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March/April Scrap Steel Price Trends

Comments provided courtesy of SteelOrbis

The Chicago Shredded Scrap finally posted down $20/ton from the prior month at $388/ton ending a long month of uncertainty and severe shifts in overall market sentiment. At one point in the last month, it looked as if scrap would “fall off the cliff” as mills were buying virtually nothing and demand in the market was non-existent. Then without notice, in the last week, the market reversed course stabilized and in several areas and grades even improved to reach where it finally settled. Much like the month prior, while there was not much demand for scrap, there also was no much supply due to the frigid winter causing collection problems.

Now that  petitioners were successful in levying a duty, watch for import prices to increase dramatically.  The anticipated surge of import to “beat” the April 18th deadline did not appear as dramatic as originally anticipated as few volumes being recently booked. Lagging sales in the last 6 weeks with the season and weather coupled with pricing that offers no new advantages have soured most big buyers appetites and nothing has been concluded.

Blame China?

Originally Posted by Katie Memmel via Steel Orbis

Although US Steel’s year of seemingly never-ending layoff notices isn’t news within the US steel industry, the trend has apparently caught the notice of mainstream news. In an editorial earlier this month, the Washington Post argued that US Steel’s downsizing is a direct result of the Chinese steel industry.

Again, blaming China for all the US industry’s woes isn’t news, but reporters with little experience in the industry who rely on corporate press releases and corporation-friendly news sources (such as the Wall Street Journal, which was referenced in the Post’s article) to make sweeping generalizations should be.

The most obvious argument against the assumption that Chinese imports are the primary reason for US Steel’s “pink slip spree” is to look around at other major US steel producers. Nucor, AK Steel and Steel Dynamics Inc. have not dominated the headlines with layoffs this year. Then again, with a few exceptions, Nucor, AK Steel and Steel Dynamics Inc. have reported generally positive quarterly results in the last few years, while US Steel has reported net losses nearly every time.

Miserable quarterly and yearly results were the impetus for the company’s Carnegie Way strategy announced two years ago, which seeks to streamline operations to become the most efficient US steelmaker, if not the largest. And part of this streamlining, naturally, takes the form of mass layoffs—the most recent, this week, includes over 2,000 employees at its Granite City facility.

That’s not to say that the global market has not been a factor—US Steel has idled several pipe and tubular plants this quarter  after plunging oil prices decimated pipe demand in the US, along with competitive imports of OCTG and line pipe from Korea and other sources other than China. As such, blaming China exclusively is almost as short-sighted as the Post’s proposed resolution to the problem: petition the US government for a dumping investigation, which US steel producers have already been doing for years.

US Steel’s layoff notices might sound lamentable, but the reality is that the company is doing exactly what it meant to do when it announced its Carnegie Way initiative in 2013. It’s unfortunate for the workers of course, but they might be able to do more than the Post’s directive to “figure out something else.” Namely, applying at one of the many US steel producers who aren’t purposely downsizing.

December Scrap / Rebar Updated

Posted on December 15, 2014 by and at

Scrap numbers were posted this week for December. No change from November was observed in shredded scrap for the Chicago index. Most other regional markets showed the same trend while a few reported slight increases from November to the tune of $5-$10/ton. This is not surprising as collections of scrap become difficult in the winter months causing a reduced supply. More importantly this shows a short-term bottom in a market that had been falling for the last 90 days. Most predict that domestic scrap will rebound in the coming months only slightly. Likewise on the global front, scrap has seemed to have found a bottom in other markets as well with Turkey reporting increased purchase prices on their scrap in the first 2 weeks of December.

The rebar market is seeing seasonal slow-downs in most areas of the country. With the holiday’s quickly approaching, existing projects are finishing up while new ones seem to be being held until the new year. Rebar Users report strong sales for 2014 and solid back-logs for the coming year. Domestic mills continue to cling to current pricing riding those strong back-log predictions for the coming year in the face of growing downward pressure on price. The substantial reduction in their raw material costs coupled with a soft global rebar and commodity market are causing buyers to really question their flat pricing over the 4th quarter. As long as mills can remain full – expect the relatively bullish position on pricing to remain.

On the import side, numbers seem to have leveled off in the recent weeks with a few Turkish producers actually announcing increases for this week in the export offers. Turkey is reporting increased raw material costs and as such are trying to raise prices for both export and local markets. Even such, buyers remain leery this week heading into the holiday hoping to defer any major purchasing decisions until after the holiday season.


Steel Price Update – June 2013

While the US domestic scrap market appeared poised to weaken slightly in June, prices are now beginning to settle at prices that are sideways to slightly up in some regions.  As other cities, including Chicago and those in the East Coast, began to negotiate, it became evident that demand for busheling is stronger this month than it has been recently, and prices for prime scrap grades could even settle slightly higher in comparison to May.

As predicted, while mills try and push scrap prices down, if they are unable to secure their requirements, it would force a backlash from dealers and prices would reverse course.

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Steel Price Update – September 2012

US scrap prices to reflect little change in September

The US domestic scrap market has been extremely quiet ahead of the Labor Day holiday, but deals made early are pointing to a soft sideways trend.

Since the fourth quarter of last year, the Chinese steel market has remained sluggish due to weak global and domestic demand. In this context, China’s total crude steel output is expected to decline to 678.68 million mt in 2012, down 0.7 percent compared to 2011, indicating the first year-on-year decline in 31 years, according to the China Iron and Steel Association (CISA).

In 2011, China produced 695.5 million mt of crude steel, up 8.9 on year-on-year basis.
A number of Chinese steel producers have implemented cuts in their production. Meanwhile, some Chinese steel giants, such as Shanghai-based Baosteel and Hubei-based Wuhai Iron and Steel Co.(WISCO) have also suspended development projects amid poor steel market conditions.

Steel Price Update – August 2012

US prices and demand are on the upswing in Aug – European markets unchanged until September
So far this month scrap steel prices have recovered strongly during July in US, and continued to firm elsewhere later in the month It is likely that demand will pick up after the summer slowdowns in the core markets, though to what degree is unclear. It remains to be seen if output will be reduced to match actual demand during the rest of Q3, beyond the holiday shutdowns and already-announced closures in Europe. In US and Europe, longs prices are quite firm even if demand is not as strong as normal at this time of year.

I also look at June’s production figures that showed global output to have fallen by over three million tonnes. Actual monthly US production fell but, on a daily output basis, Asian and Chinese production was higher. EU-27 and Other Europe daily production was lower compared with May.

The key issue is will producers be able to manage the balance between further price increases and apparent demand levels after the summer slowdowns without turning sentiment downwards.

Source : Steel Business Briefing

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