparent steel supply for the month of January 2017 was 9,236,140 net tons. Apparent steel supply is calculated by adding domestic steel shipments and finished US steel imports, then subtracting total US steel exports.

]]> (Brett Linton) Apparent Steel Supply Tue, 14 Mar 2017 11:14:41 -0400
Weekly Raw Steel Production Jumps to 2+ Year High

For the week ending March 11, 2017, the American Iron & Steel Institute (AISI) estimated the U.S. steel industry produced 1,791,000 net tons of raw steel, a 1.8 percent increase over the previous week and a 6.3 percent increase over the revised rate from the same week one year ago. The estimated capacity utilization rate for steel production is 75.6 percent, up from 74.3 percent last week and up from 72.1 percent this time last year.

]]> (Brett Linton) Weekly Raw Steel Production Tue, 14 Mar 2017 10:25:43 -0400
Turkey Challenges U.S. OCTG CVD Duties

Turkey has filed a complaint with the World Trade Organization against U.S. countervailing duties placed on imports of pipe and tube products. Turkey requested the WTO initiate dispute consultation with the United States alleging the U.S. determination and imposition of duties was inconsistent with the WTO’s Agreement on Subsidies and Countevailing Measures (SCM Agreement) and the General Agreement on Tariffs and Trade (GATT) 1994.

]]> (Sandy Williams) Trade Cases Tue, 14 Mar 2017 09:25:43 -0400
SMU Steel Summit Conference: The Familiar Compliments The New

Steel Market Update has been working diligently on the agenda and confirming quality speakers for this year’s SMU Steel Summit Conference which will be held in Atlanta, Georgia on August 28-30, 2017. As we go through the selection process we try to work with a formula that includes tried and true speakers mixed in with brand new agenda items and speakers. Our goal is to offer quality content to all segments of the industry which includes manufacturing companies, steel distributors, steel mills, steel trading companies, toll processors as well as suppliers to the industry including transportation, storage, equipment, commodities and financial.

One of the strengths of our steel conference is each one is different from the year before yet, there are core agenda items that our attendees have come to rely upon. These include strong economic and steel price forecasts. Over the past three years Dr. Alan Beaulieu of ITR Economics has been a key speaker who provides exceptional information on business trends (and where we are in the business cycle) and what companies should be planning for over the coming months.

]]> (John Packard) SMU Steel Summit Conference Mon, 13 Mar 2017 16:28:41 -0400
January Heating and Cooling Equipment Shipment Data

Below is the latest data release issued by the the Air-Conditioning, Heating, and Refrigeration Institute (AHRI) regarding residential and commercial heating and cooling equipment shipments through January 2017. You may read the press release on their website here.

]]> (Brett Linton) Appliances Mon, 13 Mar 2017 13:28:17 -0400
Final Thoughts

We are five and a half months (5.5) or 166 days away from the opening of our 7th SMU Steel Summit Conference in Atlanta, Georgia. We went over 100 registrations today and we expect 500+ registrations when we get into the month of August. There are four companies that we know of that will be registering 10 or more people from various divisions. If your company is planning on registering multiple people but not all at the same time, please contact our offices and we will get you a special code so that everyone is charged the correct amount (even if they register one at a time) when using the website. You are also welcome to contact our office and request an invoice or to register and pay through one of our offices. You can reach us at: or at 772-932-7538 or 706-216-2140.

]]> (John Packard) Final Thoughts Mon, 13 Mar 2017 08:00:00 -0400
SMU Flat Rolled Steel Market Trends Analysis: Demand

Twice per month, Steel Market Update conducts a detailed analysis of the trends impacting the flat rolled steel markets. We issue over 670 invitations to people associated with manufacturing, distribution, steel mills, trading companies and toll processors to assist us in our analysis.

We finished conducting our early March research on Thursday of this past week. We would like to share with our Executive members some of what our Premium level members get to see shortly after we finish crunching the numbers and putting them into a historical context in a Power Point presentation.

Last week 42 percent of our respondents were distributors/wholesalers while 40 percent were involved in direct manufacturing. Another 7 percent were steel trading companies and the survey was rounded out with 6 percent from steel mills and 5 percent from the toll processing portion of the industry. SMU intentionally targets manufacturing and distribution to be the two biggest segments of our survey. We feel they will provide the most information and combined they provide a balanced picture which can then be complimented by the trading companies, steel mills and toll processors.


Demand is one of the key focal points for any of our market trends surveys as we strive to get a better handle on the market as a whole and then on individual market segments within the industry. Last week 37 percent of our respondents reported demand for their products as improving, 59 percent reported demand as remaining the same and only 4 percent pegged demand as in decline. That 4 percent is the lowest level measured since the 1 percent recorded during the first week of April 2016. The 37 percent reporting demand as improving is 10 percentage points better than what we saw one year ago.

]]> (John Packard) SMU Steel Survey Results Sun, 12 Mar 2017 16:00:44 -0400
Comparison Price Indices: Numbers Start Moving Higher

Flat rolled prices have begun to move higher based on the most recent analysis of the steel price indexes from last week that are followed by Steel Market Update (SMU).

Benchmark hot rolled prices were up $10 per ton on our own index while Platts took their average up $7.50 per ton by the end of this past week. SMU has our average at $635 per ton while Platts came in with a $637.50 average.

]]> (John Packard) Price Indices Sun, 12 Mar 2017 14:43:21 -0400
Galvanized G90 Mill Coating Extras Comparison 3/12/2017

Most of the flat rolled steel mills have made changes to their zinc coating extras to either be effective immediately or by the beginning of April 2017. The new extras replaced those that became effective November 2016 through January 1, 2017. The extras were raised due to the increasing cost associated with zinc purchases needed to coat galvanized steels.

As you can see not all of the extras are the same and this needs to be taken into consideration when deciding which mill has the lowest transaction pricing for your galvanized steel purchases.

]]> (John Packard) Galvanized Sun, 12 Mar 2017 13:46:08 -0400
Final January Foreign Steel Imports 2.8 Million Tons

Total foreign steel imports for the month of January were announced this past week by the U.S. Department of Commerce. Imports totaled 2,814,081 net tons or about 120,000 tons more than December and slightly above the twelve month and three month moving averages. At the same time license data was updated for February imports and it appears February will be approximately 100,000 net tons lower than January levels.

Below is a portion of a press release from the American Institute for International Steel (AIIS) about the January tonnage from their perspective:

Falls Church, VA. March 10, 2017. Steel imports started 2017 with a small increase, growing 3.1 percent from December’s total to reach 2.77 million net tons.

January’s imports were 7.4 percent higher than the January 2016 total.

]]> (John Packard) Imports Sun, 12 Mar 2017 12:19:45 -0400
SMU Welcomes Steel Summit Conference 2017 Sponsors

Steel Market Update (SMU) is pleased to announce that we have sold out the sponsor positions available for our 2017 SMU Steel Summit Conference which will be held in Atlanta, Georgia on August 28, 29 & 30th. We would like to take a moment to thank the companies who are helping to make our 2017 Conference a world-class event. If you happen to be speaking with one of the below companies thank them for helping keep our costs the lowest in the industry for a major steel conference:

]]> (John Packard) SMU Steel Summit Conference Sun, 12 Mar 2017 10:04:17 -0400
Stelco Sees Light at End of Tunnel

Stelco, the former US Steel Canada, took another procedural step on March 10 to facilitate the sale of the company to Bedrock Industries.

Stelco filed its final Plan of Compromise, Arrangement and Reorganization with the Ontario Superior Court that addresses restructuring Stelco’s liabilities and the transaction with Bedrock. The plan “would result in the Company becoming a strong, and competitive participant in the North American steel industry,” said a press release from Stelco.

]]> (Sandy Williams) Stelco Sat, 11 Mar 2017 15:53:56 -0500
Quench Facility Closed Permanently at Lorain Tubular

US Steel announced it will permanently close the No. 6 Quench and Temper Mill at Lorain Tubular Operations. The line has been idle since March 2015 and will be permanently shut down by June 8.

“This proposed action is a strategic decision for the company after considering a number of factors, including challenging market conditions for tubular products and unfairly traded imports,” said U.S. Steel spokeswoman Erin DiPietro.

]]> (Sandy Williams) U.S. Steel Fri, 10 Mar 2017 13:35:07 -0500
Final Thoughts

The scrap market created a lot of buzz over the past two months that resulted in, so far, two domestic steel mill price increases totaling $60 per ton ($3.00/cwt). I got a note over the weekend from one of the national companies who told me about the scrap markets, "There is a sense the market is overextended at this point, especially on prime grades.  I'm not sure we'll necessarily see a significant pullback in April given ore-based metallics prices and robust demand, but a pause and/or slight pullback would not be surprising."

The scrap markets ended up as follows:

]]> (John Packard) Final Thoughts Fri, 10 Mar 2017 08:00:00 -0500
Nucor, NLMK USA & ArcelorMittal Hike Flat Rolled Prices by $30

On Wednesday, Nucor Sheet Group announced a $30 per ton ($1.50/cwt) price increase on hot rolled, cold rolled and galvanized steels. The base price increase was to take effect immediately and was the second $30 per ton increase announced since the beginning of the New Year.

Since October 21, 2016 Nucor has made six price increase announcements on flat rolled steel totaling $210 per ton on hot rolled and $200 per ton on cold rolled and coated products.

]]> (John Packard) Steel Prices (North America) Thu, 09 Mar 2017 15:21:42 -0500
SMU Steel Buyers Sentiment Index Sets New Highs

Optimism reigns supreme within the steel community and those responsible for buying and selling flat rolled steel products. The SMU Steel Buyers Sentiment Index set new record highs for both Current and Future Sentiment indices.

]]> (John Packard) SMU Steel Buyers Sentiment Index Thu, 09 Mar 2017 15:14:06 -0500
Flat, Long, and Semi-Finished Imports through February 2017

Licensed data for February was reported by the Steel Import Monitoring System of the US Commerce Department on March 7th. An explanation of the methodology that we at SMU use to analyze the trade data is given at the end of this piece. All volumes in this analysis are reported in short tons. Total rolled product licensed imports in the single month of February were 1,990,476 tons with a three month moving average (3MMA) of 2,098,296 tons. We prefer not to dwell on single months results because of the extreme variability that can occur in individual products. In the comments below we use only three month moving averages because this presents a more representative picture.

]]> (Peter Wright) Imports Thu, 09 Mar 2017 14:20:30 -0500
Circumvention: What Is the Idea?

The following article was written by trade attorney Lewis Leibowitz for Steel Market Update readers:

“Circumvention” is a loaded word suggesting evasion of responsibility or getting around something.  It smacks of dishonesty, immorality, subterfuge.  

Frequently, loaded words are designed to create just such an impression.  When you hear words like the “People’s Democratic Republic of Korea,” it implies freedom, democracy and the rule of law.  Be careful of the impressions words create.  The North Koreans might be trying to sell you something that is not what it seems.

“Circumvention” under the antidumping and countervailing duty (AD/CVD) laws refers to a finding that the Department of Commerce makes that an imported product should be covered within a case even though it does not strictly fit within the scope of the order.  In a recent case, Commerce has been asked to rule that cold rolled and corrosion resistant steel produced in Vietnam from Chinese hot rolled substrate should be considered Chinese because the substrate was made there.  The domestic petitioners claim that Vietnam does not have its own hot rolling mills, so Vietnamese producers use Chinese hot rolled material to process into cold rolled or corrosion resistant material and ship it to the United States.  This is an outlet for Chinese steel that the petitioners want to stop.  Whether this is a lawful result is very doubtful. 

]]> (Lewis Leibowitz) Trade Cases Thu, 09 Mar 2017 13:53:53 -0500
Steel Mill Lead Times: Essentially Unchanged from 2 Weeks Ago

Hot rolled average lead times remain extended at 4.38 weeks compared to the 3.79 weeks SMU was reporting one year ago.  Cold rolled, galvanized and Galvalume lead times were running close to or just below last year’s reported average.

Lead time is the average amount of time it takes for a new order of a product to be produced at a domestic steel mill. The lead time averages are based on the collective responses to our early March flat rolled steel survey made by manufacturers and service centers. The average lead time is not tied to any one mill and can vary so buyers need to be aware of the exact lead times being quoted on all products at each of the domestic mills by contacting their mill representative.

]]> (John Packard) SMU Mill Lead Times Thu, 09 Mar 2017 13:34:06 -0500
Steel Mills Less Willing to Negotiate Steel Prices

Flat rolled steel mills have become less enthusiastic about negotiating prices for new orders of hot rolled, cold rolled, galvanized and Galvalume steels. Based on the results of the flat rolled steel market trends analysis coming out of the survey we have been conducting over the past four days.

We found 33 percent of the respondents to our survey described steel mills as willing to negotiate hot rolled prices. This is a significant move compared to the 79 percent we reported based on our mid-February analysis.

]]> (John Packard) SMU Mill Negotiations Thu, 09 Mar 2017 13:14:06 -0500
Hot Rolled Futures: Highest Level Since 2014

The following article on the hot rolled coil (HRC) futures markets was written by David Feldstein. As the Flack Global Metals director of risk management, Dave is an active participant in the hot rolled coil (HRC) futures market and we believe he will provide insightful commentary and trading ideas to our readers. Besides writing Futures articles for Steel Market Update, Dave produces articles that our readers may find interesting under the heading "The Feldstein" on the Flack Global Markets website

]]> (Dave Feldstein) Hot Rolled Futures Thu, 09 Mar 2017 12:12:56 -0500
Court Rules on Algoma Oppression Case

Essar Steel Algoma’s oppression case against Essar Global received mixed results in a decision by Superior Court Judge Frank Newbould.

In a decision on Monday, Newbould agreed that the lease agreement made by Essar Global with the Port of Algoma (Portco) in 2014, was “unfairly prejudicial to, and unfairly disregarded, the interests of Algoma’s trade creditors, employees, pensioners and retirees.”

]]> (Sandy Williams) Essar Steel Algoma Wed, 08 Mar 2017 16:51:37 -0500
Dodge Momentum Index Shows Nonresidential Planning Increasing

The Dodge Momentum Index jumped 1.6 percent to 144.0 in February. The index, a measure of the initial planning for nonresidential building projects, made the gain from January due to an increase in institutional building activity.

]]> (Sandy Williams) Construction Wed, 08 Mar 2017 13:42:27 -0500
US Gross Domestic Product by Region and by State - Q3 2016

The Bureau of Economic Analysis (BEA) introduced a new data set for GDP by state and region in 2014 and backdated it to Q1 2005. This week the data was updated through Q3 2016. Even though we might consider this to be historically “old,” we think it’s worth reporting because it is a foundation for where we are now. The data is published quarterly and is reported in chained 2009 dollars seasonally adjusted. We at SMU analyze the data and report to our subscribers quarterly by region. Should anyone wish to see data and graphs for an individual state, we will supply on a one off basis. Table 1 show the growth of regional GDP in chained 2009 dollars quarter on quarter (these numbers are not annualized as is the case for published reports of the growth of national GDP.)

]]> (Peter Wright) Economy Wed, 08 Mar 2017 12:17:13 -0500
SMU MoMo Index Remains in Positive Territory

The Steel Market Update Steel Price Momentum Index (MoMo) for hot rolled steel in the United States remained in positive territory for the second consecutive week after briefly dipping into negative territory two weeks ago. MoMo is a trailing indicator and shows the relationship between the current U.S. hot rolled coil price movements against the previous 12-week average price as a percentage. A positive MoMo index indicates hot rolled steel prices are moving in an upward direction compared to the previous 12 week period, while a negative index number indicates a downward direction in prices.

MoMo should not be confused with the SMU Price Momentum Indicator which is a forward looking indicator. The SMU Price Momentum Indicator is currently at Higher indicating that steel prices are expected to rise over the next 30 days.

]]> (Brett Linton) SMU Momentum (MoMo) Model Wed, 08 Mar 2017 09:35:36 -0500
Final Thoughts

During one of the breaks from the FMA/ASD/Tolling Processing meetings I am attending in New Orleans, I met with the head of commercial for one of the domestic steel mills. We had an interesting conversation about the negativity in the market not being backed up by actions. He was telling me that a number of his customers are afraid of prices moving lower while at the same time they are telling him that they have record sales/shipments. He was of the opinion that many of his customers are short steel and could have some issues come May, June and July.

When I asked him about their pricing position after the increase announcements having been made by a few steel mills, I was told they were waiting for their sales people to return from a couple of conferences where they normally get indications of what to expect from their contract business. If the orders come back as strong as expected they will be aggressive with their spot pricing. However, over the next few days they may chose to sit and wait.

]]> (John Packard) Final Thoughts Wed, 08 Mar 2017 08:00:00 -0500
SMU Price Ranges & Indices: Firming and Waiting

Flat rolled steel prices firmed a little with benchmark hot rolled up $10 and cold rolled the same. Galvanized price average remained the same and Galvalume was up $5 per ton. We heard from a number of steel buyers that they were waiting to see what was going to happen with scrap prices (expectation was for higher scrap prices) and how the steel mills react to the new scrap numbers. Many buyers have told SMU that they are able to buy what they need, many are covered by contracts and those that do buy spot are not taking excessive positions. The market seems to be fairly priced and inventories seem to be balanced. We will watch what happens next as the expectation is for the domestic mills to go out for one more price increase...

]]> (John Packard) Price Indices Tue, 07 Mar 2017 16:54:50 -0500
Ferrous Scrap Prices Roar with Primes Up $50-$80

Flat rolled steel order books have been helping push ferrous scrap prices higher for March delivery to the domestic steel mills. Steelmakers have paid $50 to $80 per gross ton higher prices than February for prime grades such as busheling and bundles. Sheet mills pushed their buying prices in order to get the supply of prime grades needed. The addition of Big River Steel into the buying mixed, Nucor having issues with its Louisiana DRI facility and limited pig iron coming out of Brazil and Ukraine have all helped tighten the prime scrap markets.

Busheling prices in the northern USA range from $360 per gross ton to as high as $400 per gross ton.

Other grades of scrap have moved higher as well. Our sources are advising SMU that obsolete grades and shredded scrap have increased $35 to $50 per gross ton depending on location.

One of our Mid-Atlantic scrap sources told us pricing was stronger in the north, “Generally speaking cuts and shred are up $40 gross ton (GT).  $320-330gt and primes are up $60gt.  $380-400gtd in all northern markets.  Southern markets are happening now with increases of $20-30gt on cuts/shred and up $50-60 on primes. There are rumors of offers from US exporters into Turkey at the $320gtd range for shred  (up 25-28gt).” 

]]> (John Packard) Scrap Prices Tue, 07 Mar 2017 15:47:55 -0500
Scrap Prices Move Higher, Will Steel Prices Follow?

Scrap prices moved higher as scrap dealers and the domestic steel mills finished their March negotiations. With prime grades of scrap settling at about twice the $30 per gross ton originally thought a couple weeks ago, the sheet mills have got a decision to make. Do they take prices up or have they raised prices high enough for now?

The last flat rolled price increase was a $30 per ton announcement made by the Nucor Sheet Group on February 20, 2017. A few days later ArcelorMittal USA advised their minimum base prices would be $640 per ton on hot rolled and $850 per ton on cold rolled and coated steels.

]]> (John Packard) Steel Prices (North America) Tue, 07 Mar 2017 15:08:23 -0500
Weekly Raw Steel Production Steady at 1.76 Million Tons

For the week ending March 4, 2017, the American Iron & Steel Institute (AISI) estimated the U.S. steel industry produced 1,760,000 net tons of raw steel, a 0.6 percent decrease over the previous week but a 3.8 percent increase over the revised rate from the same week one year ago. The estimated capacity utilization rate for steel production is 74.3 percent, down from 74.7 percent last week but up from 72.5 percent this time last year.

]]> (Brett Linton) Weekly Raw Steel Production Tue, 07 Mar 2017 14:33:58 -0500
Behlen, BTD Mfg and Zekelman Industries CEO’s to Speak at SMU Steel Summit Conference

Steel Market Update (SMU) is adding a new dimension to this year’s SMU Steel Summit Conference which will be held in Atlanta on August 28-30, 2017. This year we are adding a manufacturing segment to provide a more depth to our overall program.

Our manufacturing panel will consist of Paul Ginter, President of BTD Manufacturing; Philip Raimondo, President & CEO of Behlen Manufacturing Company and Barry Zekelman, Chairman & CEO of Zekelman Industries. We expect to have a free-wheeling discussion on topics of importance to manufacturers regarding trade, tariffs and the domestic and international steel industries impact on U.S. based manufacturing companies.

The CEO’s selected represent a wide swath of manufactured products.

Behlen Manufacturing is a world-class steel fabricator with three diverse business units: 1) leading manufacturer of farm and ranch equipment, 2) building systems for various applications: agricultural, churches, schools, offices, factory warehouses, sports facilities and more, 3) commercial grain systems and custom fabrication. Behlen Manufacturing has exported products to more than 80 countries. Phil Raimondo was named by Inc. Magazine the “National Turnaround Entrepreneur of the Year Award” and he has been recognized by the Nebraska Business Hall of Fame for his contributions and dedication to make Nebraska a better place to live and work.

]]> (John Packard) SMU Steel Summit Conference Tue, 07 Mar 2017 12:53:57 -0500
Chinese Steel Market Analysis for the Week Ending March 5th

The following analysis of the steel markets in China is from Beijing Metal Import & Export Co.,Ltd and is being reproduced by Steel Market Update with permission. We edited the original copy to assist our readers in understanding what the group is trying to relay to us. Here is what they had to say (edited version):

Please allow me to update China steel market (Feb 27 - March 05, 2017) as usual as follows:

]]> (John Packard) International Steel Mills Tue, 07 Mar 2017 11:51:20 -0500