Pricing - Flattening prices have introduced a degree of short-term stability in the steel industry, offering some relief from the recent fluctuations.

Structural tubing prices have flattened out over the last and now seem to have stopped the bleeding. Pricing on structural tubing saw its first small increase in months on Friday, August 30^th. Since then, pricing has remained very flat and has not moved in roughly 5 weeks. It appears as if pricing will continue to remain fairly flat but we may see a slight increase(s) through the end of the year. 

Mechanical tubing has seen similar pricing trends as structural tubing. Pricing has seen several weeks now of flat pricing. Mechanical tube prices continue to be flat due to weak demand and uncertainty in the marketplace. DOM Surcharges have disappeared since June and don’t appear to be coming back anytime soon. Fuel surcharges have dropped for October and this marks the 3^rd consecutive monthly drop.

Most Hot Rolled Coil (HRC) spot base prices for the first week of September range from $700 to $730 per ton.  Hot-rolled coil prices in the US Midwest edged slightly lower on Friday October 4 with most sources conceding business has been steady, but nothing robust enough to cause an increase in prices. Nucor’s weekly published Consumer Spot Price (CSP) listed the HRC base price for the week of October 7th at $730/ton, unchanged from last week.    

There have not been any base price increases on cast iron since April 1st of 2022. Since January of 2024, Dura-Bar’s surcharges have seen a gradual decline in price and appear to remain flat going into the 4th quarter. Dura-Bar’s October surcharges remain at their lowest since May of 2021.      

Scrap & Steel Inputs

The market views are shaped by hesitation and uncertainty, driven by the upcoming election. The US ferrous scrap trend indicator stood flat at 49.5 in October. Scrap prices are expected to remain stable with only a 0.5% drop. The market consensus diverged further, with the more positive sellers at 54.7, the neutral brokers at 50.0 and the more pessimistic buyers at 43.7. Demand and supply dynamics seem balanced, with no major disruptions anticipated. The overarching mood remains one of “wait and see,” as the market appears to be in a holding pattern until post-election clarity arrives. (Source: FastMarkets)

Metal Production

In the week ended September 28, US raw steel production decreased 3.6% week-over-week to 1.646mt (-2.7% YoY), which was a 19-month low. US capacity utilization was 74.1% vs 74.4% last year. Year-to-date production is 66.212mt down 1.7% year-over-year from 67.325mt last year. (Source: AISI)

Here is the mill utilization for the past 4 weeks:

(Image source: American Iron and Steel Institute)

Lead Times

Understanding lead times for steel products is crucial for everyone involved in the supply chain. Here are the current lead times for steel products (as of 10/8/24):

DOM Tubing lead times remain low. We are now anywhere from 4 to 6 weeks depending on size. Cold Drawn Seamless tubing is slightly higher in comparison to DOM and now stands at 5 to 7 weeks. HRS tubing can be obtained on the spot market, but Metallus (domestic mill) is 9-10 weeks behind and foreign HRS is roughly sitting on a 3-to-5-month lead time.

Structural Tubing mill lead times remain historically low and are approximately 1-3 weeks upon receipt of order dependent on size. 

Dura-Bar Continuous Cast Iron mill lead times remain flat 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 increased last week to 5.1 weeks, still below the long-term average since 2016 of 5.6 weeks. Other product lead times were flat to longer last week with CRC lead times up to 7.6 weeks, HDG lead times up to 7.2 weeks, and plate lead times flat at 3.9 weeks. (Source: Platts)

Oil & Gas Industry

The US rig count decreased by 0.2% week-over-week to 587 rigs as of 9/270. The rig count is down 5.8% year-over-year. (Source: Baker Hughes)

Brent crude posts biggest weekly gains since Jan 2023. Israel conducts air attack on Beirut, Iran calls on allies to step up anti-Israel struggle. Biden says he would consider alternatives to striking Iranian oilfields if he was in Israel's shoes. Oil analysts caution prices could stay elevated until Middle East conflict is resolved. Spare OPEC+ output capacity, ramp-up in Libya output limit oil's gains. (Source: Reuters)

Steel Constraints & Roadblocks

Higher costs resulting from a tentative deal to end the strike at East Coast and Gulf Coast ports could reduce imports, increase reshoring and drive up the cost of steel products in the US, according to market observers and participants. The deal between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) would increase the wage costs of dock workers by 62% by increasing the hourly wage from $39 per hour to $63 per hour, allowing dock workers to earn $131,000 per year without working overtime. (Source: FastMarkets)

Nucor plans to close its Nucor Tubular Products Chicago facility as part of a restructuring of its tubular products business.  Nucor recently opened a new tube facility in Kentucky in an effort to replace older capacity with newer, more efficient capacity. (Source: SMU)

Wheatland Tube, a subsidiary of Zekelman Industries, is closing a tube facility in Chicago, citing a surge of imported steel conduit from Mexico as a significant contributing factor. (Source: SMU)

Economic Factors

The ISM Manufacturing PMI registered 47.2% in September, unchanged from 47.2% in August. This marks 22 of the past 23 months with domestic manufacturing contraction. (Source: Reuters)

Sixth consecutive month contracting: In September, the U.S. manufacturing sector remained weak, with the ISM Manufacturing PMI matching the figure in August at 47.2%. This means that manufacturing may stay in contraction through the end of the year if demand continues to be weak and companies continue to be hesitant to invest due to election uncertainty.

The S&P Global U.S. Manufacturing PMI dropped to 47.3 in September from 47.9 in August, remaining below the 50 threshold that indicates a contraction in the sector.

In September, manufacturing employment declined by 7,000, largely influenced by a 6,500 decrease in motor vehicles and parts. (Source: NAM)

Employment / Hiring

Nonfarm payroll employment increased by 254,000 in September, blowing past the consensus estimate of 150,000 job gains. July and August job gains were also revised upward by 72,000 jobs. The 12-month average stands at 203,000 job gains per month. Manufacturing employment, however, declined by 7,000, largely influenced by a 6,500 decrease in motor vehicles and parts. In addition, August’s 24,000 manufacturing job loss was revised down to 27,000. The unemployment rate dipped 0.1 percentage point to 4.1%, while the labor force participation rate remained unchanged at 62.7%. (Source: BLS)          

Imports & Exports

Based on preliminary import licenses, steel imports in August declined 10.1% month-over-month on a daily average basis (-4.5% YoY). Year-to-date through August imports are up 1.4% year-over-year. (Source: US Commerce Department)

The United States’ deficit in steel products has persisted for well over a decade. Exports have decreased by 9.2% between 2015 and 2023, and imports have decreased by 27.8%. In 2023, the U.S. steel trade deficit amounted to 16.9 million metric tons, a 14.9% decrease from 19.8 million tons in 2022. (Souce: U.S. Dept. of Commerce, Enforcement and Compliance)