Steel Products Prices North America

Scrap Prices Move Higher, Will Steel Prices Follow?

March 7, 2017

Scrap prices moved higher as scrap dealers and the domestic steel mills finished their March negotiations. With prime grades of scrap settling at about twice the $30 per gross ton originally thought a couple weeks ago, the sheet mills have got a decision to make. Do they take prices up or have they raised prices high enough for now?

The last flat rolled price increase was a $30 per ton announcement made by the Nucor Sheet Group on February 20, 2017. A few days later ArcelorMittal USA advised their minimum base prices would be $640 per ton on hot rolled and $850 per ton on cold rolled and coated steels.

Most mills are now sold out through March on hot rolled and into late April on cold rolled and coated steels.

Here is just a quick sample of current mill lead times based on what has been given to end users/service center buyers over the past few days:

Steel Dynamics (SDI) Butler plant have not yet opened their order book for April.

The Techs (galvanized conversion mills owned by SDI) are quoting week of April 9th and April 16th on their mills.

Nucor Berkeley is in early April on hot rolled and mid to late April on cold rolled and coated steels.

As of last Friday, NLMK USA was in the first week of April on hot rolled at Portage. Cold rolled fully processed was early May and galvanized/galvanneal were being referenced as the week of April 24th.

From our perspective (SMU) lead times continue to be “good” although there does not appear to be any issues with customers getting steel. We will have more details about lead times and mill negotiations in Thursday evening’s issue of SMU once we have compiled the responses to our latest inquiries on the flat rolled steel markets.

We have heard from service centers who are advising SMU that Nucor sales people have been warning their customers of another price increase within the next week or less due to the increase in scrap prices.

Steel buyers are telling us that over the short term they are expecting prices to move higher. However, there is a nagging resistance to any suggestion of a strong move in prices from here.

One service center executive told SMU, “I don’t think the steel mills should get carried away with these price increases. The mills will get their one [February 20, 2017] increase. I don’t think they get a second.” This executive went on and explained, “I don’t know if the market is that strong. Last year we were on allocation. We are not now. I can get all of the steel I need.”

A large service center told us, “I was pretty convinced last week [that prices will increase], but now it’s looking like the Scrap market pricing is already correcting from last week. So, I’ll be interested to see if mills pounce now, or wait and see how things shake out. If Scrap weakens further, or it looks like it cannot sustain, then that could cap off the market for the time being.”

We also heard from Nucor who advised their Louisiana DRI facility would be back in operation later this week. That, combined with European scrap headed for the U.S. markets, will most likely impact scrap prices as we move into April and beyond.

So, we will watch and wait to see how the mills react to the scrap markets as well as their own order books to see how much pressure there will be to move prices higher from here.