Pricing - Increases slowing but still coming!

Steel price increases have seemed to slow and even slightly decrease over the last few weeks. Coil continues to be in high demand, but the tubing mills are beginning to see some relief with raw material. For the first time in 55 weeks, we saw a slight decrease in the CRU mid-September however the following two weeks have gone right back to showing increases.  Just recently (Oct.20th) however, the index has shown a reduction 2 weeks in a row.  The CRU index has still seen a 89% increase in the steel index since the beginning of the year and a 192% increase since a year ago in October of 2020. With October's index falling, this marks the first month out of the last 15 months that we have seen a decrease month over month.  For all structural tubing, Nucor Tubular and Atlas Tube (the two largest structural tubing mills) raised prices on September 28^th by another $75/ton on HSS, pipe, mechanical, and piling products but have now rescinded it. With regards to DOM, we have not seen an increase since August 20^th.  Most DOM mill pricing has increased 13 times for a total of 89-92% overall since the beginning of October 2020. Cold drawn and hot rolled seamless tubing has seen 2 price increases in the last 2 months. The below charts reflect a current listing of all price increases on tubing that we have seen since late August of 2020.

Iron ore prices hit $93/ton earlier this week. However, prices eventually closed the week out above $100/ton Chinese demand remains weak and seasonal improvements in construction activity have thus far not materialized in any significant improvement in market conditions for steelmakers. At the same time, iron ore supply has been strong in the past week with global exports coming in at the highest level since the beginning of January.  (Source: SMU)

Pricing on Dura-Bar continuous cast iron bar has decreased slightly in October due to the surcharges going down. Base prices increased in February of this year with additional significant base price increases (10% to 30%) implemented again on July 1st, 2021, and August 1^st, 2021. The below chart details the Dura-Bar surcharges over the last year or so.

Lead Times

Understanding lead times for steel products are important to every participant in the supply chain. Lead times for steel products are as follows (as of 10/22/21):

Average HRC lead times were flat this week to 7.3 weeks versus an average of ~5.6 weeks since 2016. HRC lead times have now been flat or declined in 13 straight weeks and are down from their all-time high of 9.8 weeks reached in January 2021. Other product lead times were mixed this week with CRC lead times at 8.8 weeks, HDG lead times at 9.7 weeks, and plate lead times at 8.7 weeks. (Source: Platts)

DOM Tubing lead times continue to be long and are anywhere from 25 to 32 weeks given the availability of raw steel coils, allocations, and orders already on the books. We are beginning to see "Allocations" and “Force Majeure” in the marketplace which is not a good sign for availability. 

Structural Tubing mill lead times are running approximately 8-14 weeks upon receipt of order.

Dura-Bar Continuous Cast Iron mill lead times are approximately 10-14 weeks depending on size, grade, and finish.

Metal Production

In the week ended October 16th, US raw steel production increased 1.3% week-over-week to 1.882mt (+21.5% YoY). US capacity utilization was 85.3% vs 70.1% last year. Year-to-date production is 75.149mt up 20.3% year-over-year from 62.480mt last year. (Source: AISI) Steelmakers around the world produced an estimated 156.8 million metric tons of crude steel in August, down 3.0% or 4.9 million metric tons from the month prior, reported the World Steel Association. The decline was largely driven by China. This marks the third consecutive monthly decline. (Source: SMU)  

Scrap

Detroit mills kicked off the October buy week by buying prime scrap at price declines of $20/ton month-over-month, with shredded at flat prices month-over-month.  Chicago mills entered the market offering to buy shredded scrap up $10/ton month-over-month and prime scrap down $20/ton month-over-month.  So far mills in other regions have purchased shredded scrap at mostly flat prices and prime scrap at a $20/ton decline.  (Source: AMM)

Market sources currently expect scrap prices to increase in November as shredded scrap supply remains tight while export prices have increased meaningfully.  (Source: Platts)

Imports

According to market sources, China’s crude steel output is expected to rebound sharply in 1Q 2022, following weak production through December due to government controls over energy consumption and pollution, as mills with ultra-low emissions will not be subject to winter output cuts in 1Q 2022 if their steel output remains within year-ago levels. (Source: Platts)