State of Steel - July 2022

Pricing - Tale of Two Types of Tubing - Mechanical vs. Structural

Steel pricing continues to be quite contrasting and rather confusing. Due to the CRU index decreasing, we are seeing a decline in structural tube pricing but not as fast as one would think. At the beginning of May, the CRU index sat at $1,447 per ton. As of July 6th, we now sit at $988 per ton. That amounts to a decrease of 46% since the beginning of May! This drop in the index pricing has not fully made its way to the structural tubing market yet. Even though we have seen several decreases in structural pricing of late (see chart below), the market does not appear to be dropping prices quickly. From what we are hearing, we believe that pricing on structural tubing will remain flat to slightly decreasing through the 3rd quarter. Even though demand is still strong, the market remains at a standstill due to buyers being cautious. 

On the flip side, mechanical tubing pricing remains high and lead times continue to be very long. Mechanical tubing (DOM, HRS, CDS) mills are struggling to keep up with demand due to labor shortages, strong demand, and a limited supply of tube hollows and bars. Because of these factors, the pricing looks to continue to stay flat to high. Most lead times for hot-rolled seamless, cold-drawn seamless, and drawn-over mandrel tubing are well into next year! 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.

Market sources indicated spot bookings are nearly non-existent, with most service centers and consumers buying only when needed. With expectations of a further decline in scrap prices in July, market participants are indicating expectations for hot-rolled prices to continue softening through the summer months. (Source: Platts)


Cast Iron Pricing

July did not see any base increases for cast iron; however, pricing is still settling out from the April base price increases of $0.02/lb. on ductile grades and $0.04/lb. on gray iron. The latest April base price increase comes on the heels of 4 base price increases in 2021. Surcharges appear to have topped out in May as we have now seen surcharge decreases two months in a row. Assuming Dura-Bar does not increase their base pricing again, we should continue to see some relief in pricing based on surcharges declining alone. The below chart details the Dura-Bar surcharges over the last year or so.  

Scrap & Steel Inputs

Ahead of the July scrap buy week, expectations have deteriorated significantly for July scrap price settlements, with market sources currently expecting obsolete scrap prices to decline $75/ton or more from June levels and prime scrap prices to decline $100/ton month-over-month, with the decline being driven by the weak export market prices. (Source: Platts)

Metal Production

In the week ended June 25, US raw steel production decreased 0.5% week-over-week to 1,750,000 tons (-5.1% YoY).  US capacity utilization was 80.2% vs 83.0% last year. Year-to-date production is 44,166,000 tons which is down 2.0% year-over-year from 45,050,000 tons last year. (Source: AISI)

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 07/07/22):

Average HRC lead times declined last week to 4.5 weeks, which is below the average of 5.6 weeks since 2016. Other product lead times were flat to lower last week with CRC lead times at 6.3 weeks, HDG lead times at 6.5 weeks, and plate lead times at 5.0 weeks. (Source: Platts)

DOM, HRS, and CDS Tubing lead times continue to be very long and are anywhere from 40 to 52 weeks primarily now due to backlog and labor shortages. We continue to see lead times be long and are now seeing availability not free up until mid-2023. 

Structural Tubing mill lead times are steady and running approximately 3-4 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. We are experiencing longer lead times for round bars under 2” diameter.

Oil & Gas Industry

The US rig count increased 1.8% week-over-week to 753 rigs as of 6/24. The rig count is up 60.2% year-over-year. (Source: Baker Hughes) The price of West Texas Intermediate crude, the U.S. benchmark, dropped 8% Tuesday to $99.50 per barrel and settled at $98.53 Wednesday. That’s down from March 8's closing price of $123.70 per gallon. Brent Crude, the world benchmark, dipped below $100 per barrel for the first time since April before settling at $100.69 Wednesday. Analysts say fears of a recession, which could crimp demand for oil and gas, have brought on the price drop. (Source: USA Today)


President Biden has increased tariffs on some Russian and Belarussian steel, ferroalloys, and aluminum products to 35%. The list of steel and steel-making raw material products subject to higher duties includes slab, several pipe categories, certain fabricated products made from steel, and several ferroalloys, including ferrosilicon. (Source: SMU)




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