The price gap between US-produced cold-rolled (CR) coil and offshore products narrowed slightly again in the week ended Oct. 11, mainly due to a stateside price cut.
While domestic CR coil tags remain higher than offshore prices on a landed basis, the premium tightened a bit. US prices edged back down week on week (w/w), though offshore tags were mixed.
US CR coil prices averaged $940 per short ton (st) in our check of the market on Tuesday, Oct. 8, down $20/st vs. the prior week. Despite some recent gains, CR tags slipped this past week, now down roughly $385/st from the year-to-date high of $1,325/st in January.
Domestic CR prices are, theoretically, 20% more expensive than imports. That’s down from 23% last week and 31.5% in early January.
In dollar-per-ton terms, US CR is now, on average, $152/st more expensive than offshore products (see Figure 1). That’s down $24/st from last week and is still well below a recent peak of $311/st in mid-January.
The charts below compare CR coil prices in the US, Germany, Italy, South Korea, and Japan. The left-hand side shows prices over the last two years. The right-hand side zooms in to highlight more recent trends.
This is how SMU calculates the theoretical spread between domestic CR prices (FOB domestic mills) and foreign CR prices (delivered to US ports): We compare SMU’s US CR weekly index to the CRU CR weekly indices for Germany, Italy, and East Asia (Japan and South Korea). This is only a theoretical calculation. Import costs can vary greatly, influencing the true market spread.
We add $90/st to all foreign prices as a rough means of accounting for freight costs, handling, and trader margin. This gives us an approximate CIF US ports price to compare to the SMU domestic CR price. Buyers should use our $90/st figure as a benchmark and adjust up or down based on their own shipping and handling costs. (Editor’s note: If you import steel and want to share your thoughts on these costs, please get in touch with the author at david@steelmarketupdate.com.)
As of Thursday, Oct. 10, the CRU Asian CR price was $549/st, up $14/st w/w and ~$59/st higher than a month ago. Adding a 71% antidumping duty (Japan, theoretical) and $90/st in estimated import costs, the delivered price to the US is $1,029/st. The theoretical price of South Korean CR exports to the US is $639/st.
As noted above, the latest SMU CR price is $940/st on average, which puts US-produced CR theoretically $89/st below CR product imported from Japan but $301/st above CR imported from South Korea.
Italian CR prices were down $10/st to ~$650/st this week. After adding import costs, the price of Italian CR delivered to the US is, in theory, $740/st.
That means domestic CR is theoretically $200/st more expensive than CR coil imported from Italy. The spread is up $10/st from last week but is still more $250/st below a recent high of $453/st mid-December.
CRU’s German CR price was down $13/st vs. the previous week. After adding import costs, the delivered price of German CR is, in theory, $743/st.
The result: Domestic CR is theoretically $197/st more expensive than CR imported from Germany. The spread is $7/st lower w/w but still well below a recent high of $428/st in the first week of 2024.
SMU’s latest steel buyers market survey results are now available on our website to all premium members. After logging in at steelmarketupdate.com, visit the pricing and analysis tab and look under the “survey results” section for “latest survey results.”
Past survey results are also available under that selection. If you need help accessing the survey results, or if your company would like to have your voice heard in our future surveys, contact info@steelmarketupdate.com.
SMU’s next Community Chat webinar will feature Barry Zekelman, executive chairman and CEO of Zekelman Industries – the largest independent steel pipe and tube manufacturer in North America.
The webinar will be on Wednesday, Oct. 16, at 11 a.m. ET. It’s free to attend. A recording will be available only to SMU subscribers. You can register here.
Zekelman is known for his straight talk. And his company is one of the largest steel buyers in North America. So he’s got a better eye than most on steel market developments.
We’ll be discussing everything from end-use demand and the outlook for next year to trade policy and the US presidential election.
We’ll take your questions too. Think of some good ones and bring them to the Q&A! As usual, we’ll keep it to approximately 45 minutes, so you can learn a thing or two and then get on with your day.
ArcelorMittal is set to take full ownership of AM/NS Calvert if Nippon Steel finalizes its pending acquisition of U.S. Steel.
ArcelorMittal and Nippon announced on Friday that they’ve entered into a definitive equity purchase agreement. In it, Nippon has agreed to transfer its 50% stake in the AM/NS Calvert joint venture to ArcelorMittal upon the consummation of its $14.9-billion purchase of USS.
ArcelorMittal had previously said that this could happen.
The agreement states that Luxembourg-based ArcelorMittal will pay Nippon $1 for the transaction. Additionally, Nippon “will inject cash and forgive partner loans in an amount estimated to be approximately $0.9 billion,” ArcelorMittal said in a separate statement.
However, if the Nippon/USS deal does not go through, the Calvert operation will remain a joint venture of the two steelmaking conglomerates.
Tokyo-based Nippon said in a statement on Friday that divesting its stake in the Alabama steel mill proactively addresses any antitrust concerns and “is the most assured path to receiving timely regulatory approval for the acquisition.”
Nippon’s purchase of USS still faces regulatory hurdles in the US. This includes a national security review by the Committee on Foreign Investment in the US (CFIUS). That decision has been delayed until after the US elections on Nov. 5.
Additionally, the United Steelworkers (USW) union remains opposed to the deal. And that’s despite Nippon pledging to invest “no less than $1 billion” at U.S. Steel’s union-represented Mon Valley Works in Pennsylvania.
The union is still understandably upset with USS after it canceled a previously announced $1.2-billion investment for Mon Valley. It reminded members in a communication on Friday that “capital investment promises mean nothing if they are not included in a labor agreement and unenforceable.”
U.S. Steel and Nippon remain hopeful that the deal will close by the end of 2024.
ThyssenKrupp began building the flat-rolled steel finishing facility in Calvert, Ala., just north of Mobile, in 2007. ThyssenKrupp Steel USA began operating in 2010, relying on external slabs for its rolling operations. The German steelmaker decided to sell the mill and it became a joint venture of ArceloMittal and Nippon in 2014.
The Calvert operations include a hot strip mill, continuous pickling line, pickle line-tandem cold mill, and galvanized and aluminized coating lines. Nippon said the mill produced 4.7 million tons of steel products in 2023.
An electric-arc furnace is currently being constructed at Calvert to give the mill full melting capabilities. Start-up of the 1.65-million-short-ton-per-year EAF is still slated for this year. ArcelorMittal’s facility in Gregory, Texas, will supply hot-briquetted iron (HBI) for the furnace.
Two additional investment projects are under consideration for the Calvert mill: a second EAF and a non-grain oriented electrical steel line.
The American Iron and Steel Institute (AISI) has named two new board members: Neil Tannyan of Hatch and Doug Dunworth of SMS Group.
Both Tannyan and Dunworth represent associate member companies on the AISI board of directors. Additionally, Tannyan serves as the chairman of the AISI Associate Member Committee.
“I am proud to welcome Neil and Doug to the AISI Board of Directors,” Kevin Dempsey, AISI president and CEO, said in a statement on Thursday. “Their expertise and work with the Associate Member Committee will bring new and exciting insights to our board of directors.”
Tannyan has been the USA regional manager of iron and steel at Mississauga, Ontario-based Hatch since 2021. He joined the industry, engineering, and management consultancy in 2008.
Dunworth is currently the president and CEO of the Americas region for SMS Group, a Germany-based metals technology and equipment provider. He has previously held similar positions at SMS Technical Services and SMS Millcraft.
Active drill rig counts were mixed this week, according to the latest figures released by Baker Hughes.
US activity saw a slight increase from last week but continues to hover near multi-year lows, a trend observed since July. In Canada, rig counts dipped last week but remain near one of the highest levels recorded in the past seven months.
There were 586 drilling rigs operating in the US through Oct. 11, one more than the week prior. Oil rigs counts were up by two to 481, gas rigs fell by one to 101, and miscellaneous rigs were unchanged at four. Last week, there were 36 less US rigs operating compared to the same week last year, with 20 fewer oil rigs and 16 less gas rigs.
There were 219 active Canadian drilling rigs last week, four less than the previous week (when activity reached a seven-month high). Compared to counts one week prior, oil rigs declined by three to 154, gas rigs rose by two to 65, and miscellaneous rigs were down by three to zero. There are currently 26 more active Canadian rigs than a year ago, with 38 more oil rigs, 11 fewer gas rigs, and one less miscellaneous rig.
The international rig count is a monthly figure updated at the beginning of each month. The total number of active rigs for the month of September rose to 947, up 16 from the August count and seven more than levels one year prior.
The Baker Hughes rig count is important to the steel industry because it is a leading indicator of demand for oil country tubular goods (OCTG), a key end market for steel sheet. A rotary rig rotates the drill pipe from the surface to either drill a new well or sidetrack an existing one. For a history of the US and Canadian rig counts, visit the rig count page on our website.
SMU’s Steel Buyers’ Sentiment Indices moved in different directions this week. Our Current Steel Buyers’ Sentiment Index eased to a six-week low, while Future Buyers’ Sentiment ticked up to a four-week high. Both of our Indices continue to indicate optimism among steel buyers.
Every other week, we poll hundreds of steel buyers on their companies’ chances of success in today’s market, as well as business expectations in three to six months. We use this information to calculate our Current Steel Buyers’ Sentiment Index and our Future Sentiment Index, measures tracked since SMU’s inception.
SMU’s Current Sentiment Index indicates that buyers remain optimistic about their business’ ability to thrive in today’s market, though not as confident as they were at the beginning of this year. Meanwhile, our Future Sentiment Index shows that buyers continue to expect favorable business conditions ahead.
SMU’s Current Buyers’ Sentiment Index slipped seven points to +39 this week (Figure 1). This is the lowest measure since mid-August. Current Sentiment readings of 2024 continue to fall short of levels recorded this time last year (+57).
Year to date (YTD), Current Sentiment has averaged +51 across the first 42 weeks of 2024. This is significantly lower than the 2023 YTD average of +67.
SMU’s Future Buyers’ Sentiment Index rose one point to +70 this week, the second-highest measurement recorded this year. Recall that in early August Future Sentiment dipped to the lowest reading seen in over a year (+55), recovering to a nine-month high of +72 just two weeks later. (Figure 2).
Future Sentiment has averaged +65 since the beginning of this year, down two points from the same time frame last year. This time last year Future Sentiment was +74.
“For us this market is worse than 2009 in terms of volume.”
“We expect more volume and higher prices in 2025.”
“I am highly confident that my company will remain successful for many years to come.”
“Outlook on plate is pointing north.”
Buyers’ Sentiment also moved in opposite directions this week when measured as a three-month moving average (Figure 3).
The Current Sentiment 3MMA eased to +40.96 this week, slightly greater than the four-year low recorded one month prior. The Current Buyers’ Sentiment 3MMA has generally trended downward over the last year. The Future Sentiment 3MMA increased to +64.91 this week, slowly recovering from the one-year low seen in early September.
The SMU Steel Buyers Sentiment Index measures the attitude of buyers and sellers of flat-rolled steel products in North America. It is a proprietary product developed by Steel Market Update for the North American steel industry. Tracking steel buyers’ sentiment is helpful in predicting their future behavior. A link to our methodology is here. If you would like to participate in our survey, please contact us at info@steelmarketupdate.com.
European automaker Stellantis’ CEO Carlos Tavares will step down at the conclusion of his CEO term in early 2026. The company announced other sweeping management changes, including a new North America CEO.
The automaker said the search for a successor to Tavares is already under way, who called this a “Darwinian period for the automotive industry.”
“Our duty and ethical responsibility is to adapt and prepare ourselves for the future, better and faster than our competitors to deliver clean, safe and affordable mobility,” Tavares said in a statement on Thursday.
The news comes as the company has recently lowered its 2024 guidance due to woes in the North American market and weakening global industry dynamics.
Likewise, the company announced a management shakeup, effective immediately, to enhance organizational performance in the “turbulent global environment.”
Doug Ostermann has been appointed CFO. He succeeds Natalie Knight who is leaving the company. Ostermann has more than 19 years’ experience in finance across three international groups, including Stellantis.
Among the changes notable to the North American market, Antonio Filosa has been named North America CEO, in addition to his role as Jeep brand CEO.
He succeeds Carlos Zarlenga whose next position will be announced at a later date, Stellantis said.
Filosa previously led Stellantis’ South America Region.
Price changes in the HR coil futures market have been minimal in the past month with values recorded on Monday, Oct. 7, near steady with our Sept. 9 analysis. This lack of change in the futures market is not surprising given the relative stability in physical prices over the past four weeks.
What has changed in the futures market has been a 10% rise in open interest, with a substantial increase in the December 2024 contract. Open interest is the number of 20-st contracts active in the market, representing both a buyer and seller. As of this past Monday, there were just over 24,000 contracts, representing nearly 500,000 st of volume. The December contract alone stood at 7,375 contracts or just over 30% of all open interest. In reviewing this futures data over the past several years, the most visible increase of open interest has come at times before futures prices associated with this volume fell.
As of Oct. 7, the December contract was priced at $772/st, nearly steady with the price in early August. However, open interest has jumped by 72%. While mills continue to target prices near the mid-$750/st level, we have recently seen a return of competition in the physical market, likely due to the temporary outages ending while new capacity continues to ramp up. The value associated with the December contract bears watching as does the full 2025 forward curve, particularly as the upcoming US election unfolds over the next four weeks.
Learn more about CRU’s services at www.crugroup.com.
Aluminum product manufacturer Novelis has signed a three-year agreement with TSR Recycling of Germany for delivery of around 75,000 metric tons (mt) of pre-sorted and end-of-life aluminum products. They will be processed at the Novelis Nachterstedt recycling center in Saxony-Anhalt, eastern Germany, as a feedstock for low-carbon aluminum sheet used in the automotive sector.
The company said the agreement will support rising market demand for aluminum with high-recycled content. Novelis added that availability of end-of-life material is crucial as the company is constantly developing new ways for its automotive customers to absorb more pre- and post-consumer scrap into automotive aluminum alloys.
“Ensuring that valuable resources are reused and repurposed benefits both our businesses and the planet,” said TSR’s chief operating officer Denis Reuter. Novelis plans to increase its recycling of aluminum in Europe to 750,000 mt this year from around 700,000 mt in 2023.
It was announced that Hydro is recycling and extruding 20 mt of scrap aluminum from a decommissioned oil platform in the North Sea. The aluminum, along with other discarded products, will be used in the construction of the new bridge, highlighting Hydro’s commitment to a circular economy. The Hangarbrua Bridge is truly groundbreaking because its deck, which is an all-aluminum network arch construction, will be the first of its kind in the world, consisting of 100% recycled aluminum. Only the tension rods will be made from stainless steel.
Hydro is collaborating on this project together with the Norwegian Public Roads Administration, Leirvik AS, Aker Solutions, and Stena. It is also tasked with delivering the extruded aluminum products for the bridge deck. Leirvik will then take on the construction, transportation, and installation of the bridge, which is scheduled for completion in June 2025.
This year, Constellium is presenting the full range of its advanced aluminum solutions with the theme “Together We Care, Together We Grow,” celebrating the collective effort of its employees, customers, and partners in driving innovation and sustainability across the industry.
Present at the Aluminum 2024 fair in Dusseldorf, Germany, Constellium’s booth will feature cutting-edge solutions for the automotive, aerospace, packaging, and construction industries. It will highlight contributions to lightweight design, energy efficiency, and sustainable development. Several of the products on display reinforce Constellium’s commitment to recycling and increasing recycled content in its products.
Products and solutions on display include:
Also present at the aluminum fair in Germany, Vedanta issued a press statement about its offering. The company’s focus at the conference will be on its low-carbon aluminum product line, Restora – the first of its kind from India. Restora and Restora Ultra are designed to drastically reduce carbon emissions, catering to businesses worldwide that prioritize environmental responsibility without compromising on quality.
Commenting on the participation, COO Sunil Gupta of Vedanta Aluminum, said: “We are excited to showcase our sustainable aluminum products at Aluminum 2024, a premier global stage for the aluminum industry.”
He said the company’s participation “reflects our commitment to advancing responsible manufacturing while offering innovative solutions that meet the growing demand for low-carbon materials.”
“We are confident that our products will attract significant interest from global stakeholders,” he concluded.
There was another announcement made this week by Hydro. The Norwegian producer has appointed Erik Fossum and Jeff Lehman as the new leaders for its aluminum extrusion businesses in Europe and North America, respectively. Erik Fossum has been appointed as the new business unit president of Extrusion Europe. He replaces Bruno D’hondt who led the Extrusion Europe unit since September 2018. At the same time, Jeff Lehman has been named business unit president of Extrusion North America, succeeding Charlie Straface, who is retiring after 45 years in the aluminum industry. The last nine years of his career, Straface led the North American organization.
With 8,300 employees, Extrusion Europe is the largest of the four business units in Hydro Extrusions. Extrusion North America is the next-largest, with 5,600 employees at its plants and offices in the US and Canada. Combined, the two business units had revenues of €5.4 billion in 2023.
Editor’s note: This article was first published by CRU. To learn more about CRU’s services, click here.
I’m trying to make sure this is not a TL;DR Final Thoughts. As a journalism school professor once told me, ‘No one but your mom reads more than 1,000 words.’ Also, as the old adage goes, a picture is worth a thousand as well.
With that in mind, below are a couple of charts I think go a long way toward explaining how prices and lead times have been relatively stable despite concerns about demand.
Take a look at the chart below. We asked a simple question: “How did your company perform last month compared to your forecast?”
Rewind to 2022. The vast majority of folks responding to our surveys said they were meeting or exceeding forecast. (There is no data for Q1’22 because we hadn’t introduced the question yet.) In most months, only 5-10% said they were missing target.
The number missing forecast increased to roughly 15-30% in 2023. In 2024, it’s ticked steadily (if unevenly) higher from there. And 51% of respondents in our survey this week said they missed forecast in September.
I try not to read too much into any one survey. Even so, it’s worth noting that that’s the highest number we’ve seen since we’ve been asking this question.
Ethan Bernard has more on the troubles at Stellantis here. As for 2009, I feel like it’s sort of steel’s version of “Voldemort.” Don’t say it. Or it’ll come back and hunt you down.
I’m not in the 2009 camp. And I’m not sure the person who wrote that is either. Because while volumes might be off, prices are a lot better now than they were then.
SMU’s price for hot-rolled (HR) coil averages $695 per short ton (st) now. Rewind to 2009, and HR prices were as low as $380/st, according to our pricing archives. Adjusted for inflation, that’s about $555/st in 2024 dollars. (That’s according to the US government’s inflation calculator.)
If demand and volumes are off, what’s keeping prices steady around $700/st?
This might be oversimplifying it. But simply put, domestic production fell sharply in mid/late September and early October.
Some of that might be steelmakers ratcheting back production in response to weaker demand. A good portion of it could also be maintenance outages. You can see from our maintenance outage calendar that much of the downtime is in October.
What happens a few weeks from now when most of those outages are over? Will lead times be close enough to Q1, typically a busier time of the year, to keep prices from slipping too much further? Could those outages be extended? Or could we have a sloppy year-end market, as we’ve seen in past years?
In the meantime, and despite those outages, steel buyers tell us that most mills remain willing to negotiate lower prices.
Another adage, at least in steel, is that you can’t get ahold of your mill representative when times are good. And that they’re calling you when the market is soft. We’re guessing there might be more catching up now than there was last year, when prices were (in the case of HR) exactly where they are now but on their way higher.
We tend to get a little obsessive about short-term trends. It’s hard not to when you’re polling the market every week.
But steel is about a lot more than that. And I think Steel Dynamics Inc. (SDI) deserves some credit for becoming the first steel producer to certify its decarbonization targets with the Global Steel Climate Council.
Those targets, which align with the Paris Agreement, stretch out as far as 2050. What I think is cool: The company is taking concrete action now – like a project to replace anthracite coal used in its EAFs with biocarbon.
Biocarbon is a fancy way of saying, for example, the bark and other trimmings left over from a timber mill. So, you know, doing what EAFs have long done – turning someone else’s waste into something very useful.
The first chart above is a sneak preview of results from our full steel market survey. We’ll release those to our premium subscribers on Friday.
Give us a shout at info@steelmarketupdate.com if you’re executive and you’d like to upgrade to premium. Premium gives you all the news and prices you get in executive, along with our proprietary data – not just the surveys but also useful stuff like service center shipments and inventories.
You can also ping us at info@steelmarketupdate.com if you’re active in the market and would like to participate in the survey. Your feedback helps us keep our finger on the pulse of the industry – especially when it moves in unexpected directions.
AZZ Inc., relatively unfazed by volatility in zinc pricing, is optimistic about demand prospects and M&A opportunities, especially in the galvanizing sector.
Executives from the Fort Worth, Texas-based company, which advertises itself as the largest independent hot-dip galvanizer in North America, discussed these topics and more on a conference call on Thursday.
The call was held to discuss financial results released on Wednesday, in which AZZ reported strong earnings in the first half of its fiscal year.
Executives said the company’s growth during its first half was “entirely organic.”
But, after taking some time off from M&A to focus on debt reduction, AZZ is back to actively exploring inorganic growth opportunities, especially in the galvanizing sector.
“We continue to evaluate bolt-on acquisitions to add inorganic growth in each” of its two segments, Metal Coating and Precoat, said Tom Ferguson, president and CEO.
“Within the galvanizing sector, we’ve got a lot of open space out there,” he commented.
AZZ is considering acquisitions in regions where it lacks a significant presence, with Ferguson mentioning the Northwest and Southeast US. It’s also interested in opportunities involving multi-site acquisitions and expects to be active if the right deals arise.
“On the galvanizing side, there’s pretty much nothing that’s off the table,” he noted.
Ferguson said the company is disciplined when it comes to taking market share. Noting its market share on the galvanizing side is ~35%, he said there is more opportunity on the Precoat side.
“We plan to remain patient while evaluating the best timing leverage and target valuations,” Ferguson added.
Recall that AZZ acquired Precoat Metals for $1.28 billion in 2022. The acquisition of the St. Louis, Mo.-based steel and aluminum coil coater added 13 manufacturing facilities, 15 coating lines, and 17 value-added processing lines to AZZ’s portfolio.
And that was just one of its purchases in a buying spree of coated metal companies that included Steel Creek Galvanizing, Acme Galvanizing, Tennessee Galvanizing, and others.
When asked about volatility in zinc prices, Ferguson noted that it tends to be easier for AZZ to raise its prices when zinc costs are fluctuating. While zinc costs could present headwinds in the future, he said there may also be opportunities to raise prices, especially as demand from hurricane recovery efforts picks up.
As rescue and recovery are still the focus in the areas recently ravaged by Hurricanes Helene and Milton, he said there will likely be a three- to six-month lag time on rebuilding work. Plenty of fabrication work will be available as those areas begin to rebuild the bridges, highways, signages, towers, and poles destroyed by the storms.
And with plenty of capacity available, “We stand ready to support the recovery and rebuilding efforts,” he said.
Looking ahead, AZZ expects weaker results in the second half of its fiscal 2025 year due to the construction sector’s normal seasonal slowdown, winter weather in general, and the holiday season.
The company believes the Fed’s recent loosening of monetary policy will spur spending growth in the consumer and private sectors.
It remains optimistic about upcoming opportunities, particularly in data centers and electrical transmission.
Other general trends Ferguson noted that will continue to benefit AZZ include the “reshoring of manufacturing, the migration to aluminum and prepainted steel, as well as the conversion from plastics to aluminum in the container space.”
Steel mill lead times inched up this week for most sheet and plate products, according to buyers responding to our latest market survey. Compared to late-September, lead times have marginally extended for all products other than galvanized. Overall, lead times remain near some of the shortest levels witnessed this year.
Production times are mixed this week compared to those seen one month prior, but higher for all products vs. levels three months ago. For sheet products, lead times for hot-rolled steel remain around five weeks on average and tandem products are all hovering around seven weeks. Plate lead times continue to register about four weeks, around where they have been since mid-July.
Table 1 below summarizes current lead times and recent trends.
Compared to our Sept. 25 market check, the upper and lower limits for some of our lead time ranges this week have changed:
Just over half of the companies we surveyed this week believe lead times will be flat two months from now, down from 67% in our prior survey. A third expected production times to extend further (up from 20% in late-Sept.). The small remainder (9%) believe lead times will shrink further (vs. 13% two weeks prior).
We also asked buyers how they classify current mill production times. The majority continue to respond that they are either shorter than normal (47%) or within typical levels (44%). A small portion of buyers said lead times are slightly longer than normal (9%).
“Domestic lead times have started to slip. We expect that to continue due to poor demand across the board.”
“Normal cyclical curve for the steel market. Mill outages in December will push out lead times.”
“I think once the presidential election is decided, people/businesses will have some direction and business will pick up a bit.”
“In the next 30 days, they go down and then stabilize as buying picks up.”
“I expect a lead time push because of a rebound of steel demand.”
Figure 1 below tracks lead times for each product over the past two years.
One way to smooth out the variability seen in our biweekly readings and better highlight trends is to view lead time data on a three-month moving average (3MMA) basis. Through Oct. 9, 3MMA lead times increased ever-so-slightly on sheet products and marginally eased on plate products.
On a 3MMA basis, sheet lead times have begun to flatten out in recent months, while plate lead times continue to shrink. Generally all 3MMA lead times have trended downwards since February and remain at some of the shortest levels seen in the past year.
The hot rolled 3MMA is now at 4.82 weeks, cold rolled at 6.69 weeks, galvanized at 7.04 weeks, Galvalume at 7.13 weeks, and plate at 4.15 weeks.
Figure 2 highlights lead time movements across the past four years.
US hot-rolled (HR) coil prices slipped this past week but remain marginally higher than offshore material on a landed basis.
Since reaching parity with import prices in late August, domestic prices had been slowly pulling ahead of imports. But with stateside and offshore prices largely edging down this week, the US premium was squeezed a bit.
SMU’s check of the market on Tuesday, Oct. 8, put average domestic HR tags at $695 per short ton (st), down $10/st from last week. US hot band did rebound from July’s 20-month low, but prices have fluctuated, with average prices increasing just $60/st over the past two-and-a-half months.
Domestic HR is now theoretically 4.6% more expensive than imported material. That’s lower than last week’s reading of 5.8%. While the gains have been negligible at times, prices are still up from late July, when stateside products were ~12% cheaper than imported HR.
In dollar-per-ton terms, US HR is now, on average, $32/st more expensive than offshore product (see Figure 1), compared to $41/st more costly last week. Prices are still up $104/st from late July when US tags were ~$72/st cheaper than offshore material.
The charts below compare HR prices in the US, Germany, Italy, and Asia. The left-hand side highlights prices over the last two years. The right-hand side zooms in to show more recent trends.
This is how SMU calculates the theoretical spread between domestic HR coil prices (FOB domestic mills) and foreign HR coil prices (delivered to US ports): We compare SMU’s weekly US HR assessment to the CRU HR weekly indices for Germany, Italy, and East and Southeast Asian ports. This is only a theoretical calculation. Import costs can vary greatly, and that can influence the true market spread.
We add $90/st to all foreign prices as a rough means of accounting for freight costs, handling, and trader margin. This gives us an approximate CIF US ports price to compare to the SMU domestic HR coil price. Buyers should use our $90/st figure as a benchmark and adjust up or down based on their own shipping and handling costs. If you import steel and want to share your thoughts on these costs, please get in touch with the author at david@steelmarketupdate.com.
As of Thursday, Oct. 10, the CRU Asian HRC price was $484/st, a $12/st increase vs. the week prior. Adding a 25% tariff and $90/st in estimated import costs, the delivered price of Asian HRC to the US is approximately $696/st. As noted above, the latest SMU US HR price is $695/st on average.
The result: US-produced HR is theoretically about even, just $1/st cheaper than steel imported from Asia. That’s a $26/st decline from last week because prices in Asia edge up while domestic tags slipped. Still, it’s a far cry from late December, when US HR was $281/st more expensive than Asian products.
Italian HR prices declined $10/st to $550/st this week. After adding import costs, the delivered price of Italian HR is, in theory, $640/st.
That means domestic HR coil is still theoretically $55/st more expensive than imports from Italy. That’s flat week over week (w/w) as both markets diverged by $10/st. Recall that US HR was $297/st more costly than Italian hot band just five months ago.
CRU’s German HR price moved down $9/st to $563/st. After adding import costs, the delivered price of German HR coil is, in theory, $653/st.
The result: Domestic HR is theoretically $42/st more expensive than product imported from Germany. Stateside hot band was at an $18/st discount just a month ago. At points in 2023, in contrast, US HR was as much as $265/st more expensive than imported German hot band.
European automaker Stellantis is mulling a major management shakeup following the company’s recently lowered 2024 guidance, according to a Bloomberg report. This comes amid a spate of layoffs in the last few months at Stellantis, which has significant operations in the US, and at General Motors.
In its adjusted guidance at the end of last month, Stellantis cited a soft North American market and weakening industry dynamics worldwide.
Stellantis CEO Carlos Tavares said he could present his proposal at a board meeting scheduled in the US this week, according to the Bloomberg article.
A spokeswoman for Stellantis said the company declined to comment on the Bloomberg story.
The news comes amid layoffs that have occurred at both Stellantis and GM in the last few months.
A report in the Detroit Free Press on Sept. 24 said Stellantis is planning indefinite layoffs of union-represented workers “across its footprint.”
When asked by SMU about these layoffs, the spokeswoman said the company will continue to take “the necessary actions to improve operations across our facilities.”
She noted that Stellantis is in “full implementation mode” to protect the company from “intense” external market conditions. At the same time, the focus is also still on “offering customers vehicles they can afford.”
This includes ongoing assessments to improve manufacturing efficiency.
“While that effort continues, the company will be implementing indefinite layoffs of represented employees across its footprint,” she added.
A survey of WARN notices issued in several Rust Belt and Midwestern states yielded the following layoffs at Stellantis and GM facilities.
At its Warren, Mich., Truck Assembly Plant, Stellantis said in a WARN notice on Aug. 9 that it was laying off 1,200 workers. The plant makes the Jeep Wagoneer and Wagoneer L, Grand Wagoneer and Grand Wagoneer L, and Ram 1500 Classic. A report from Fox 2 Detroit said nearly 2,500 jobs have been cut from the plant.
GM also said in late August it would lay off 634 workers in Warren. A report in the Detroit Free Press said the cuts were at GM’s Global Technical Center.
At GM’s’ Fairfax, Kan., Assembly and Stamping Plant, 1,695 layoffs were announced via WARN on Sept. 19. The plant has 2,275 employees and makes mid-size models such as the Cadillac XT4 and Chevrolet Malibu.
The majority of steel buyers continue to report that mills are willing to talk price on new orders, according to our latest market survey. Negotiation rates have consistently been in the 70-80% range for over two months, relatively strong in comparison to levels seen across the past year
SMU polls hundreds of steel market executives every other week asking if domestic mills are willing to negotiate lower spot pricing on new orders. As shown in Figure 1, 78% of all buyers we surveyed this week reported that mills were flexible on price. This is now the highest negotiation rate recorded since late July, having ticked higher each of the last four weeks.
As seen in Figure 2, negotiation rates differ across our various sheet and plate products, ranging from 63-92%. Negotiation rates were highest for coated and hot-rolled products. The biggest movers from our prior survey were plate and hot rolled. Negotiation rates by product are:
“[Hot rolled] depends on the mill, more tons can achieve some type of quantity discount, but less discount available than previous weeks.”
“I think eventually [galvanized] prices trend up with less import being booked, but still seems to be the one product mills are willing to chase.”
“It is going to take a lot of steel to rebuild and repair what has been damaged by hurricane Helene and Milton. [Plate] prices are not going down anytime soon. I would not be surprised to see an $80-$100/ton increase on discrete plate.”
“Depends on the [plate] tonnage.”
Note: SMU surveys active steel buyers every other week to gauge their steel suppliers’ willingness to negotiate new order prices. The results reflect current steel demand and changing spot pricing trends. Visit our website to see an interactive history of our steel mill negotiations data.
The building that was once the headquarters of AK Steel is again up for sale.
The four-story office building in West Chester, Ohio, just north of Cincinnati, was recently listed for sale for an undisclosed sum.
Built-to-suit for AK Steel in 2007, the building last sold in 2018 for $25 million, according to Zillow records.
At that time, AK Steel employed 2,400 full-time employees at its corporate headquarters in West Chester and at its Middletown Works plant, according to local media.
The lease transferred to AK Steel’s new owner, Cleveland-Cliffs, when the Cleveland-based company acquired AK in 2020 for $1.1 billion. Cliffs said it would maintain a significant presence at the West Chester location.
AK was and now Cliffs is the only tenant in the building. It signed an early lease extension, which is good through July 2029, according to the listing company Institutional Property Advisors.
It is unclear how many workers Cliffs still employs at the location. The company did not respond to requests for comment.
Steel Dynamics Inc. (SDI) has become the world’s first steel producer with carbon targets certified by the Global Steel Climate Council (GSCC).
The Fort Wayne, Ind.-based steelmaker said the science-based, greenhouse gas (GHG) emissions-intensity targets and its 2022 base year data have also been verified by a third-party, global sustainability firm KERAMIDA Inc.
SDI set a 2050 emissions intensity target of 0.12 metric tons (mt) of CO2 e (“carbon dioxide equivalent”) per mt of hot-rolled steel produced. This is in alignment with the 1.5-degree Celsius scenario in the Paris Agreement adopted in 2015.
Additionally, the company set an interim 2030 emissions intensity target of 0.80 mt of CO2 e per mt of HR steel. This is a 15% reduction from the 2022 base year.
“Steel Dynamics is already a leader in producing lower-carbon steel products,” Mark D. Millett, SDI chairman and CEO, said in a statement on Thursday.
“Even though our emissions are already among the lowest in the industry, we are committed to further reducing our carbon impact and have an actionable path forward,” he added.
The company touted its investment of over $260 million in a biocarbon production facility in Columbus, Miss. Construction began there in 2023. It expects this will further decrease its Scope 1 emissions by as much as 35%.
Adina Renee Adler, executive director of the GSCC, praised SDI’s actions toward reducing its carbon footprint.
“Our certification recognizes Steel Dynamics for its leadership on decarbonization and taking a forward-leaning approach to continue cutting emissions across the company,” Adler said in a separate statement.
GSCC is a non-profit that leads efforts to reduce steel carbon emissions. Its members have a presence in 80+ countries around the world.
| Second quarter ended Aug. 31 | 2024 | 2023 | % Change |
|---|---|---|---|
| Net sales | $409.0 | $398.5 | 2.6% |
| Net income (loss) | $35.4 | $24.7 | 43.3% |
| Per diluted share | $1.18 | $0.97 | 21.6% |
| Six months ended Aug. 31 | |||
| Net sales | $822.2 | $789.4 | 5.2% |
| Net earnings (loss) | $(1.4) | $49.7 | (102.8)% |
| Per diluted share | $(0.05) | $1.95 | (102.6)% |
AZZ Inc. posted sharply higher second-quarter profits driven by increased sales and better demand for its products.
The Fort Worth, Texas-based hot-dipped galvanized and coil coater reported net income of $35.4 million in the second quarter of 2024, up 43.3% from $24.7 million in the same quarter last year. It posted Q2’24 sales of $409 million, up 2.6% from $398.5 million in Q2’23.
The gains were driven by “focused execution and seasonal strength,” AZZ President and CEO Tom Ferguson said in a statement released with earnings data after the close of markets on Wednesday.
“I want to thank all of our dedicated AZZ employees for their work this quarter on both sales volume and productivity improvements,” he added.
AZZ bills itself as North America’s largest hot-dipped galvanizer. It become so with its $1.28-billion acquisition of Precoat Metals in 2022.
The company has two business segments: Metal Coating and Precoat.
The Metal Coating segment recorded sales of $171.5 million in Q2’24, up 1% from Q2’23. AZZ said the gain came thanks to “slightly increased” volumes related to infrastructure spending, bridge and highway work, electricity transmission and distribution, and renewable energy.
Precoat posted sales of $237.5 million in Q2’24, up 3.8% from Q2’23. The increase resulted from higher sales volumes to construction, HVAC, and transportation, AZZ said.
On the cap-ex side, meanwhile, AZZ said it spent $32.1 million in Q2’24. Of that amount, the company earmarked $19.4 million for its new facility in Washington, Mo. The new plant remains on budget and on schedule, the company said.
Nucor said it would keep plate prices unchanged in a letter to customers on Wednesday.
The Charlotte, N.C.-based steelmaker also said it was opening its November order book for plate.
The company did not specify what its plate price was. It has officially kept prices flat since cutting them by $125 per short ton (st) on July 1.
SMU’s average price has fallen more than that. Our plate price now stands at $920/st on average as of Tuesday, down $200/st from $1,120/st in early July.
Some major domestic mills are offering plate prices as low as ~$860-880/st. And smaller regional players might be in the low $800s per ton, or not much higher than imports on a landed basis, market participants said.
Some also questioned Nucor’s plate price announcements. They cited the discrepancy between prices being officially flat even as tags have steadily eroded in the physical market.
SMU’s plate price is at its lowest point since $880/st in early January 2021, according to our pricing archives. They are also down nearly 53% from an all-time high of $1,940/st reached in the spring of 2022 following Russia’s full-scale invasion of Ukraine in the winter.
The war led to panic over pig iron supplies and the destruction of Azovstal Iron and Steel Works, previously an important supplier of plate and of slab to international markets – including the US.
After a complete stoppage earlier this year, ArcelorMittal Mexico’s steel mill in Lazaro Cardenas, in the state of Michoacán, will soon return to full production.
The company announced it previously restarted flat product production and will return to making long products on Oct. 16.
It noted that the mill’s capacity for manufacturing long products is 1.5 million metric tons per year (mtpy). The restart will help the company reach the mill’s total production capacity of 5.3 million mtpy.
“This milestone represents the company’s full return to the Mexican steel market, after a gradual reactivation process,” the company said in a statement translated from Spanish.
Recall that a labor strike earlier this year forced the mill to close for 55 days. The steelmaker and local mining union reached an agreement to end the work stoppage in July.
The mill on Mexico’s west coast operates one blast furnace for manufacturing long products, including bars and wire rod. It also has four electric-arc furnaces for making flat products.
In 2023, the mill produced 3.8 million mt of crude steel, with 2.8 million mt of flats and 1.0 million mt of longs.
Victor Cairo, CEO of ArcelorMittal Mexico, emphasized that resuming operations is important for both the company and the local economy.
“The restart of the plant in Michoacán not only marks the return to its maximum production capacity, but also contributes to the development of critical infrastructure for Mexico and the strengthening of the country’s industrial sector,” the company said.
Stelco Inc. said that the Canadian Competition Bureau will not challenge Cleveland-Cliffs’ pending buy of the Hamilton, Ontario-based steelmaker.
The issuance of a “no-action letter” by the Bureau means that the $2.5-billion deal, first announced in July, has cleared another antitrust hurdle, this time on the Canadian side of the border.
The companies anticipate the deal to close by the end of the year.
As previously reported, in the US, the deal’s waiting period for the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) expired on Oct. 8, clearing that antitrust obstacle. Additionally, the deal has the support of the United Steelworkers (USW) union. And, in September, Stelco shareholders voted to OK the transaction.
Lourenco Goncalves, Cliffs’ chairman, president, and CEO, noted that a third milestone for the deal was also achieved this week, as the company “successfully raised the remaining capital to fund the transaction.”
Stelco is an integrated steelmaker with operations in Hamilton and Nanticoke, Ontario.
It’s another week of big headlines for the world writ large – an expanding war in the Middle East, another potentially catastrophic hurricane – and not much going on in the world of steel prices.
“Call me Stevie Wonder, I see nothing.” That’s how one service center executive described the current sheet market. There seems to be almost a competition among some of our Community Chat guests and contributors to outdo each other in flowery ways to say, “Not much is happening.”
Sheet prices might go up or down slightly in any given week. They’re generally lower this week. But despite that dip, HR prices remain around $700 per short ton (st) on average – as has mostly been the case since August. Cold-rolled and coated prices have been $900-950/st on average over that same period, according to SMU’s pricing records.
One mill source told me today that, from his perspective, prices should continue to inch higher – especially in the wake of recent trade actions and potential future ones. “The game is turning all domestic on all products, little by little,” he said.
A second Midwest service center source said that the calendar might provide a lift to prices. He pointed out that Christmas and New Year’s fall on Wednesdays, which effectively takes two weeks out of the calendar instead of one.
Recall that last year, the holidays fell on Mondays. In 2022, they landed on Sundays. And in 2021, Saturdays. “With that and the Thanksgiving week, a 7-8 week lead time is quickly approaching 2025 production, which if we might ever see a bump in pricing, that could be it,” he said.
He was referencing cold-rolled and coated lead times. But at Steel Dynamics Inc. (SDI), according to lead times posted on Wednesday, HR is out that far at its Sinton, Texas, facility. And its operation in Columbus., Miss., is closed. That squares with some of you who’ve told me: You’re having trouble finding discounts from certain mills even if you have large tons to place. And some of those mills aren’t taking large orders.
It’s starting to sound pretty bullish, right?
And yet HR futures markets appeared to move lower on Tuesday on news that stimulus from Beijing might not be enough to turn China’s economic prospects around. That sent seaborne iron ore prices lower.
And, closer to home, we keep hearing variations on this theme: Election-related uncertainty is weighing on the market. Polls show it remains historically close, so it’s hard to see that uncertainty going away soon.
And concerns remain on the demand side. That first service center source, we’ll call him Mr. Wonder, said he thinks he could get prices in the low $600s from some of his domestic suppliers if he could cobble together a big enough buy. In the past, the price negotiation was more difficult than finding enough orders to justify a large purchase. Now the reverse is true, he said.
Another service center source said his company had 3.5 months’ supply of inventory on hand, more than he’d like to have – but less than some of his competitors. He pushed back against the idea that the calendar might help steel prices.
As he sees it, mills will be mostly past their maintenance outages by the end of October. That means more supply into the market during what is typically one of the weakest times of the year. And he questioned how active the spot market was at current prices, especially if buyers can mostly tide themselves over with contract tons.
A steel buyer on the plate side, meanwhile, said it’s still tough to find and retain skilled workers – as it was in 2021. But it’s not so much of a struggle to find competitively priced plate, especially with prices at their lowest levels since then.
Some major North American plate mills are in the $800s/st, which makes imports from South Korea and Brazil in the high $700s/st not very competitive. But while prices might finally be manageable, demand is only a fraction of what it had been, he said.
The plate buyer pointed to lead times as short as 2-3 weeks among EAF mills. And among his customers, “I don’t know many who are doing well, doing overtime, or putting on more shifts,” he said.
He pinned that partly on big projects – like offshore wind – not coming to fruition. And partly on high steel prices in the US driving downstream work aboard.
So, which is it: Could prices and demand inflect higher as lead times stretch closer to 2025? Or will prices slip as maintenance outages conclude, on a weaker global economy, and on questions about demand?
I could hazard a guess. But it would be just that. So let us know what you’re seeing in the market.
One of the best ways to do that is by participating in our steel market surveys. So ping us if you’d like to at info@steelmarketupdate.com.
And in the meantime, thanks to all of you for your continued business. We really do appreciate it.
Steel sheet and plate prices moved lower this week as efforts by some mills to hold the line on tags ran up against continued concerns about demand.
SMU’s hot-rolled coil price now stands at $695 per short ton (st) on average. That’s down $10 from last week but still within the narrow range of average prices ($685-705 st) we’ve seen since late August, according to SMU’s interactive pricing tool.
How did we arrive at that number?
Certain larger mills are trying to stick to numbers around Nucor’s published price of $730/st. And some of those mills sport lead times into mid-November or even early December once you factor in Thanksgiving, market participants said.
But some smaller mills, as well as certain northern mills, remain willing to sell in the mid/high $600s/st given a more competitive market. And certain larger buyers speculated that they could get prices in the low $600s/st should they return to the market.
It was a similar story across cold-rolled (CR) and coated products. SMU’s CR price fell $20/st to $940/st on average. Galvanized base prices dropped $25/st to $920/st on average. And Galvalume prices were unchanged at $940/st.
Despite the week-over-week declines in CR and galv, both remained within the $900-960/st range they’ve been in since mid-August.
Market sentiment was decidedly weaker on plate, where SMU’s average price fell $20/st to $920/st on average. We haven’t seen plate prices that low since early January 2021. And several buyer sources said major plate mills were selling well below $900/st despite list prices as high as $1,075/st.
SMU’s price momentum indicator remains neutral for sheet products until a clear trend emerges. And our plate momentum indicator continues to point lower.
The SMU price range is $660-730/st, averaging $695/st FOB mill, east of the Rockies. The lower end of our range is down $20/st w/w, while the top end is unchanged. Our overall average is down $10/st. Our price momentum indicator for hot-rolled steel remains at neutral until the market establishes a clear direction.
Hot rolled lead times range from 3-6 weeks, averaging 4.9 weeks as of our Sept. 25 market survey. We will update lead times this Thursday.
The SMU price range is $900–980/st, averaging $940/st FOB mill, east of the Rockies. The low and high ends of our range are both down by $20/st w/w, as is our overall average. Our price momentum indicator for cold-rolled steel will remain at neutral until the market establishes a clear direction.
Cold rolled lead times range from 5-9 weeks, averaging 6.9 weeks through our Sept. 25 survey.
The SMU price range is $880–960/st, averaging $920/st FOB mill, east of the Rockies. The lower end of our range is down $20/st w/w, and the top end is down $30/st. Our overall average is down $25/st from last week. Our price momentum indicator for galvanized steel remains at neutral until the market establishes a clear direction.
Galvanized .060” G90 benchmark: SMU price range is $977–1,057/st, averaging $1,017/st FOB mill, east of the Rockies.
Galvanized lead times range from 5-9 weeks, averaging 7.3 weeks through our last survey.
The SMU price range is unchanged for a third week at $900–980/st, averaging $940/st FOB mill, east of the Rockies. Our range is unchanged w/w. Our price momentum indicator for Galvalume steel remains at neutral until the market establishes a clear direction.
Galvalume .0142” AZ50, grade 80 benchmark: SMU price range is $1,194–1,274/st, averaging $1,234/st FOB mill, east of the Rockies.
Galvalume lead times range from 6-9 weeks, averaging 7.3 weeks through our latest survey.
The SMU price range is $860–980/st, averaging $920/st FOB mill. The lower end of our range is down $40/st w/w, while the top end is unchanged. Our overall average is down $20/st w/w. Our price momentum indicator for plate remains at lower, meaning we expect prices to decline over the next 30 days.
Plate lead times range from 2-6 weeks, averaging 4.0 weeks through our latest survey. Look for updated lead times on Thursday.
SMU note: Above is a graphic showing our hot rolled, cold rolled, galvanized, Galvalume, and plate price history. This data is also available here on our website with our interactive pricing tool. If you need help navigating the website or need to know your login information, contact us at info@steelmarketupdate.com.
Worthington Enterprises has named Joseph Hayek as the company’s next president and CEO, effective Nov. 1. He will replace Andy Rose, who is retiring.
Hayek has served as the Columbus, Ohio-based company’s EVP and chief financial and operations officer since December 2023.
Recall that Worthington Industries split into two standalone, public companies on Dec. 1 of last year: Worthington Enterprises and Worthington Steel. Worthington Enterprises focuses on building products, consumer products, and sustainable energy solutions. Meanwhile, Worthington Steel specializes in steel processing, electrical steel lamination, and tailor welding.
Before the split, Hayek served as Worthington Industries’ VP and CFO from November 2018 to November 2023.
“We expect a seamless and effective transition as Joe has earned the respect of the board, our employees and the investment community,” Worthington Enterprises Chairman of the Board John Blystone said in a statement on Tuesday.
Regarding Rose’s retirement, Blystone said: “On behalf of the board, I would like to thank Andy for his contributions to Worthington over his 16 years with the company and four years as CEO.”
“I would particularly like to recognize the role he played successfully leading the team that separated Worthington Industries into two independent public companies,” he added.
At the same time, Worthington Enterprises announced Colin Souza will become VP and CFO of the company, also effective Nov. 1. He is currently VP of finance, overseeing financial planning and analysis, corporate development, M&A, and corporate strategy and innovation.
Domestic steel shipments increased month over month in August but slipped year over year.
Steel mills in the US shipped 7,292,562 short tons (st) in August, up 1.8% from 7,160,731 the previous month. However, that marked a 3.8% decline from 7,580,767 st in August 2023.
Year-to-date (YTD) shipments through August stood at 58,212,974 st, down 3.9% from 60,564,059 st for the first eight months of last year.
Comparing YTD 2024 shipments to same period last year shows the following: cold-rolled sheet, up 4%; corrosion-resistant steel, down 2%; and hot-rolled steel, off 5%.
Richard Fruehauf, formerly of U.S. Steel, has been named chief venture officer of robotics and AI firm Carnegie Foundry.
Fruehauf most recently served as senior vice president and chief strategy and sustainability officer of Pittsburgh-based U.S. Steel.
As previously reported, he left the steelmaker in June.
In his new role, Fruehauf will focus on securing key partnerships and investments to support new ventures.
“Having worked with Carnegie Foundry during my tenure at U.S. Steel, I was deeply impressed by its unique capability to deliver a continuous flow of significant innovations,” Fruehauf said in a statement on Monday.
“I am excited to now play a direct role in helping to bring pioneering IP to market,” he added.
Pittsburgh-based Carnegie Foundry said decarbonization and sustainability are among the key areas the company is targeting for future market entry.
The US has banned imports from a subsidiary of the world’s largest steelmaker because it allegedly uses forced labor to produce steel products.
The US Department of Homeland Security (DHS) has added Baowu Group Xinjiang Bayi Iron and Steel Co. (Xinjiang Bayi) to its Uyghur Forced Labor Prevention Act (UFLPA) Entity List.
Xinjiang Bayi, which produces hot-rolled coil, plate, and rebar, is located in Ürümqi, Xinjiang, China. It was acquired by the Baosteel Group in 2007. When Baosteel merged with Wuhan Iron and Steel in 2016, it became China Baowu Steel Group. The group is now the largest steelmaker in the world, producing over 130 million metric tons in 2023.
The UFLPA, in place since December 2021, prohibits the importation of goods mined, produced, or manufactured wholly or in part with forced labor in the Xinjiang Uyghur Autonomous Region (XUAR) of the People’s Republic of China.
“The United States government has reasonable cause to believe, based on specific and articulable information, that Xinjiang Bayi works with the government of the XUAR to recruit, transport, transfer, harbor, or receive Uyghurs, Kazakhs, Kyrgyz, or members of other persecuted groups out of the Xinjiang Uyghur Autonomous Region,” DHS said in a statement on Oct. 2.
The UFLPA list now includes 75 entities, mainly in the chemicals, apparel/textiles, and agricultural sectors. Xinjiang Bayi is the first steel company added to it.
DHS cautioned US importers to conduct due diligence and research their supply chains to determine any risks of forced labor.
“No sector is off-limits,” warned DHS Under Secretary for Policy Robert Silvers.
Customs and Border Protection (CBP) will deny entry to any goods or their components believed to be produced by these entities.
SMU received a tip earlier this year that a vessel carrying ~20,000 tons of Chinese tin plate was denied entry at a US port because it was unable to certify that the product was not made with forced labor. We were unable to confirm that rumor.
Iron ore prices spiked as the Chinese market reopened after the country’s seven-day holiday, but the rally started to lose steam on Tuesday afternoon. The iron ore price closed at $106.5 per dry metric ton (dmt) today, which is $2.0/dmt lower than the closing price before the holiday.
Iron ore supply has remained ample after strong shipments in September. Australian supply declined somewhat in the first week of October, but this is expected for the first week of Q4 as producers are carrying out maintenance after sustaining robust shipments since mid-August. Indian exports have been subdued during China’s holiday period and will be restricted by post-monsoon restocking activity in the domestic market in October. Ukrainian producer Ferrexpo released its Q3 results, showing a 16% quarter-over-quarter (q/q) decline in total production under challenging environment of high costs including electricity, freight, and additional war risk insurance premiums. In Brazil, iron ore exports were very strong in September at 36.9 million metric tons (mt), up by 2.6 million mt month over month (m/m) and 1.3 million mt year over year (y/y). Low-grade exports remained high as many small producers in Minas Gerais make one final push before the wet season starts. We also see an increasing proportion of Brazilian ore being shipped to China. Our data shows that arrivals of Brazilian ore to the Chinese market will reach a new all-time high in the coming months.
Rising Chinese steel and iron ore prices before the holiday sent positive signals to steel producers. Besides the announced monetary measures, there are rumors regarding strong fiscal stimulus, which is believed to be more effective in supporting steel demand and exacerbated the upward price reaction. Hot metal production responded quickly and edged higher even during the quiet holiday period. A contact commented that government-imposed production cuts are very unlikely as pollution control needs to give way to employment. Steel demand is yet to show any concrete change on the first day of market reopening, and the weak steel market in other parts of the world, combined with the absence of new stimulus measures on Tuesday, have made traders more cautious about the iron ore price direction in the coming weeks.
The current price level cannot sustain as optimism will fade away and demand/supply fundamentals are not supportive. We expect iron ore prices to hold steady in the coming week. The market is still looking for a direction and the stimulus hopes will still linger, while the strong supply and weak demand mean we are poised for a correction later in the month.
NOTE: There are two price assessments for iron ore and coal displayed on this page, both sets of prices are published weekly each Tuesday. The assessments in the column on the right represent the average of market prices over the past week and are available in online tables, workbooks and Data Lab. The assessments in the dashboard below include only price information for Tuesday up to market close in Asia and are only available in this dashboard.
Editor’s note: This article was first published by CRU. To learn more about CRU’s services, click here.
Cleveland-Cliffs has cleared a regulatory hurdle for its pending purchase of Canadian steelmaker Stelco Inc.
The waiting period for the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) has expired for the deal.
“The expiration of the HSR Act waiting period clears an important regulatory hurdle and marks a significant step toward the closing of this acquisition,” the company said in a statement on Tuesday.
The HSR Act requires that companies file premerger notifications with the Federal Trade Commission (FTC) and the Antitrust Division of the Justice Department for certain acquisitions, according to the FTC website.
The Cleveland-based steelmaker said the deal is expected to close in Q4’24 following the satisfaction or waiver of other customary closing conditions and approvals.
“We are excited to secure this critical step in the process and move another step closer toward completing this transformative acquisition of Stelco,” Lourenco Goncalves, Cliffs’ chairman, president, and CEO, said.
Recall that Cliffs announced plans to acquire Stelco for $2.5 billion in July. The deal has the support of the United Steelworkers (USW) union. Additionally, in September, Stelco shareholders voted to OK the transaction.