SMU Managing Editor Michael Cowden joined this month’s virtual discussion on Tuesday, Sept. 24.

Galvanized sheet prices

The call moderator opened the meeting by noting that prices for galvanized sheet steel have been mostly stable since last month’s meeting. If anything, prices inched higher, rising ~$1 per cwt, or ~$20/short ton, he commented.

Indeed, SMU’s interactive pricing tool shows galvanized base prices averaging $920/st ($46/cwt) as of Sept. 24. This was a monthly increase of $15/st ($0.75/cwt), or less than 2%. After bottoming in late July at $870/st, prices have since risen $50/st, or 5.7%.

The market remains stuck “in a wait-and-see mode,” as one buyer put it. There are some fundamentals in place for higher steel prices, he remarked. But lackluster demand, high inventory levels, and excess supply are driving uncertainty and keeping prices in check.

“This inventory in the system is really what’s keeping a lid on prices,” according to another buyer. He said there are plenty of players with high inventories “all fighting for the same orders right now.”

However, some participants reported increased service center activity and inventories falling below the two-month mark, which they saw as positive indicators of a coming restocking.

While prices are firming at the mill level, the “street level is still pretty swampy,” noted one HARDI member, referring to the market conditions discussed on last month’s call.

Most call participants (58%) predicted galvanized base prices will be mostly flat (+/- $40/st) for the next month. Still, 17% anticipate a rise of at least $40/st, and 25% said the increase will be at least $80/st.

One buyer likened current market conditions to fighting in wet, muddy trenches. He predicted there won’t be any significant price movement until at least the first quarter of next year.

Most buyers present agreed with the prediction: 50% thought prices would be at least $40/st higher than current levels by the end of March, and 33% said they’ll be more than $120/st higher.

Another purchaser expressed that this relative price stability would likely continue for the next few months. That is, “absent any type of black swan event, whether … a major port strike or a trade case or an outage or something that we’re not even talking about,” of course.

Buyers watching CORE trade case and BF idling

Call participants also talked about the impacts of the filing of a trade case against coated sheet imports earlier this month.

It’s already impacting the market, having “put the brakes on some of the interest and foreign inquiries on galv in particular,” said one buyer.

Another member disclosed that his company is seeing increased orders from what are typically offshore buyers, driven by “fear of the impending tariffs.” He speculated this would spur activity at domestic mills and fill their order books, pushing lead times out and prices higher.

Also of note, the call moderator mentioned the upcoming hot idling of a blast furnace by Cleveland-Cliffs. Noting the furnace’s annual capacity of over 1.5 million st (or 4,150 st per day), “That is not insignificant,” he commented. “I guess that is a reflection of lackluster demand.”

SMU participates in a monthly steel conference call hosted by HARDI and dedicated to better understanding the galvanized steel market. The participants are HARDI member companies, wholesalers who supply products to the construction markets. Also on the call are service centers and manufacturing companies that either buy or sell galvanized sheet and coil products used in the HVAC industry and are suppliers to the HARDI member companies.

Further, the board said that no further action is necessary under the BLA to close the pending transaction between U.S. Steel and Tokyo-based Nippon.

Recall that the deal was first announced last December. Since then, there has been pushback from the union and various politicians, including President Biden and current Democratic and Republican presidential nominees, Vice President Kamala Harris and former President Donald Trump.

The deal still faces US government regulatory hurdles. This includes a critical national security review by the Committee on Foreign Investment in the United States (CFIUS). Earlier this month, that decision was pushed back until after the election.

U.S. Steel and Nippon Steel still hope to close the transaction by the end of this year.

USS cheers

The company said the Board of Arbitration cited Nippon Steel’s written commitments in support of its decision.

These include Nippon’s pledge to invest no fewer than $1.4 billion in USW-represented facilities, not to conduct layoffs or plant closings during the BLA’s term, and to safeguard the best interests of U.S. Steel in trade matters.

“With the arbitration process now behind us, we look forward to moving ahead with our pending transaction with Nippon Steel,” David Burritt, USS president and CEO, said in a statement on Wednesday.

He noted that with the commitments from Nippon, “We will protect and grow U.S. Steel for the benefit of our employees, communities and customers.”

USW jeers

The union said it “strenuously disagreed” with the decision.

“The arbitrators accepted at face-value Nippon Steel’s statement that it would assume the Basic Labor Agreement, despite the obvious means by which it’s using its North American holding company to insulate itself from our contracts,” USW said in a statement on Wednesday.

The statement was issued by Mike Millsap, USW District 7 director and chairman of the negotiating committee, and USW International President David McCall.

The two commented that Nippon’s commitment to USW facilities and jobs “remains as uncertain as ever.”

While disappointed, they said, “It does nothing to change our opposition to the deal or our resolve to fight for our jobs and communities that hang in the balance in this transaction.”

The union said the owner of USS needs to make “iron-clad, enforceable commitments to maintain blast furnace operations well into the future.” Otherwise, “Our country will lose its capacity to make much of what we need for the automotive industry, bridges, and other infrastructure and military operations.”

The union added that these products cannot be made in EAFs like at USS’ Big River Steel in Osceola, Ark.

Inflation still a major sticking point

High prices and inflation continue to weigh on consumers, influencing their view of the economy in September, a trend seen for much of the year. Inflation appears to be cooling, but prices have risen more than 16% over the past three years, and the job market shows signs of weakness.

Both the Present Situation and the Expectations indices also declined in September. Despite the downgrade in confidence, consumers’ intent to purchase big-ticket items was mixed, though buying plans for homes and new cars improved slightly.

“Consumers’ assessments of current business conditions turned negative while views of the current labor market situation softened further. Consumers were also more pessimistic about future labor market conditions and less positive about future business conditions and future income,” commented Dana Peterson, chief economist at The Conference Board.

The Present Situation Index, which measures consumer sentiment toward current business and labor market conditions, declined for a third consecutive month, falling 9.1 points from August to 124.3 in September. The Expectations Index, which assesses the short-term outlook for income, business, and labor market conditions, also moved slightly lower to 81.7.

Consumer Confidence 3MMA trend

Calculated as a three-month moving average (3MMA) to smooth out volatility, The Conference Board’s Composite Index was 101.5, a 0.3-point increase from August, marking September as the third straight month to see a rise.

The Composite Index is made up of two sub-indexes: Consumers’ view of the present situation and their expectations for the future. Figure 1 below notes the 3MMA linear trend lines from January 2019 through September 2024 vs. the trend lines of all three subcomponents of the index, Present Situation, Composite, and Future Expectations. All three subcomponents were above the average composite line of 95.7 before the pandemic, then fell consecutively through February 2021. A surge from March through June of 2021 again pulled all three indexes above the composite line. However, economic uncertainty continues to weigh on expectations, keeping them below the average.

The table below compares September 2024 with September 2023 on a 3MMA basis. The headline index and its two sub-indexes have been declining on a year-over-year (y/y) basis, with the Present Situation showing a much sharper decline. All three indexes also show downward momentum, something worth keeping an eye on, with September’s notable dip.

Business and employment conditions

The present situation saw a sharp cut in September as consumer “confidence declined in September across most income groups, with consumers earning less than $50,000 experiencing the largest decrease,” according to the report.

The differential between those finding jobs and those having difficulty was 12.6 in September, down from 15.9 in August and well behind the year-to-date high of 32.2 in March. The difference between those expecting wages to rise vs. those expecting wages to decline moved to 5.0 in September from 6.9 the month prior but is still above a low of 2.7, also registered in March.

Buying intentions for big-ticket items — cars, homes, and major appliances — were mixed in September. While consumers were slightly more keen to purchase autos and homes, they were less so for major appliances.

These recent dynamics and historical movements are illustrated below in Figure 2.

Note: The Conference Board is a global, independent business membership and research association working in the public interest. The monthly Consumer Confidence Survey®, based on a probability-design random sample, is conducted for The Conference Board by Nielsen. The index is based on 1985 = 100. The composite value of consumer confidence combines the view of the present situation and expectations for the next six months.

On a three-month moving average (3MMA) basis, world production declined 4% month on month (m/m) to 152.6 million mt through August. This is the lowest 3MMA recorded in six months. On a 12-month moving average (12MMA) basis, production over the last year has averaged 152.5 million st per month, 1% less than the August 2023 12MMA.

On a daily basis, August production averaged 4.67 million mt per day. This daily rate is 5% lower than the prior month and now the lowest measure recorded since last December. Daily production in August was 5% lower than the same month one year ago.

Regional breakdown

China, the world’s top steelmaker, produced 77.9 million mt last month, down 6% m/m. Recall that in May Chinese production reached a 14-month high of 92.9 million mt. August production is down by 10% compared to the same month one year ago. Year-to-date production has averaged 85.9 million mt per month across 2024, down from a rate of 88.7 million mt in the same period last year.

Chinese production accounted for 54% of the world’s total steel output in August. This is unchanged from July, but down from a rate of 56% this time last year.

Steel output from the rest of the world (ROW) eased 3% m/m in August. Production in these regions totaled 66.9 million mt, down 1% from levels one year prior. ROW production has averaged 69.9 million mt per month so far this year, up from 69.5 million mt in the same period of 2023.

Production by country

Looking at production levels by country, Indian mills retained the number two spot last month, producing 12.3 million mt of steel in August. Next up was the United States at 7.0 million mt, followed by Japan at 6.9 million mt, Russia at an estimated 5.8 million mt, and South Korea at 5.5 million mt.

“The rigorous requirements needed for ResponsibleSteel Certified Steel represent a new gold standard for responsible steel manufacturing on a global scale,” U.S. Steel President and CEO David B. Burritt said in a statement on Tuesday.

According to the statement, ResponsibleSteel is a “global multi-stakeholder standards body” that has enabled certification at the site level and now at the product level.

Burritt remarked that the certification “gives customers and stakeholders confidence that Big River is on the path to near zero (carbon emissions) and demonstrates that we are using responsible practices across our supply chain.”

The ResponsibleSteel International Production Standard, established in 2022, uses environmental, social, and governance requirements across its “13 Principles.” These include over 500 criteria for the responsible sourcing and production of steel.

“Our transparency around decarbonization and collaborative approach with our suppliers and community all play a role in what it means to have truly ‘sustainable’ steel products for our customers,” Dan Brown, SVP of advanced technology steelmaking for USS and COO of Big River Steel Works, said in the statement.

Explore the full STEO report covering energy spot prices, production, and inventories here.

Oil and gas spot prices

The weekly West Texas Intermediate oil spot market price has remained rangebound for the last two years, hovering between $70-90 per barrel (b). The spot price has moved lower across the last two months, falling to $68.82/b through the week of Sept. 13 (Figure 1). This is now the lowest weekly spot price recorded since December 2021.

In its latest forecast, the EIA expects spot oil prices to recover and average $82/b in the fourth quarter, down from prior estimates. Its 2025 forecast has been revised downwards to $84/b.

Following historical lows seen earlier this year, natural gas spot prices rose in May and June but have since edged back down. Recall that, in March, prices fell to a 25-year low of $1.40 per metric million British thermal units (mmBtu). The EIA attributed these low prices to historically high inventory levels due to reduced winter consumption. Following a three-month low of $1.88/mmBtu in August, natural gas prices are beginning to increase. Prices reached a one-month high of $2.13/mmBtu through the week of Sept. 13.

The September STEO forecasts natural gas prices to climb in the coming months and to reach an estimated $3.25/mmBtu by early next year. EIA forecasts natural gas prices from November through March to average $3.10/MMBtu, following regular seasonal patterns. This rise is supported by higher seasonal heating demand and higher gas exports from new facilities in Texas and Louisiana.

Rig counts

The number of active drilling rigs operating in the US remains near multi-year lows, territory they have been in for the last three months (Figure 2). The latest US count is 588 active drill rigs as of Sept. 20, according to Baker Hughes. Active US rig counts are 7% below year-ago levels.

Drilling activity in Canada has declined over the past two weeks but is still up 11% from a year ago. The active rig count was 211 rigs last week, declining from a six-month high earlier this month (Figure 3).

Stock levels

US crude oil stocks have eased in the past three months, following a 14-month high in June. As of Sept. 14, the US stock level declined to almost a seven-month low of 798 million barrels. September stocks were still 1% higher than at the start of the year and 4% higher than last year (Figure 4).

I thought that was a bit of a head-scratcher. The need for stimulus typically indicates that things aren’t going so well. China does not ship much in the way of finished steel into the US because of existing duties and tariffs.

Whatever the case, as I noted in my last Final thoughts, there is plenty of reason to be bullish on US sheet prices in Q4 and into Q1 of next year.

There is a major trade case against coated products pending. We could see increased trade restrictions against Mexico. And we could also see a major strike at US ports as soon as next week. Combine that with planned fall maintenance outages, and you could make a strong case that US mills should be able to continue ride the current “mini-rally” higher.

There are some big questions of course. What kind of trade restrictions on Mexico are we talking about exactly? A group of US senators has floated a 25% tariff on imports of Mexican steel. Former President Donald Trump is threatening a 200% tariff on John Deere, a US company, should it move production to Mexico. And the Biden administration has already announced stricter Section 232 measures against Mexico. (Less talked about: What if Mexico – or Canada, which is also targeted in the coated trade case – retaliates?)

As Lewis Leibowitz noted in a column on Sunday, the data don’t necessarily support such moves against Mexico. But numbers have a way of not getting in the way of a narrative, especially in an election year. Just ask U.S. Steel and Nippon Steel what happens to logic and moderation when an issue becomes a political football and the White House is up for grabs.

And yet for every person that tells me potential trade restrictions are already having an impact and that steel prices have nowhere to go but up, another says that it’s too early to say.

Some note that we could see – somewhat counterintuitively – more coated imports toward the end of the year. Basically, recently placed orders or shipments already on the water coming in. Perhaps driven by folks trying to get in a last cargo before Commerce publishes preliminary duty margins. (SMU has a helpful timeline for the trade case here.)

Certainly, the widely anticipated case had no impact on August import licenses. The US was licensed to import approximately 403,000 short tons (366,000 metric tons) of coated flat-rolled steel in August, up 11% from 362,000 short tons in July, according to Commerce Department figures.

And I’ve been told by some of you that other nations not targeted in the case – Indonesia and Pakistan, for example – could help fill some of the gaps left by Vietnam, arguably the primary target of the case. Keep in mind, too, that all the tons that Vietnam had been sending to the US will have to find a home elsewhere. Where will that be?

And on the HR side, even as more and more mills press for $700-750 per short ton (st), some of you tell me that prices in the $600s are still readily available from other producers. You might also note that certain mills have lengthy secondary and excess prime lists. And that those prices haven’t budged much even as spot prices for prime material have steadily risen.

Maybe that shouldn’t be a surprise. Automotive looks like it’s slowing down. There are planned layoffs at Stellantis, according to the Detroit Free-Press. General Motors also has major layoffs slated, according to Automotive News. Meanwhile, dealer inventories are higher than they were a year ago, according to Cox Automotive. Heck, who can even afford a new car anymore, especially once you factor in gas and insurance? (Um, asking for a friend.)

As I’ve noted before, our survey data indicates that service center inventories are high and demand is weaker than it was a year ago. Yes, HR lead times are nearly five weeks on average for HR, which is a healthy number. Will they remain so once we’re past most fall maintenance outages about 30-45 days from now?

But back to the futures. One thing that strikes me is how steady prices have been over the last three months. Especially by the standards of the last three years. That’s why the big moves upward caught my attention.

Steel is infamously volatile. Can we really continue to tread water around $650-750/st? Or will we see prices break out above that level or fall below it? Maybe it’s just too hard to know, which is why some of you tell me that you’re still in “wait-and-see mode.”

Each of our indices have fluctuated within relatively narrow ranges across September, ranging from $10-25 per short ton (st).

We are hearing that high inventories and uneven demand are the culprits keeping prices in check. Some factors could send them higher, such as trade case impacts and a potential port strike.

Our hot-rolled steel index increased $5/st week over week (w/w) to $695/st, the highest price seen this month. HR prices are up by $60/st compared to levels two months prior, when they had reached a year-and-a-half low of $635/st in July.

Following a 10-week high recorded last week, cold-rolled steel prices edged $5/st lower w/w to $945/st. Prices have recovered $45/st from July’s 10-month low.

Prices for coated products remained around their highest points in the last three months. Our base Galvanized index held steady at $920/st. Galvalume base prices increased $10/st w/w to $940/st. Our coated indices have risen $45-50/st compared to their mid-July lows.

This week our plate index held steady for the third consecutive week at $950/st. Plate prices have declined $70/st over the last two months and have overall trended downward since late last year.

SMU’s sheet price momentum indicator remains at neutral following our Sept. 10 adjustment. Our plate price momentum indicator remains at lower.

Hot-rolled coil

The SMU price range is $660-730/st, averaging $695/st FOB mill, east of the Rockies. The lower end of our range is unchanged w/w, while the top end is up $10/st w/w. Our overall average is up $5/st w/w. Our price momentum indicator for hot-rolled steel remains at neutral, meaning we see no clear direction for prices over the next 30 days.

Hot rolled lead times range from 3-7 weeks, averaging 4.9 weeks as of our Sept. 11 market survey. We will publish updated lead times this Thursday.

Cold-rolled coil

The SMU price range is $890–1,000/st, averaging $945/st FOB mill, east of the Rockies. The lower end of our range is down $10/st w/w, while the top end is unchanged w/w. Our overall average is down $5/st w/w. Our price momentum indicator for cold-rolled steel remains at neutral, meaning we see no clear direction for prices over the next 30 days.

Cold rolled lead times range from 5-8 weeks, averaging 6.7 weeks through our latest survey.

Galvanized coil

The SMU price range is $860–980/st, averaging $920/st FOB mill, east of the Rockies. Our range is unchanged w/w. Our price momentum indicator for galvanized steel remains at neutral, meaning we see no clear direction for prices over the next 30 days.

Galvanized .060” G90 benchmark: SMU price range is $957–1,077/st, averaging $1,017/st FOB mill, east of the Rockies.

Galvanized lead times range from 6-8 weeks, averaging 7.2 weeks through our latest survey.

Galvalume coil

The SMU price range is $900–980/st, averaging $940/st FOB mill, east of the Rockies. The lower end of our range is unchanged w/w, while the top end is up $20/st w/w. Our overall average is up $10/st w/w. Our price momentum indicator for Galvalume steel remains at neutral, meaning we see no clear direction for prices over the next 30 days.

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.

Plate

The SMU price range is $900–1,000/st, averaging $950/st FOB mill. Our range is unchanged 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 3.9 weeks through our latest survey.

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.

Roughly 25,000 union dock workers at ports from Maine to Texas are preparing to strike on Tuesday, Oct. 1, at 12:01 a.m. That is if the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) haven’t yet reached a new 6-year contract agreement.

“A sleeping giant is ready to roar on Tuesday, Oct. 1, 2024, if a new master contract agreement is not in place,” ILA President Harold J. Daggett said last week. “My members have been preparing for over a year for that possibility of a strike.”

Indeed, SMU reported on Daggett’s warning about the contract’s impending expiration and potential for a strike last November.

Recall that negotiations have been suspended since June after the ILA halted talks due to a dispute over the use of automation by USMX-represented employers at specific ports.

USMX claims to have made multiple attempts to resume bargaining with the ILA but says it hasn’t been able to schedule a meeting with the union.

“We remain prepared to bargain at any time, but both sides must come to the table if we are going to reach a deal, and there is no indication that the ILA is interested in negotiating at this time,” USMX said on Monday.

However, the ILA refuted that. Noting that the two sides have been communicating in recent weeks, it said the USMX has been engaging in “a misleading publicity campaign.”

While the union initially halted talks in June over disputes about automation, it said the stalemate in negotiations now is because USMX has offered “an unacceptable wage increase package.”

Despite knowing the bottom line needed for ILA members to ratify a new contract, Daggett said USMX is pushing “a low-ball wage package.”

USMX represents employers of the East and Gulf Coast longshore industry, including container carriers, marine terminal operators, and port associations.

It says that, since 1977, it has successfully negotiated 10 contracts with the ILA “without any coastwide disruptions to service.”

“Our goal remains the same: We want to bargain and avoid a strike, but time is running out if the ILA is unwilling to return to the table,” USMX said on Monday.

Possible impact of potential strike

While an ILA strike would primarily affect container-related trade and not so much breakbulk operations, it still has the potential for significant supply chain disruption.

International container shipper Maersk warned a strike would “have impacts on supply chains, leading to delays in cargo movement, increased costs, and logistical challenges for businesses relying on US East Coast and Gulf ports.”

“Longer strike durations may exacerbate disruptions, affecting import and export activities, container availability, and overall operational efficiency,” Maersk added.

Prepping underway

While the situation remains in flux, ports, terminal operators, and shipping carriers are closely monitoring the situation and taking measures to prepare for the likely strike.

For example, South Carolina Ports and other port operations have extended gate hours and increased staffing levels in preparation for a work stoppage.

Port Houston communicated that its container terminals would be closed in the event of a strike, but its general cargo/multipurpose facilities wouldn’t be affected.

Noting the potential for widespread service disruptions starting on Oct. 1, rail freight transporter CSX said, in anticipation of a strike, it “is making every effort to accommodate as much freight as possible in a fluid situation.”

Others, like Germany-based container transportation company Hapag-Lloyd, are encouraging customers to expedite import documentation and customs clearances and get cargo out of port terminals before Oct. 1.

Maersk is even prepping for an extended work stoppage: It plans to implement a “port disruption surcharge” effective Oct. 21 to cover the higher operational costs associated with a longer strike. The $1,500-3,780 surcharge would be for all cargo moving to and from East and Gulf Coast terminals.

Government intervention?

Last week, 69 members of Congress called on the Biden-Harris administration “to do everything in its power to prevent a work stoppage at East and Gulf Coast ports.”

A strike would lead to “dire impacts to our supply chains, our economy, and the American consumer,” they said.

However, Reuters reported on Sept. 17 that President Biden would not be using his presidential powers to stop the strike.

Meanwhile, USMX said it “has received outreach from the Department of Labor, the Federal Mediation & Conciliation Service (FMCS), and other federal agencies.”

Bonus black swan

If the looming, expansive strike was not enough, Gulf Coast ports face another potential black swan this week: Gathering strength in the Gulf of Mexico is Tropical Storm Helene, expected to reach hurricane status by the time it makes landfall in Florida this Thursday.

“Port Tampa Bay is working with the National Weather Service, US Coast Guard, and state and local partners to monitor the potential impact of the tropical system in the Gulf,” the port said on Monday.

“Gale force winds could impact our maritime operations within 48 hours,” it warned.

• Policy rate cut: Reduction in the seven-day reverse repo rate by 20 bps to 1.5%.
• Reserve Requirement Ratio (RRR) cut: Reduction in the reserve requirement ratio (RRR) for banks by 50 bps.
• Mortgage refinancing: Encouraging banks to cut the average mortgage rates by 50 bps to existing borrowers.
• Minimum downpayment: Reduction in the minimum downpayment for second-home purchases from 25% to 15%.
• Relending facility enhancement: Increase the supporting ratio of relending facility for unsold housing acquisition from 60% to 100%.
• Equity market support: Creation of new liquidity facilities for companies and institutional investors.

While some sort of stimulus was expected, we do not expect these measures to fully address the underlying issues facing the Chinese economy, such as weak consumer demand that has spurred the longest deflationary streak since 1999. More comprehensive efforts may be needed to solidify growth in the following quarters.

In the steel market, Chinese end-use demand weakened, indicating that the seasonal demand recovery is fragile. Nonetheless, steelmakers ramped up output and the surveyed BF capacity utilization rate has now risen above 84%. Together with pre-holiday restocking, iron ore spot buying picked up somewhat, and port inventories declined slightly. Having said that, we heard iron ore inventories have exceeded storage capacity at some ports.

Iron ore supply fell marginally in the past week. Port Hedland shipments edged lower by 400,000 metric tons (mt) week over week (w/w) and Indian iron ore exports remain weak. Samarco has restarted its P3P pellet plant ahead of its previous schedule of January 2025 and the company is on track to increase pellet production rapidly at the end of this year. In South Africa, September and October are the normal maintenance periods for railways, which will result in slightly lower iron ore shipments.

We expect the iron ore price to remain rangebound w/w. Besides the bullishness from stimulus announcement, buying activity will pick up as some iron ore traders look to close their short position; and there will be continued pre-holiday restocking before Oct. 1. However, there is very limited upside from the current price level with unsupportive demand/supply fundamentals.

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.

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.

This article was first published by CRU. To learn more about CRU’s services, visit www.crugroup.com.

Earlier this year, the Moline, Ill.-based manufacturer announced layoffs in the Midwest, as well as the moving of production of skid steer and compact track loaders from Iowa to Mexico by the end of 2026, according to a report in Fox Business News.

When asked for a response to Trump’s comments, a Deere spokesperson pointed SMU to a webpage on the company’s commitment to American manufacturing.

Deere has invested more than $2 billion into American factories since 2019, according to the site.

However, the company noted that “in order to position our US factories to undertake these highly value-additive activities, it is sometimes necessary to move less complex operations, such as cab assembly, to other locations.”

All told, 17 key indicators point lower, nine are neutral, and 12 point higher. Results are mixed with a few noteworthy details: 11 of the indicators pointing lower are lagging indicators but another six are leading indicators. Many of those pointing upward are coincident indicators, meaning they occur at approximately the same time as the conditions they signify.

Flat-rolled steel prices have been in a ‘tug-of-war’ or clash of sorts over the past several weeks. While market sentiment would suggest lower prices accentuated by dreary demand, mills continue to push tags higher.

Despite the most recent pricing dynamics, tags had been declining for the better part of the year, a trend highlighted by 17 key indicators pointing lower.

Hot-rolled (HR) coil prices have fluctuated by just $15 per short ton (st) over the past five weeks, and at $690/st – according to SMU’s check of the market on Tuesday, Sept. 17 – are just $55/st from their lowest mark since December 2022.

Lead times are now 4.9 weeks on average for HR coil. They have been largely stable since early Q2, hovering around five weeks on average since late April. And while mills remain largely flexible on prices as they seek business beyond contracted tons, they have been a bit less willing to talk price in recent weeks.

SMU’s Steel Buyers’ Sentiment Indices, however, both edged lower following a slight recovery in late August. Current Sentiment is still near a four-year low. And Future Sentiment indicates that buyers are still mixed about business prospects.

Broadly speaking, while some SMU indicators are at recent lows, others remain near historic lows. Still others have improved. The lack of a clear direction is perhaps best characterized by the fact that many indicators remain in a holding pattern.

Despite recent improvements, headwinds remain

The Labor Department’s Bureau of Labor Statistics (BLS) reported that while consumer prices improved 0.2% in August, inflation being the lowest since February 2021, core CPI increased 0.3% last month.

And the US economy added just 142,000 jobs in August. That’s slightly above July, but the poor showing reinforces a consensus view that the US labor market is slowing but not breaking.

However, gross domestic product (GDP) increased at an annual rate of 3% in Q2 after a poor showing of just 1.4% in Q1. Economists expect an annualized growth rate of 2.2% in Q3 after a better-than-expected update on retail sales in August. But that figure is subdued compared to the second half of last year.

Consumer spending continued to prop up economic growth, despite economists’ projections that retail sales would sputter out. The Fed slashed interest rates by half a point in its first interest rate cut since the early days of Covid-19.

SMU’s Present Situation and Trends analyses in the table below are based on the latest available data as of Sept. 21. Readers should regard the color codes in the “Present Situation” column as a visual summary of the current market condition.

The “Trend” columns are color-coded to give a quick visual snapshot of the market’s direction. All data included in this table was released within the past month. The month or specific date to which the data refers to is shown in the second column from the far right. Click to expand the table below.

For many in the market, FGM is synonymous with steel futures. But the company has also further expanded its presence in the physical market with the 2023 acquisition of metal wall and roofing company, Fabral, and a minority stake in Windsor America, a garage door manufacturer.

More recently, it is finalizing a majority acquisition in Pacesetter, a steel service center. How are these efforts to pair financial acumen with physical assets panning out?

Also, we’ll talk about the current steel market. HR prices have been hovering between roughly $600-700 since mid/late July. That kind of steadiness is unusual in a market infamous for cyclicality. If we’re in less volatile times, how does that change hedging strategies?

Or could there be an October surprise in store? And would it more likely to be to the upside (on trade actions or a dockworkers’ strike, for example) or to the downside (e.g., poor demand and high inventories)?

We’ll take your questions too. Make sure to bring some good ones to the Q&A!

PS – Check out our Community Chat page if you’d like to see presentations and recordings of past webinars.

About Flack

Jeremy Flack founded FGM in 2010 with the mission to reinvent how metal is bought and sold. Flack Global Metals operates through four interconnected divisions—Flack Metal Supply (FMS), Flack Capital Markets (FCM), Flack Manufacturing Investments (FMI), and Flack Metal Trading (FMT)— that work together to deliver a unified solution for metal supply and financial stability through integrated distribution, risk management, and market intelligence.

Raw production last week was 0.9% lower than the year-to-date weekly average of 1,723,000 st. But production is 0.9% more than the same week one year prior when mill output totaled 1,691,000 st. Recall that production recently reached a multi-year high in late August of 1,782,000 st.

The mill capability utilization rate last week fell to 76.9%. This is down from 78.8% the week prior but up from 74.4% this time last year. (Compare this to the late-August peak of 80.2%).

Year-to-date production is up to 64,566,000 st at a capability utilization rate of 76.8%. This is 1.6% less than the same time frame last year, when 65,634,000 st had been produced at a capability utilization rate of 76.9%.

Weekly production by region is shown below, with the weekly changes noted in parentheses:

• Northeast – 125,000 st (down 2,000 st)
• Great Lakes – 583,000 st (down 14,000 st)
• Midwest – 204,000 st (down 16,000 st)
• South – 742,000 st (down 5,000 st)
• West – 53,000 st (down 5,000 st)

Editor’s note: The raw steel production tonnage provided in this report is estimated and should be used primarily to assess production trends. The monthly AISI “AIS 7” report is available by subscription and provides a more detailed summary of domestic steel production.

“We do not expect any production interruptions,” a spokesperson for the Pittsburgh-based steelmaker told SMU on Monday.

The incident did not cause any injuries. “Safety remains our top priority,” the spokesperson added.

Midwest Plant is a finishing facility at U.S. Steel’s integrated Gary Works. It operates two cold reduction mills and two galvanizing lines. It is also the only USS facility that still produces tin mill products.

Nucor also adjusted the HR coil base price for subsidiary CSI, raising it by $10/st from last week to $790/st. One month ago it was $775/st.

Lead times of 3-5 weeks will continue to be offered, but Nucor noted that customers should contact their district sales manager for availability. Published extras will apply to all spot transactions.

SMU’s Sept. 17 check of the market had HR coil spot prices ranging from $660-720/st, with an average of $690/st.

SMU’s hot-rolled (HR) coil price averaged $676 per short ton (st) in September 2023. That figure increased to $1,035/st in December 2023, a gain of 53% percent. (You can follow along with our pricing tool.)

We saw something similar in the fall of 2022, even if the cadence wasn’t exactly the same. SMU’s HR price averaged $642/st in November of 2022. By March 2023, it was $1,119/st – an increase of 75%.

Ditto in the fall of 2020. Our HR price averaged $568/st in September 2020. By February 2021, it was more than double that at $1,185/st on average.

In each of those cases, the prevailing market sentiment was that prices would drift lower. Or at least that there was no reason for them to go shooting upward. And then unexpected events rocked that consensus.

2023-24: UAW strike shifts buying patterns

Last year, most of the market expected that prices would fall into the fall on the UAW strike. U.S. Steel idled a furnace at Granite City, near St. Louis, citing the strike.

But then savvy consumers realized the strike-induced lows were a good time to buy big. And they pulled forward purchases that might otherwise have been made later in the year or Q1.

Also, the UAW targeted money rather than tons with a new tactic – the “stand up” strike. The union went after the most profitable automotive plants. This was a shift from prior negotiations when the union targeted all operations at a single automaker.

The result: The impact on steel consumption wasn’t as immediate as in past strikes. And automotive sales were still steady, so there was sure to be pent-up demand once the strike was resolved.

2022-23: AHMSA goes out, US left short

Rewind to the fall of 2022. Prices were drifting lower. And by November, consensus was, that there was no reason for them to stop sliding – especially with new capacity coming online.

There was an assumption that the Southwest in particular could face a glut as SDI’s new mill in Sinton, Texas, ramped up. Instead, Altos Hornos de México (AHMSA) – which had been having issues for years – unexpectedly stopped production almost entirely. Sinton, meanwhile, grappled with startup problems for longer than expected.

Instead of a glut, the region faced a shortage. And steelmakers – including some in Mexico – scrambled to scoop up tons from other suppliers, including those in the US. That sent the regional shortage in the Southwest and northern Mexico cascading into other markets, including the Midwest. And prices unexpectedly shot higher.

2020-2021: Snowmageddon!

In the fall of 2020, many in the steel market were slow to grasp the mismatch between supply and demand following pandemic shutdowns. Mills struggled to ramp up capacity (or perhaps couldn’t because of pending M&A). And inventories dwindled as lead times extended.

Then, just as the extent of the problem was becoming clear, a freak snowstorm cut power and caused outages across a wide swath of Texas and northern Mexico – exacerbating the shortages. Before long, buyers were concerned less about price than about availability.

An October surprise on the trade front?

If we were to see another price spike this fall, what could the cause be? If I had to look for a potential surprise, I’d look at the trade actions we’ve written about in recent issues.

For starters, there is the trade case against coated imports from 10 countries. Maybe it’s not being felt all that much in the Midwest yet. But talk to someone on the Gulf Coast or the West Coast, and you might get a different story. (Note that the Commerce Department will decide whether to initiate the case on Wednesday.)

Let’s consider the West Coast for a moment. UPI, which had been a big supplier of coated products, has been idled. The trade case means that Vietnamese imports, which had helped fill that void, are out of the market given the alleged dumping margin of nearly 160%. And other important suppliers to the region – notably Taiwan and Australia – also face high alleged margins.

Is demand soft now? Yes. But could lower interest rates begin to stimulate construction activity? That’s an important one to consider because construction is the biggest driver of steel demand on the West Coast. (In the Midwest, in contrast, it’s primarily automotive and manufacturing.)

True, Nucor plans to build more coating capacity at California Steel Industries (CSI), a key sheet supplier to the region. But that new capacity isn’t online yet. And if there is a shortage of coated on the West Coast, how much spare capacity is there east of the Rocky Mountains to make up for it?

As Lewis Leibowitz points out in his column today, let’s also remember that election years can lead to unusual trade policies. Does that mean we could see stricter measures against Mexico?

We’ve written before about how a lot of new capacity is coming online not only when it comes to hot strip mills but also when it comes to coating lines. Could the political goal of these trade actions – if they have a unifying theme – be to make sure all of that new domestic capacity has a home in the US?

Last thing: What about a potential widespread strike among US dock workers? Recall that a coastwide strike could begin as soon as Oct. 1. That could make bringing in foreign steel a little trickier, to say the least.

The takeaway

It’s worth considering some of these possibilities, even if you’re pretty sure that any October surprises are more likely in the presidential election than in steel.

I am not saying that prices will soar in the fall again this year. In the back half of 2021, supply caught up with demand and then overshot it. The result: Prices fell in the fall of 2021 and throughout most of 2022 as well.

Yes, there are plenty of reasons to be concerned about downside risk given uneven demand, new capacity, high inventories, etc. My point is just that it’s never wise to be complacent that a market will continue along its current trajectory. And to be on the lookout for factors that could change that trajectory.

Steel 101

Don’t miss out on SMU’s next Steel 101. It’s a great way for those new to the industry to learn the basics and for experienced folks looking to fine-tune their knowledge.

It will be held on Oct. 8-9 in Starkville, Miss., at the Courtyard Starkville MSU at The Mill Conference Center.

Students will learn how steel is made on the morning of the first day. Then they’ll see it being made at SDI Columbus in the afternoon. That experience really makes the knowledge stick.

On the second day, we’ll explore key end markets, coating extras, steel futures – and a lot more. You can find the agenda here. You can register here.

Note that this is more than just a two-day course. Our experienced instructors will remain available to help you well after the workshop has concluded.

Four senators  – Bob Casey (D-Pa.), Sherrod Brown (D-Ohio), Marco Rubio (R-Fla.), and Mike Braun (R-Ind.) – wrote a “bipartisan” letter attacking Mexican exports of steel to the United States. They framed it as a “surge” in US steel imports from Mexico. To address this “surge,” the Senators urge the imposition of 25% tariffs on all steel imports from Mexico.

The import data don’t support the “surge” theory

The statistics reveal that imports from Mexico declined 9.5% from 2023 (January-July) compared to the same period in 2024. Total steel imports into the US from Mexico declined more than 10% from 2022 to 2023.

The letter cites a “surge” of 500% from a “base period” of 2015-2017 for imports of steel conduit from Mexico. This number is not supported by import statistics either. Imports of conduit (HTSUS number 7306.30.5028) from Mexico averaged $269,000 from 2015-2017. But almost all of those imports occurred in 2015.

The 2023 number was a bit less than $1.1 million of conduit imports, which is about three times the volume in the 2015-2017 period. But this is not a major amount of steel. It accounts for 0.001% of total US steel imports from Mexico of $11 billion.

A flimsy case against China

The senate’s letter asserts a “surge” from Mexico but lacks evidence to support it. The letter also asserts that the increase in steel imports (or even the increase in conduit imports) results from Chinese-financed manufacturing in Mexico.

Surely there has been some. But it is far from clear where increased steel imports come from. The senate letter assumes that China is the cause of the increase. I, for one, would like to see a lot more evidence before drawing conclusions.

The letter does not directly accuse Mexico of permitting steel made in China to be used in Mexico. In July, the Biden administration ruled that, to be exempt from the Section 232 steel tariffs, steel processed in Mexico must be “melted and poured” in North America. But that was not enough for the senators. They want all steel from Mexico to be hit with 25% tariffs. Why? Just in case the steel is “melted and poured” in Mexico but is produced by companies that could benefit Chinese investors.

US Customs has identified revisions to the Customs entry form to reveal in what country steel used in manufacturing was melted and poured. In the abstract, there should be more facts rather than fewer facts. But the availability of that information will be harder to come by the further down the production chain the imported products are.

Even if this were “bad,” the punishment does not seem to fit the “crime”. The letter implies, as several news articles have said, that the country of origin of imported products should not necessarily determine the tariff treatment. Instead, if interests from a “bad” country benefit from production and exports from a friendly country, the traditional rules that assign the country of origin based on the location of production should now be overturned. (Note that China and Russia top the current list of “bad” countries.)

In favor of… what?

What level of Chinese investment should determine whether we punish companies in Mexico because there are Chinese investors?

In March, Sen. Tom Cotton (R-Ark.) introduced legislation to reimpose the 25% tariffs on Mexican steel. He claimed that Mexico was in “material breach” of the Joint Statement of May 2019 regarding monitoring of shipments from third countries through Mexico and into the United States. The senate letter supports passage of this bill. But its chances of becoming law are extremely thin. That’s because the president is likely to veto it due to its impingement on the president’s authority to conduct foreign policy.

In short, the evidence presented so far does not indicate that Mexico tolerates massive fraudulent transshipment of Chinese steel (or even steel not melted and poured in North America). While there may well be such fraudulent transshipments, it appears very unlikely that the volume of transshipment is significant to steel trade. The appropriate way to handle this fraudulent activity is to prosecute it, not impose tariffs across the board on innocent and guilty alike.

The push for more restrictions seems more political than economic. It is another sign (if we needed one) that close elections can result in very bad policies. And that those policies are aimed mostly at gaining a few votes.

American manufacturing, like it or not, depends on global commerce as well as domestic commerce. Many manufacturing companies rely on foreign sources. That’s not only because they may be cheaper but also because they are better thanks to reliable delivery or to higher quality or consistency of products.

Congressional letters get headlines. But they are not guaranteed to be accurate or wise, especially during election season.

Editor’s note

This is an opinion column. The views in this article are those of an experienced trade attorney on issues of relevance to the current steel market. They do not necessarily reflect those of SMU. We welcome you to share your thoughts as well at info@steelmarketupdate.com.

Our galvanized price index averaged $920/st last week (base price with no extras). Prior to last week, galvanized prices had held steady at $905/st since mid-August. Back in late July we saw galvanized prices decline to a ten-month low of $870/st.

Figure 1 shows the pricing relationship between these two products.

As seen in Figure 2, the relationship between hot rolled and galvanized prices has been volatile since late 2021, much more so than prior to the pandemic.

As of last week, galvanized currently held a $230/st price premium over hot-rolled steel. This is the fourth-lowest spread measured in 2024 to date. Since the beginning of this year, the highest spread between these two products occurred in May at $320/st. That followed gradual increases across the five prior months. The lowest spread was $205/st in the last week of August. This time last year the spread was $215/st.

The spreads we have experienced over the past month are in line with levels seen in September-November of 2023. Prior to the post-pandemic volatility, we saw spreads mostly between $85-220/st for multiple years.

An alternative way to compare these two product prices is to look at the galvanized premium as a percentage rather than a dollar value. In Figure 3, we graph the hot-rolled/galvanized price spread as a percentage of the hot rolled price.

The percentage premium paints a slightly different picture to Figure 2. The latest premium is 33%. This rate has ticked up each of the last three weeks but remains one of the lower measures of 2024. The premium climbed to a nearly two-year high of 44% back in June. That followed an upward trend generally witnessed since March 2023, when the premium bottomed out at 9%. This time last year the premium was also 33%.

Prior to the pandemic volatility, galvanized prices held an average premium of 24% above hot rolled prices from 2017 through the end of 2021. The premium reached a record high of 52% in July 2022.

The proposed modifications first announced in May were largely adopted, with several updates strengthening actions to protect American businesses.

“Today’s finalized tariff increases will target the harmful policies and practices of the People’s Republic of China that continue to impact American workers and businesses,” said Ambassador Katherine Tai. “These actions underscore the Biden-Harris Administration’s commitment to standing up for American workers and businesses in the face of unfair trade practices.”

In particular, the USTR’s office said that many of the tariffs – including a 100% duty on Chinese EVs, 50% on solar cells, and 25% on steel, aluminum, EV batteries, and key minerals – would take effect on Sept. 27. The determination also showed that a 50% duty on Chinese semiconductors, now including two new categories – silicon wafers and polysilicon used in solar panels – is due to start in 2025.

Nevertheless, the final decision disregarded calls from automakers for lower tariffs on graphite and critical minerals used in EV battery production because they are still dependent on Chinese supplies.

Novelis is taking end-of-life automotive recycling to the next level

In a new blog launched by Novelis VP Global Automotive Development Daniel Kern, the company discusses industry-wide solutions, including innovative scrap sortation and segregation technologies that enable the recovery of specific alloys.

These advancements, combined with new uni-alloy designs and collaboration across the supply chain, offer promising pathways to improve recycling processes and create a more sustainable future for automotive aluminum.

Novelis has been working on this challenge for years. The company has invested in and deployed innovative scrap sortation and segregation operations that “close the loop” by enabling aluminum from end-of-life vehicles to be captured, further realizing the value of recycled content.

The group has also developed new automotive aluminum alloys that accept higher scrap content along with creating single-alloy designs for hoods, doors, and other closures that support design-for-disassembly initiatives. In the document, Novelis calls for all players in the automotive supply chain to come together to make cost-effective recapture of high-value, end-of-life automotive aluminum a reality. The full blog can be accessed here.

Power maintenance hits Century’s output

Century Aluminum could lose around 2,500 tons of output from the Grundartangi smelter in Iceland this quarter. The shortfall is because geothermal energy companies have issued partial power curtailment orders to industrial customers to carry out maintenance work.

On a positive note, the Chicago-headquartered aluminum producer resumed normal shipping operations at the port of Rocky Point, which serves Jamalco in Jamaica. The news comes following the completion of repairs to an alumina conveyor that was partly damaged when Hurricane Beryl passed across the Caribbean in July.

The bauxite mining and alumina operation returned to production within days of the storm and the company secured alternative port arrangements in the interim to ensure continued alumina shipments to customers.

Constellium opens new recycling center

Constellium celebrates the opening of its new recycling center at its facility in Neuf-Brisach, France. The €130 million ($145 million) investment, supported by a grant from the France Relance investment program, will increase the Neuf-Brisach plant’s capacity to recycle automotive and packaging products by up to 75%, adding 130,000 tons.

With the added capacity, the facility also expects to increase the recycled content rate of its products, responding to growing demand for sustainable materials in the automotive and packaging sectors, the company said.

The investment brings Constellium’s global recycling capacity to approximately 735,000 tons per year, contributing to a reduction of roughly 400,000 tons of greenhouse gas emissions (GHG). The move supports the company’s sustainability targets of reducing GHG intensity by 30% by 2030 vs 2021; and increasing recycled input to at least 50% by 2030.

The Neuf-Brisach facility, established in 1967, is one of Constellium’s largest plants with approximately 1,600 employees and a production capacity of 450,000 tons per year. The facility primarily serves the packaging and automotive markets.

Vedanta reports water storage breach

Vedanta reported on Monday that a water storage facility at its Lanjigarh alumina refinery in Odisha state overflowed due to heavy rains and “impacted agricultural areas”. The incident reported by Reuters occurred during the early hours on Sunday, Sept. 15, as extreme weather caused elevated water levels and pressure in the facility’s catchment area.

There were no injuries or loss of livestock due to the flooding caused by the breach, a spokesperson for Vedanta said.

This analysis was first published by CRU. To learn more about CRU’s services, visit www.crugroup.com.

US rigs

Through Sept. 20, there were 588 drilling rigs operating in the US, two less than the week before. Oil rigs were stable at 488, gas rigs fell by one to 96, and miscellaneous declined by one to four. There were 42 fewer active US rigs last week compared to last year, with 19 fewer oil rigs, 22 fewer gas rigs, and one fewer miscellaneous rigs.

Canada rigs

There were 211 active Canadian drilling rigs operating as of last week, seven less than in the prior week. Oil rigs fell by six to 144, gas rigs eased by one to 66, and miscellaneous rigs were unchanged at one. There are currently 21 more Canadian rigs in operation than levels one year ago, with 29 more oil rigs, nine fewer gas rigs, and one more miscellaneous rig.

International rig count

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 August fell to 931, two less than the July count and down by 21 from levels a year ago.

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.

US CR coil prices averaged $950 per short ton (st) in our check of the market on Tuesday, Sept. 17, up $10/st vs. the prior week. Despite some improvement as of late, CR tags are still down roughly $375/st from the year-to-date high of $1,325/st in January.

Domestic CR prices are, theoretically, roughly 25.3% more expensive than imports. That’s up from 24.1% last week. While US CRC prices are still higher than offshore material, the US CR premium is down from 31.5% in early January.

In dollar-per-ton terms, US CR is now, on average, $171/st more expensive than offshore product (see Figure 1). That compares to $160/st more expensive on average last week. That’s 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.

Methodology

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.)

East Asian CR coil

As of Thursday, Sept. 19, the CRU Asian CR price was $494/st, up $4/st w/w but ~$14/st lower than a month ago. Adding a 71% anti-dumping duty (Japan, theoretical) and $90/st in estimated import costs, the delivered price to the US is $935/st. The theoretical price of South Korean CR exports to the US is $584/st.

As noted above, the latest SMU CR price is $950/st on average, which puts US-produced CR theoretically $15/st above CR product imported from Japan and $366/st more expensive than CR imported from South Korea.

Italian CR coil

Italian CR prices were down $4/st to ~$680/st this week. After adding import costs, the price of Italian CR delivered to the US is, in theory, $770/st.

That means domestic CR is theoretically $180/st more expensive than CR coil imported from Italy. The spread is up $14/st from last week but is still $273/st below a recent high of $453/st mid-December.

German CR coil

CRU’s German CR price was down $18/st vs. last week. After adding import costs, the delivered price of German CR is, in theory, $778/st.

The result: Domestic CR is also theoretically $172/st more expensive than CR imported from Germany. The spread is up $28/st w/w but still well below a recent high of $428/st in the first week of 2024.

Notes: We reference domestic prices as FOB the producing mill, while foreign prices are CIF the port (Houston, NOLA, Savannah, Los Angeles, Camden, etc.). Inland freight from either a domestic mill or a port is important to keep in mind when deciding where to source from. It’s also important to factor in lead times. In most market cycles, domestic steel will deliver more quickly than foreign steel. Note also that, effective Jan. 1, 2022, the blanket 25% Section 232 tariff was removed from most imports from the European Union. It was replaced by a tariff rate quota (TRQ). Therefore, the German and Italian price comparisons in this analysis no longer include a 25% tariff. A similar TRQ with Japan went into effect on April 1, 2022. South Korea is subject to a hard quota rather than a tariff.

Industrial Production

The Industrial Production (IP) index is a gauge for factory, mine, and utility output. Figure 1 shows the IP index since 2019, graphed as a three-month moving average (3MMA) to smooth out the variability seen month to month. The latest IP index reading was 102.9 through August, the second-highest level recorded in the past nine months. As a 3MMA, this index has steadily remained within this strong range for the past two and a half years.

Manufacturing capacity utilization

Manufacturing capacity utilization has been edging lower across 2024, continuing a trend that began in 2022. Utilization fell to a 3MMA of 77.0% through August. While still a healthy rate, it’s also the lowest level recorded in over three years. In 2023, we saw an average rate of 77.8%, compared to 79.2% in 2022 and 77.1% in 2021. Capacity utilization has remained above recessionary territory since its recovery in late 2020. For reference, capacity utilization had hovered around 74–78% for most of the 2010s before stalling early in 2020 and reaching a low of 65.8% in June 2020 (Figure 2).

New orders for durable goods

New orders for durable goods are an early indicator of consumer and business demand for US manufactured goods. This measure has been recovering since December 2020, with positive y/y growth every month through April of this year. New orders are at $278.7 billion on a 3MMA basis through July (Figure 3). This rate is down 4.4% from a year earlier. July marks the third month in a row with a negative annual growth rate.

New orders for manufactured products

Growth in new orders for manufactured products was historically strong in 2021 and 2022. The growth rate stabilized entering 2023 and has been flat since. While growth has been relatively stable, the value of factory orders remains near historical highs. The highest 3MMA level in our 30-year data history was recorded last November at $589.3 billion (Figure 4). The 3MMA through July is down slightly to $579.8 billion, 0.2% below the year-ago level.

New orders for iron and steel manufacturing

Federal Reserve manufacturing data includes a subsection for iron and steel products. Figure 5 shows the value of new orders for iron and steel products as a 3MMA. This measure saw remarkable growth from mid-2020 through 2021, reaching a record-high 3MMA of $15.3 billion in July 2022. The 3MMA through July 2024 was $14.4 billion, a ballpark it has been in for nearly three years. The y/y growth rate has fluctuated around zero since late 2022, registering -3.9% through July. This rate reached an 11-year high of 81.8% in June 2021.

Inventories of products manufactured from iron and steel

Inventories of iron and steel products broke a multi-month increase streak in mid-2022 and have been gradually declining since (Figure 6). The latest iron and steel inventory levels totaled $26.3 billion on a 3MMA basis through July, down 3.5% compared to last year. The 3MMA annual growth rate has been negative since March 2023, reaching a 31-month low of -4.7% late in 2023.

The deal includes Dale’s seven recycling centers in Tennessee, one in Kentucky, and one in Missouri.

According to Dale’s website, the family-owned business has been in operation since 1983 when current owner Dale Nelson Sr. founded it.

“This acquisition aims to increase capture of captive ferrous scrap by Gerdau through proprietary channels, supplying raw material to its operations at a competitive cost,” Gerdau SA said in an official notice to the market on Wednesday, Sept. 18.

The company expects the transaction to close by the end of this year.

“The yards will predominantly supply ferrous scrap to our mill in Jackson, Tenn.,” a Gerdau spokesperson told SMU in an email. In fact, one of Dale’s yards is just a mile away from the Jackson mill, which produces merchant bar, SBQ, and rebar products.

Gerdau completed a project to upgrade the plant’s rolling mill, roll shop, warehouse, and conveyer earlier this year. “The investment expanded the mill’s merchant bar product range and operational competitiveness, while improving the flexibility of Gerdau’s network of mills,” according to the spokesperson.

Gerdau’s Metals Recycling group currently operates 24 scrap yards and four shredders in the US and Canada. Upon closing the deal with Dale’s, it will run nine additional yards.

Gerdau Long Steel North America, formerly known as Gerdau Ameristeel, is a Tampa, Fla.-based longs steel producer and metals recycler. It produces various steel products, including merchant bar, rebar, structural steel, piling, and wide-flange beams.

US buyers do not want to pay these prices in the next round of buying since the domestic scrap market continues to be weak. But Brazilian producers have the rainy season with which to contend. Also, there may be competition from new buyers abroad.

As previously mentioned by RMU, Europe still buys most of its pig iron from Russia and Ukraine, so Brazilian material is overwhelmingly sold into the US. If Europe relied even to some degree on Brazilian stocks, a shortage for the US could be expected.

There is a quota on the European importation of Russian pig iron. As things move toward the last quarter of 2024, we understand the quota has been exhausted. If the Eurozone can’t source further from Russia and looks to Brazil for supplies, there could be some price competition with US buyers.

RMU reached out to an industry veteran about this possibility. He acknowledged that European buyers have been inquiring about pig iron in Brazil, but no business has been concluded thus far. There are currently cargoes available for November shipment, even though some channels already have commitments for November. He added that European and US mills will probably compete for cargoes next year when the Russian quota decreases again before it drops to zero in 2026.

There may be some new suppliers which could mitigate the potential supply crunch. One of our mill sources claimed to have received offers from South Asia at $440/mt CFR USGC Ports. Since then, at least one offer has dropped further into the $420s. That’s over a $40/mt difference from recent purchases from Brazil. We have not heard of a booking yet, but rest assured, RMU will be keeping an eye on this and keep you updated. Even with these potentially lower prices for pig iron, the premium over #1 Busheling is $75-85/mt calculated on a delivered works basis.

Editor’s note: This column appeared first in Recycled Metals Update (RMU), SMU’s new sister publication. RMU is devoted entirely to the ferrous and nonferrous recycled metals markets. If you’d like to learn more, visit RMU’s homepage and register for a free 30-day trial.

Steel prices in the Asia-Pacific region continued to weaken overall in the past month, as prolonged weakness in steel demand and oversupply intensified the downward pressure. The CRU China export price index was down 2.6% m/m for HR coil and 1.1% m/m for rebar. Demand in China remained depressed due to inclement weather and low market confidence towards the near-term outlook. Nevertheless, since late August, as the new rebar standards were gradually digested by the market, infrastructure funding has improved. For flat steel, local demand remained weak due to the underperformance of key end-use sectors such as the automotive industry. Meanwhile, steelmakers have kept production rates high despite negative margins to maintain their market share.

The resultant oversupply has caused Chinese export participation to rise and has been the key reason for steel price declines across Asia. Japanese sheet export prices are down by $50 /t m/m, while Indian export prices are down to a 52-week low. Meanwhile, Southeast Asian prices are now close to a cost floor. The consequent thinning of profit margins for steelmakers has prompted governments to act. For instance, anti-dumping investigations on HR coil imports are now underway in Vietnam and India.

EU prices plummet while the US launches a new trade investigation

In Europe, insufficient local demand amid strong supply availability has kept steel prices (for both longs and flats) on a downtrend, contradicting seasonal expectations. As some import options are priced closely at local European levels (upon delivery, customs clearance and duties applied), interest from European consumers remained low, given longer lead times and safeguard quota risks. The ongoing anti-dumping investigation into HR coil imports launched by the EU has not yet impacted regional prices, although caution among buyers of imported steel has increased.

In the US, four steelmakers filed a petition with the Department of Commerce on Sept. 5 that seeks to impose new tariffs on coated flat-rolled steel from ten countries. The petition includes zinc and aluminum-coated steel sheet products, such as HDG coil and aluminized sheet products. The alleged dumping margins vary greatly but are sizeable in all instances. Commerce is scheduled to make a decision on whether to initiate the investigations on Sept. 26, with a preliminary determination of injury from the US International Trade Commission due on Oct. 18. Final rulings are expected by October 2025. HDG import offers to the USA have pretty much evaporated. (For additional information, see the recent CRU Insight following the initiation of this investigation.)

Steel demand in the US remained modest, and buyers preferred local sourcing for reasons beyond the trade investigation. Ongoing mill maintenance outages have slightly tightened the domestic supply-demand balance, and this has restricted declines in prices of steel, scrap, and pig iron. Brazilian slab export prices have been stable m/m despite the reduction in exports to North America following the July upsurge due to a supply outage in Mexico.

This article was first published by CRU. To learn more about CRU’s services, visit www.crugroup.com.

Having just attended the SMU Steel Summit last month in Atlanta, here is a cheat sheet of things that stood out to me at the Decarbonisation Summit.

First off, there was a heavy emphasis on DRI and hydrogen, as well as decoupling ironmaking and steelmaking. Less of an emphasis on EAFs and scrap. That’s understandable, given the European industry’s continuing reliance on BFs.

For energy, this current period was widely viewed as a transition, where natural gas may have to be used until renewables are able to ramp up and pick up the slack. Electricity is key, with wind and solar the main subjects of the conversation, while nuclear was largely excluded.

In Europe, there’s no way around it: energy costs a lot. Indeed, another “shore” was added to the mix at the conference: “Powershoring,” or having a mill near an electricity source. Green steel is going to use more energy. With geopolitical turmoil and, hence, cheap Russian energy off the table, something will have to power the push. Just as in the US, questions about strengthening the grid have taken on a sense of urgency. With the European Union’s multiple nations with different resources, transportation networks, and national industries, another layer of complexity is involved compared to the US.

Green premium?

If there is a premium for green steel, will customers be willing to pay it? At Steel Summit, Hybar CEO Dave Stickler said, “Environmental sustainability is a tiebreaker, not a game changer.” That is, in the US, the green premium largely remains an open question.

Initially, many panelists in Stockholm said their customers were demanding green still and willing to pay for it. The tone was much more bullish on it than in the US. However, an informal poll was conducted at the end of the conference by a show of hands.

“Would customers be willing to pay a green premium?”

By my estimation, fewer than half said yes.

There was a consensus that customers would be willing to pay if a tax was placed on “brown steel” to bridge the price gap.

That’s the thing: the journey to green steel is kicking into high gear, but, like in the US, there are still no agreed-upon definitions. Terms like “brown steel” (with no emphasis on carbon content), “green steel” (carbon neutral steel), and “grey steel” (somewhere in the middle) were tossed around. But definitions need to be determined, especially as regulations start to come into effect.

CBAM

From my US perspective, the discussion around the Carbon Border Adjustment Mechanism (CBAM) was eye-opening. It’s widely viewed as a non-starter in the US. (For a description of how CBAM works and the daylight between the US and EU positions, click here.) However, the transitional phase for CBAM lasts from 2023-25. In 2026, it goes into effect. That is, the non-starter is starting.

Regarding how it will work, a panel moderator quipped, “It’s complicated.” There are still a lot of things to work out. However, the general tenor was that it was going forward and is THE way things will proceed.

Of course, it’s a major stumbling block in The Global Arrangement on Sustainable Steel and Aluminum between the EU and the US. (Negotiations have been extended until March 31, 2025.) It was my impression that this issue will heat up next year when CBAM starts to get some teeth.

As to the complexity of determining the carbon footprint of end products, one panelist brought up the example of a washing machine. Simply put, there are a lot moving pieces to figure out.

What’s clear is that these kinks need to be worked out to keep trade open around the world. While there are many ways to decarbonize, two countries – or two trading blocs – need to agree on how to treat each other’s imports.

The China wild card

That brings me to the last issue that really stood out. As the largest steelmaker in the world, what happens if China decides to make a decarb push? If Chinese steelmakers made as little as 10% of their output “green,” how could European producers compete?

Also, it was noted that as China’s economy matures, a natural offshoot of that will be that it will start to generate more scrap, which means potential material for EAFs there.

Closing thought

All in all, it was very interesting to see an alternative perspective. The question is, after learning about that viewpoint, how do we create a dialogue to bridge the gaps? Personally, I am much more a fan of the “z” than the “s,” but I would be willing to make a concession if it would be a boon to global trade and international relations.

On Wednesday, a key member of the Lerman family joined Michael Cowden for an SMU Community Chat. Read on for some highlights of the conversation (SMU subscribers can watch a replay of the entire conversation on our website.)

Marc Lerman, grandson of founder Nate Lerman, currently serves as chief commercial officer of Steel Warehouse. Marc began his career trading as a young man at the Chicago Board of Trade. Once his beer money ran out, he had to get serious. (As Cowden pointed out, that might be a more common career progression than one would think!) That’s when he joined the family business, where he has remained for over 35 years.

Ingenuity in labor woes

Securing skilled labor has been a hurdle for the company in recent years. Marc said the hiring environment has improved somewhat, but finding and retaining skilled workers remains challenging, especially in technical and maintenance roles.

One solution to address this is an apprenticeship program the company developed years ago. The program includes classroom instruction and hands-on training and has been “very, very successful,” according to Marc.

Another solution to labor shortages is automation, with Marc noting that automating certain roles can help alleviate hiring pressure in a tight labor market.

Demand and the tale of varied markets

Regarding steel demand, Steel Warehouse has seen discrepancies across geographic regions, with certain markets experiencing slowdowns while others show more resilience. Demand from the company’s end-use markets has been varied. Automotive and truck demand is flat, he said, while energy projects, including solar, remain inconsistent.

Marc attributed high inventories at service centers to recent declines in order volumes. Still, he remains optimistic that inventory levels will normalize over the next few months.

Cowden circled back to an earlier conversation with Marc when the spread between hot-rolled coil and plate had ballooned to as much as $800 per short ton. It’s since fallen by more than $300/st. Marc said shifting supply-demand dynamics will continue to drive fluctuations and cycles in the spread.

For example, plate prices will face downward pressure as more plate enters the market, and the spread will narrow. If/when “that infrastructure people love to talk about” ever comes, plate demand will rise, and the spread will widen again, he said.

Marc talked a little about product substitution as a strategy during times of steel pricing volatility. He said Steel Warehouse’s approach isn’t entirely dependent on the price spread, but more on the productivity and quality advantages of using a different product.

And a sweeping Q&A

An audience member inquired about Marc’s thoughts on the outcome of the U.S. Steel/Nippon deal. “We do business with U.S. Steel, and we’re going to do business with U.S. Steel,” regardless of who owns it, he replied. “It’s quite obvious” the deal isn’t going to happen before the elections in November, he said.

Someone else asked about Marc’s outlook for consolidation in the service center space. He said many smaller, family-owned companies sold when valuations were high after strong years in 2021 and 2022. As the market has since softened, it will be a challenge for any family business without a succession plan looking to sell now, he commented.

On Mexico, Marc noted political uncertainty on both sides of the border and commented, “The shining is certainly not there today as it was in the past.”

Marc’s chat with Cowden also touched on trade and supply chain issues. The CCO said the big issue for his company is that there’s been less of a focus on imports of finished products and more action taken against steel products.

Be sure to join us for our next SMU Community Chat on Wednesday, Oct. 2 at 11 a.m. ET. We’ll catch up with Jeremy Flack, founder and CEO of Flack Global Metals. You can register here.

The UAW said union President Shawn Fain would announce the latest development regarding a potential work stoppage at Stellantis at 7 pm ET on Thursday on Facebook Live.

“We are preparing to take action at Stellantis to enforce our contract … up to and including national strike action if necessary,” Fain said in a video post.

Note, however, that the UAW would first have to hold strike authorization votes before any strike could happen. And the votes would have to be held at individual locations because they concern local grievances.

Stellantis is based in Auburn Hills, Mich., a Detroit suburb. It makes popular vehicles like Jeep. The union accuses the automaker of violating terms of a 2023 labor contract.

The USW claims Stellantis broke the terms of the agreement by moving production of the Dodge Durango SUV from Detroit to Canada. It also said Stellantis had failed to keep a promise to restart an assembly plant in Belvidere, Ill., that was idled in February 2023.

Stellantis fires back

Stellantis forcefully denied those allegations.

The automaker said it had not scrapped plans to restart Belvidere. It indicated that it had instead delayed them because of lackluster demand.

“It is critical that the business case for all investments is aligned with market conditions,” the company said in a statement.

Stellantis also said Fain’s claims that it had confirmed plans to move Durango production to Canada was “simply not true.”

“He continues to willfully damage the reputation of the company with public attacks,” the company said. “A strike does not benefit anyone,” it added.

Ford

Meanwhile, Fain authorized a strike at Ford’s Dearborn, Mich., truck plant starting on Thursday, Sept. 26, according to a press release from the union.

The UAW said the potential strike at Ford was related to issues between the automaker and UAW Local 600. That local represents workers at a tool and die unit at the Dearborn truck plant.

Sticking points were around job security, wage parity for skilled trades, and work rules, the UAW said.

Ford confirmed that talks were ongoing. “Negotiations continue, and we look forward to reaching an agreement with UAW Local 600 at Dearborn Tool & Die,” a Ford spokesperson said in an email to SMU.

Ford is also based in Dearborn. And the assembly plant there is one of its largest.

Approximately 500 workers are employed at the tool and die unit. All told, the Dearborn truck plant employs nearly 3,800 people, according to Ford’s website.

The facility makes the F-150 pickup truck, one of the best-selling vehicles in the US. The F-150 shifted to an aluminum body in 2015. Its frame continues to be made from steel.

At Ford, the threatened strike at first glance only concerns the tool and die unit. But the labor contract negotiated by the UAW last fall contains language about honoring pickets. That means, in theory, that UAW members across the entire Dearborn plant could strike in support of the tool and die unit.

Background

The threatened work stoppages now come a year after the UAW launched a strike against all “big three” US automakers – including Detroit-based General Motors. That strike resulted in historic gains in wages and benefits for auto workers.

SMU’s check of the market on Tuesday, Sept. 17, put domestic HR tags at $690 per short ton (st) on average, up $5/st from last week. Stateside hot band has rallied from July’s 20-month low.

Domestic HR is now theoretically 3.8% more expensive than imported material. That a change from two months ago, when domestic material was nearly 12% cheaper than imported HR.

In dollar-per-ton terms, US HR is now, on average, $26/st more expensive than offshore product (see Figure 1), compared to $18/st more expensive on average last week. This is nearly a $100/st swing from late July, when US tags were roughly $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.

Methodology

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.

Asian HRC (East and Southeast Asian ports)

As of Thursday, Sept. 19, the CRU Asian HRC price was $432/st, up $7/st 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 $630/st. As noted above, the latest SMU US HR price is $690/st on average.

The result: US-produced HR is theoretically $60/st more expensive than steel imported from Asia. That’s down $4/st vs. last week because prices in Asia rose at a slightly sharper clip than those in the US . Still, it’s a far cry from late December, when US HR was $281/st more expensive than Asian product.

Italian HRC

Italian HR prices were down $5/st to $581/st this week. After adding import costs, the delivered price of Italian HR is, in theory, $671/st.

That means domestic HR coil is theoretically $19/st more expensive than imports from Italy. That’s up $10/st from last week. Recall that just five months ago, US HR was $297/st more expensive than Italian hot band.

German HRC

CRU’s German HR price moved to $600/st, which is $13/st lower than last week. After adding import costs, the delivered price of German HR coil is, in theory, $690/st.

The result: Domestic HR is theoretically even with coil imported from Germany. That’s an $18/st swing. Stateside hot hand was at a $18/st discount last week. At points in 2023, in contrast, US HR was as much as $265/st more expensive than imported German hot band.

Notes: Freight is important when deciding whether to import foreign steel or buy from a domestic mill. Domestic prices are referenced as FOB the producing mill. Foreign prices are CIF, the port (Houston, NOLA, Savannah, Los Angeles, Camden, etc.). Inland freight, from either a domestic mill or from the port, can dramatically impact the competitiveness of both domestic and foreign steel. It’s also important to factor in lead times. In most markets, domestic steel will deliver more quickly than foreign steel. Effective Jan. 1, 2022, Section 232 tariffs no longer apply to most imports from the European Union. It has been replaced by a tariff rate quota (TRQ). Therefore, the German and Italian price comparisons in this analysis no longer include a 25% tariff. SMU still includes the 25% Section 232 tariff on prices from other countries. We do not include any antidumping (AD) or countervailing duties (CVD) in this analysis.