Pricing - The freefall seems to have leveled out for now

Structural steel pricing has been on the decline since the end of April but now seems to be leveling off. We have now seen a month with no price adjustments. Some market sources think the price of HRC could potentially level off given very low inventory levels at service centers. However, many buyers reportedly remain cautious and continue to purchase only what is absolutely needed, with some market sources doubtful the attempted $50/ton HRC price increase will generate enough buying interest to stick. (Source: Platts)

For the first time in a very long time, we have seen a leveling off and even a slight decrease in mechanical tube pricing. Mechanical tube prices have recently seen a slight decrease in pricing due to lead times and demand subtly shrinking. Scrap surcharges shrunk by $34/ton from June and now sit at $46/ton with a fuel surcharge of 39% for July, down 1% from June. Reference page 2 for a graph of price adjustments since 2021 (went up then and hasn’t come down). 

Nucor announced it will maintain plate prices unchanged with the opening of its August order book. This marks the second consecutive month of unchanged pricing, with plate prices currently averaging $1,470/ton. (Source: SMU)   

Cast Iron Pricing

There have not been any base price increases on cast iron since April 1^st of 2022. Since May of 2023, Dura-Bar’s surcharges have seen a gradual decline in price.  

Scrap & Steel Inputs

The July scrap trade kicked off this week with a major Detroit-area mill bidding prime grades down $30/ton and shred down $20/ton month-over-month, while initial trends in the southeast suggest the region could see little-to-no downside this month. (Source: Argus)

Metal Production

In the week ended July 1, US raw steel production decreased 1.0% week-over-week to 1,740,000 tons (+1.0% YoY). US capacity utilization was 77.3% vs 79.4% last year. This marks 50 consecutive weeks where capacity utilization has been below 80%. Year-to-date production is 44,200,000 tons down 2.8% year-over-year from last year. (Source: AISI)

Lead Times

Understanding lead times for steel products is important to every participant in the supply chain. Lead times for steel products are as follows (as of 07/07/23):

DOM Tubing lead times have loosened up quite a bit. We are now anywhere from 6 to 12 weeks. HRS and CDS tubing has recently gone down as well and now stands at 12-20 weeks.   

Structural Tubing mill lead times are low and running approximately 1-4 weeks upon receipt of the order. Average HRC lead times were lower last week at 5.2 weeks, below the long-term average since 2016 of 5.6 weeks. Other product lead times were flat to lower last week with CRC lead times at 7.0 weeks, HDG lead times at 6.9 weeks, and plate lead times at 6.2 weeks. (Source: Platts)

Dura-Bar Continuous Cast Iron mill lead times are shorter and approximately 1-3 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.

Oil & Gas Industry

The US rig count decreased 1.2% week-over-week to 674 rigs as of 6/30. This was the 9th consecutive week of rig count declines. The rig count is down 10.1% year-over-year. (Source: Baker Hughes)

Imports/Exports

Economic Factors

The June Manufacturing PMI® registered 46 percent, 0.9 percentage points lower than the 46.9 percent recorded in May. Regarding the overall economy, this figure indicates a seventh month of contraction after a 30-month period of expansion. The New Orders Index remained in contraction territory at 45.6 percent, 3 percentage points higher than the figure of 42.6 percent recorded in May. The Production Index reading of 46.7 percent is a 4.4-percentage point decrease compared to May's figure of 51.1 percent. The Prices Index registered 41.8 percent, down 2.4 percentage points compared to the May figure of 44.2 percent. The Backlog of Orders Index registered 38.7 percent, 1.2 percentage points higher than the May reading of 37.5 percent. The Employment Index dropped into contraction, registering 48.1 percent, down 3.3 percentage points from May's reading of 51.4 percent. (Source: Institute of Supply Management)

Employment / Hiring

Approximately 0.248 million Americans filed for unemployment insurance last week. This was worse than economists’ expectations of 0.245 million claims, and worse than last week’s downwardly revised claims number of approximately 0.236 million claims (revised down from 0.239 million claims). Continuing claims decreased during the week ending June 24 (continuing claims have a week lag in terms of reporting) and stand at approximately 1.720 million continuing claims. (Source: Reuters)

US employers added 209 thousand workers in June (down from 306 thousand in May and below analysts’ estimates of 240 thousand), and the unemployment rate was 3.6% (down from 3.7% in May). Wages increased 4.4% year-over-year in June. (Source: Wall Street Journal)