Pricing - Have we seen the bottom?

Structural tubing prices seem to have hit bottom for now and have now seen its first increase since November of 2023.  The steel indexes are currently ranging from $826 to $835 for HRC (hot rolled coil). Structural tube pricing continues to be fluid and the overall sentiment is that this latest increase was large, and the mills are still waiting to see if it will stick.  If it is accepted, there may be some flattening to slightly elevated pricing coming in future weeks. 

Mechanical tubing prices are still lower for this month. Drawn Over Mandrel (DOM), Cold Drawn Seamless (CDS) and Hot Rolled Seamless (HRS) tubing prices are all fairly flat. The April surcharge on contract business was removed and sits at $0 per ton. Demand is still sluggish, with buyers holding out for more attractive prices and evidenced by reportedly minimal trading activity.

Domestic flat roll mills continue to attempt to keep prices moving higher without official price increase announcement. Some attempting to offer at a $900/ton base price for HRC in line with Cleveland-Cliffs March 27th price increase announcement. 

Nucor announced that it will start issuing a weekly Nucor Consumer Spot Price (CSP) for HRC. Nucor will issue the first CSP on April 8, and will then issue an update every Monday. The CSP will remain in effect until the next weekly publication. Nucor said its CSP pricing will be derived from both quantitative and qualitative data. Lead times for all spot orders will be offered between three and five weeks. Nucor expects this will increase transparency and reduce pricing speculation and risk. (Source: Company Press Release)

Cast Iron Pricing & Surcharges

There have not been any base price increases on cast iron since April 1^st of 2022. Since January of 2024, Dura-Bar’s surcharges have seen a gradual decrease in price and look to remain low heading into the 2^nd quarter. (see chart below). April surcharges decreased slightly in comparison to last month.    

Metal Production

In the week ended March 30, US raw steel production increased 1.1% week-over-week to 1,722,000 tons (+0.2% YoY). US capacity utilization was 77.5% vs 76.9% last year. Year-to-date production is 21,752,000 tons down 2.6% year-over-year from 22,323,000 tons last year. (Source: AISI)

The World Steel Association has released its Short-Range Outlook (SRO) steel demand forecast for 2024 and 2025. Worldsteel forecasts that this year demand will see a 1.7% rebound to reach 1,793,000 tons. Steel demand is forecast to grow by 1.2% in 2025 to reach 1,815,000 tons. (Source: worldsteel)

Expectations for steel demand in China in 2024 will remain around the level of 2023, as real estate investments continue to decline, but the corresponding steel demand loss will be offset by growth in steel demand coming from infrastructure investments and manufacturing sectors. In 2025 they see China steel demand returning to a downtrend with a 1% decline. (Source: worldsteel)

Scrap & Steel Inputs

Scrap pricing for April settled sideways from March.  Busheling at $400-420 per gross ton (gt), averaging $410, flat from March and Shredded at $390-415 per gross ton, averaging $402.50 which is flat from March. (Source: SMU)

Steel Constraints & Roadblocks

The mills are halfway through their semi-annual maintenance outages which occur March through May. Approx. 380,000 tons will be taken out of the market in this time period. This will reduce spot availability in the market and could extend lead times slightly as we go forward.

Cleveland-Cliffs’ said the company is still interested in acquiring US Steel, though no bid is currently on the table.  Separately, the Alliance for Automotive Automation (AAI) has come out against any potential Cliffs deal for US Steel citing concentration concerns. (Source: SMU)

Oil & Gas Industry

The US rig count decreased 0.5% week-over-week to 621 rigs as of 3/29.  The rig count is down 17.6% year-over-year. (Source: Baker Hughes)

Oil country tubular goods (OCTG) prices declined in April to $1,600/ton on soft demand and elevated inventory levels. (Source: AMM)

Brent crude futures were up 70 cents, or 0.8%, at $90.12 per barrel at 1320 GMT, while U.S. West Texas Intermediate (WTI) crude futures rose 69 cents, or 0.8%, to $85.92. (Source: Reuters)

The U.S. government raised its forecast for U.S. crude oil output, expecting an increase of 280,000 bpd to 13.21 million bpd in 2024, up 20,000 bpd from an earlier forecast from the U.S. Energy Information Administration (EIA). (Source: Reuters)

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 4/10/24):

DOM Tubing lead times remain consistent. We are now anywhere from 6 to 10 weeks depending on size. Cold Drawn Seamless tubing remains high compared to DOM and now stands at 12 to 16 weeks. HRS tubing can be obtained on the spot market, but Timken (domestic mill) is 25+ weeks behind on their product lead times and foreign HRS is roughly 4-to-6-month lead times.

Structural Tubing mill lead times remain low to average and run approximately 3-5 weeks upon receipt of order dependent on size.  

Dura-Bar Continuous Cast Iron mill lead times lowered slightly and are approximately 2-4 weeks depending on size, grade, and finish. If it’s a large bar, special grade, size, or shape then the lead time could be longer. 

Average HRC lead times decreased last week to 5.0 weeks, below the long-term average since 2016 of 5.7 weeks. Other product lead times were flat to shorter last week with CRC lead times flat at 7.8 weeks, HDG lead times down to 8.2 weeks, and plate lead times flat at 4.0 weeks. (Source: Platts)

Employment / Hiring

U.S. unemployment rate fell to 3.8% in March from 3.9% in February.  Average hourly earnings rose 0.3% month over month and 4.1% YOY. Nonfarm payrolls increased by 303,000 jobs last month, the Labor Department's Bureau of Labor Statistics said. The economy added 22,000 more jobs than previously estimated in January and February. Economists polled by Reuters had forecast 200,000 new jobs in March, with estimates ranging from 150,000 to 250,000.Average hourly earnings gain 0.1%; up 4.3% year-on-year (Source: Reuters)

Economic Factors

The ISM Manufacturing PMI registered 50.3% in March, up from 47.8% in February. This was the first expansion in manufacturing activity after 16 consecutive months of manufacturing contraction. (Source: Reuters)

Futures traders have reduced bets on how much the Federal Reserve will cut rates this year to the lowest level since October, LSEG data showed on Monday, amid evidence of continued strength in the U.S. economy. Fed funds futures contracts for December on Monday reflected expectations of around 60 basis points in rate cuts this year, compared to some 150 basis points that had been priced at the start of 2024. The prospect of a first 25 basis point cut in June stood at 49%, down from 57% a week ago. (Source: Reuters)

The consumer-price index rose 0.4% in March and 3.5% on an annual basis—economists had expected 0.3% and 3.4%. Core CPI, which removes the volatile food and energy categories, was up 0.4% from February, topping an expected 0.3%.  Inflation also proved higher than anticipated in January and February. Taming price increases is key to the Federal Reserve’s deliberations about when to cut interest rates and the series of hot readings have raised doubts that the central bank can act soon. (Source: Wall Street Journal)

Imports