Pricing - Steel pricing is on its way back up!

Steel pricing continues to be very unstable. Due to many factors, the price of steel is on a steep, large increase over the last month.  At the beginning of March, the CRU index sat at $935 per ton. As of April 6^th, we now sit at $1,435 per ton which is an increase of 53.5% just in the month of March! Futures continue to look at steel pricing going up but how high, no one really knows. Some of the factors that are being attributed to the increase are the Ukraine crisis, decrease in imports, increase in raw material pricing, and shortage of labor. 

Structural tubing followed the CRU trend and began quickly rising in March. We have seen 3 increases alone in March for a total of $500 per ton.  That more than erases all the decreases we saw in the last 4 months. There continues to be upward momentum for structural steel prices to continue increasing and we have heard rumors that we could see another increase anytime now. With regards to DOM tubing, we have not seen an increase or decrease since August 20^th although we have been seeing an increase in surcharges lately. These “surcharges” are going up and remaining high due to freight, fuel, demand, long lead times, and increases in raw material costs.  Most DOM mill pricing has increased 13 times for a total of 89-92% overall since the beginning of November 2020. Lead times are still very long for mechanical tubing thus less urgency to reduce pricing. Cold drawn and hot rolled seamless tubing has recently seen an additional $200 per ton increase for all new orders. That is on the back of a $100 per ton increase announced in February. The below charts reflect the CRU index and a current listing of all price increases/decreases on tubing that we have seen since late August of 2020.

Nucor announced it will attempt to raise plate prices by $55-$125/ton depending on the product, effective immediately. This announcement comes with the opening of the company’s May order book. Nucor also increased plate prices by $40/ton in early March with the opening of its April order book. (Source: SMU)

Effective April 1^st, 2022, base pricing on all Dura-Bar continuous cast iron products were increased by $0.02 per pound. This latest base price increase comes on the heels of 4 base price increases in 2021. Surcharges have also continued to rise, and ductile iron is at a new high.  Future surcharges look to remain elevated and even grow more given the situation with pig iron which is a critical ingredient of cast iron. 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 04/08/22):

Average HRC lead times increased last week to 5.3 weeks, which is below the average of 5.6 weeks since 2016. Other product lead times were also higher last week with CRC lead times at 7.3 weeks, HDG lead times at 7.6 weeks, and plate lead times at 5.0 weeks. (Source: Platts)

DOM Tubing lead times continue to be long and are anywhere from 25 to 32 weeks primarily now due to backlog. We continue to see lead times grow and are now seeing availability not free up until the end of 2022.  

Structural Tubing mill lead times are steady and running approximately 4-6 weeks upon receipt of order. Common sizes we can get sooner for now.

Dura-Bar Continuous Cast Iron mill lead times are approximately 8-14 weeks depending on size, grade, and finish. If it’s a large bar, special grade, size, or shape then the lead time could be considerably longer.  We are currently struggling to inventory large gray iron billets for our plate department but are looking to resolve this as best we can. 

Metal Production

In the week ended April 2, US raw steel production decreased 0.1% week-over-week to 1,724,000 tons (-3.5% YoY). US capacity utilization was 79.3% vs 78.0% last year. Year-to-date production is 22,911,000 tons, which is down 0.4% year-over-year from 23,005,000 tons last year. (Source: AISI)

Scrap & Steel Inputs

The April scrap trade kicked off with the Midwest mills offering to purchase prime scrap at up $75/ton month-over-month, shredded scrap at flat prices month-over-month, and #1 heavy melt, plate, and structural scrap at down $20/ton month-over-month. These offers are significantly below last week’s expectations (although earlier in the week expectations began to dim). (Source: Platts)

Pig iron import prices declined this week to $1,005/ton but are still up ~56% month-over-month. This was the first weekly decline since the Russian invasion of Ukraine. Market sources attributed the decline to US buyers stopping the ‘panic’ buying. However, limited supply availability is expected to keep prices elevated. (Source: AMM)

President Biden is invoking the Defense Production Act to boost domestic production of minerals used in batteries needed for electric vehicles. It would include minerals such as lithium, nickel, graphite, cobalt, and manganese. The companies would still be subject to the regular environmental review process and permitting wouldn’t be expedited. (Source: Wall Street Journal)

Oil & Gas Industry

Oil country tubular goods prices increased meaningfully on strong demand (driven by higher oil prices) outpacing domestic supply, and higher raw material input prices. OCTG prices are up nearly 20% month-over-month. (Source: Platts) The US rig count increased 0.4% week-over-week to 673 rigs as of 4/1. The rig count is up 56.5% year-over-year. (Source: Baker Hughes)

Steel Capacity 

ArcelorMittal’s Kryvyi Rih steelmaking facility, which is in Ukraine, is reportedly working on gradually restarting its steel and pig iron operations. The facility produced 4.92 million tons of crude steel in 2021, primarily long products, with 80% of production traditionally exported. (Source: AMM)