US housing starts increased in September despite high interest rates, according to the latest estimates from the US Census Bureau.
Total privately owned housing starts were at a seasonally adjusted annual rate of (SAAR) of 1.36 million in September, a 7% gain over the revised August estimate of 1.27 million, Census said.
Despite the month-on-month improvement, September’s total was still down 7.2% vs. September 2022.
The result was a surprise given elevated mortgage rates, but the result is likely due to more buyers “turning to new homes because of a dearth of inventory in the resale market,” the National Association of Home Builders (NAHB) said.
“The uptick in single-family production was somewhat unexpected as our latest builder surveys indicate that starts are likely to weaken in the months ahead due to recent higher mortgage rates that were near 7.6% in mid-October,” Alicia Huey, NAHB’s chair, said in a statement.
Single‐family housing starts in September were at a rate of 963,000, up 3.2% vs. the revised August figure of 933,000. The September rate for units in buildings with five units or more was 383,000.
Huey cautioned, however, that builders continue to struggle with persistent labor shortages, a lack of buildable lots, and higher financing costs among other headwinds.
“Despite ongoing challenges in the market, the housing deficit of resale inventory continues to provide some market support for builders,” said Robert Dietz, NAHB’s chief economist.
New construction accounted for 31% of all available homes for sale, a staggering boost from a historical average between 12-14%. The result is due to a growing housing deficit, noted Dietz. Despite the inflated number, higher interest rates have slowed the market.
“The number of single-family homes under construction in September was 674,000, which is almost 15% lower than a year ago,” he cautioned.
Regionally, combined single-family and multi-family starts are down in all four regions, with the largest decline being in the Northeast and the lowest in the South.
Sheet prices were up again this week. That much everyone seems to agree on.
It’s what comes a month or two from now where some disagreement has emerged. I’ll break it down into two schools: “higher for longer” and “higher, but not for long”.
If you think prices will continue to rise, you might point to longer lead times and stable order entry.
Are mills seeing spot buyers placing huge orders (10,000 tons or more) like they were in September? Maybe not. But are standard spot transactions (500-1,000 tons) still coming in at a healthy clip? Yes. And are buyers paying more than $700 per ton ($35 per cwt) for those tons? Also yes.
You might also note that mills have shown their ability to ratchet back supply should demand tail off, whether because of the UAW strike or some other factor.
Some recent reductions weren’t intentional. Unplanned outages, for example. But EAFs were designed to be more flexible. So if you’re an EAF mill, why continue to produce 100% if demand is not 100%?
Also, service center inventories were lower. Why should mills produce more if consumers still need steel and might not have enough inventory to mount a buyers’ strike? Why not instead manage the HRC-scrap spread as effectively as possible?
Those of you who think that prices are set to cycle back down might point out that most fall maintenance outages are wrapping up. You might reason that those outages had outweighed the impact of the UAW strike – which allowed prices to rise even as auto assembly plants shut.
You might also note that the UAW strike continues, and that that’s more of a problem now because it’s expanded well beyond the three assembly plants that were targeted initially on Sept. 15.
Some of you think that the strike will see a resolution, or at least a tentative agreement, before Thanksgiving. Others suggest that typical patterns (a deal before the holidays, for example) should not be taken for granted this time. After all, if the UAW took the unprecedented step of striking all “Big Three” automakers at once, why would the union fold just because the weather has turned cold in the Midwest?
You might also suggest that higher spot prices are less the result of solid demand than of consumers ordering to the maximum end of their min-max contracts. That allows mills to charge more for the spot tons they have available. But how many takers are there for $750-per-ton HRC for delivery at year end?
I don’t want to paint with too broad a brush across sheet products.
Some of you who think $750/ton HRC, the target base price announced by Cleveland-Cliffs last month, isn’t very likely to stick. But you also think $950/ton galvanized base might.
Why is that? It could be a story of lead times. Mills could find it difficult to sell out December for hot-rolled. But they already have or are close to doing so on coated products, and so they can be more disciplined on holding out for $950/ton.
Does that match what you’re seeing in the market? Let me know!
And thanks to all of you from all of us at SMU for your continued support.
Steel Dynamics, Inc. (SDI) announced changes to its management team in a press release on Tuesday.
The steelmaker said that Christopher Graham will take the place as SVP of the flat-roll group. Graham will also remain the interim leader for the long products steel group until a replacement is announced.
Graham has been with the Fort Wayne, Ind.-based steel maker since 1994. He will continue to report to Barry Schneider, president and COO, the release said.
“The increased scope and complexity within our flat-roll steel group will benefit from Chris’ operational and cultural guidance as we continue to differentiate ourselves and grow this platform,” Mark D. Millett, chairman and CEO, said in the release.
Richard Poinsatte joined SDI in 2000, and has been promoted to SVP and treasurer for finance, business development, and risk. Previously, He joined SDI in 2000 and since 2008 Poinsatte was responsible for SDI’s treasury, risk, and legal applications.
He will continue to report to Theresa Wagler, SDI CFO and EVP, according to the release.
Additionally, Angela Reeve has been named VP of Steel Dynamics – human resources. Joining the company in 1995, she most recently served as human resources director.
Christopher Gionti has been named VP of Steel Dynamics and GM of the structural and rail steel division. Gionti joined SDI in 1998 and has served as SDI’s rail steel division GM since 2014, and will continue in this role as well.
Likewise, Daniel Keown joined SDI in 1998 and has been named VP of Steel Dynamics and GM of the Columbus flat-roll steel division. Since 2021 he has been in the GM of Columbus position in Mississippi, and will also continue in this role.
“Their passion and spirit of excellence reflect the foundational principles of Steel Dynamics. They embody our culture of safety, performance, innovation – and always place our people first,” Millett said. “They have each been key contributors to our success.”
Sheet prices notched a third consecutive week of gains on limited supply and stable demand outside of automotive operations impacted by the UAW strike.
But opinions diverged on the future direction of prices.
Some sources said they would continue to rise on long lead times and limited spot availability. Others said they would lose momentum as the impact of mill outages faded and as the effects of the UAW strike increased.
SMU’s average hot-rolled coil price in the meantime stands at $725 per ton ($36.25 per cwt), up $30 per ton from $695 per ton last week and up $80 per ton from a 2023 low of $645 per ton in late September.
Prices for cold rolled and coated products also increased. Cold rolled and galvanized base price are both at $925 per ton, up $15 per ton from a week ago and up $60 per ton from late September. Galvalume, at $940 per ton, was up $20 per ton week over week (WoW).
Plate prices, in contrast, were roughly flat at $1,475 per ton, up $5 per ton from last week.
Despite divergent outlooks, our sheet price momentum indicators remain pointed upward. We will keep them there unless there are clear signs of that upward momentum fading. Our plate price momentum indicator remains at neutral.
The SMU price range is $700–750 per net ton ($35.00–37.50 per cwt), with an average of $725 per ton ($36.25 per cwt) FOB mill, east of the Rockies. The bottom end of our range increased $40 per ton vs. one week ago, while the top end of the range edged up $20 per ton compared to the prior week. Our overall average is up $30 per ton WoW. Our price momentum indicator for HRC continues to point higher, meaning SMU expects prices will increase over the next 30 days.
Hot Rolled Lead Times: 3–7 weeks
The SMU price range is $900–950 per net ton ($45.00–47.50 per cwt), with an average of $925 per ton ($46.25 per cwt) FOB mill, east of the Rockies. The lower end of our range was up $20 per ton WoW, while the top end was $10 per ton higher compared to a week ago. Our overall average is up $15 per ton WoW. Our price momentum indicator for CRC continues to point higher, meaning SMU expects prices will increase over the next 30 days.
Cold Rolled Lead Times: 5–8 weeks
The SMU price range is $900–950 per net ton ($45.00–47.50 per cwt), with an average of $925 per ton ($46.25 per cwt) FOB mill, east of the Rockies. The lower end of our range was up $20 per ton vs. last week, while the top end of our range was also up $10 per ton WoW. Thus, our overall average is up $15 per ton vs. the prior week. Our price momentum indicator on galvanized steel continues to point higher, meaning SMU expects prices will increase over the next 30 days.
Galvanized .060” G90 Benchmark: SMU price range is $997–1,047 per ton with an average of $1,022 per ton FOB mill, east of the Rockies.
Galvanized Lead Times: 5-8 weeks
The SMU price range is $920–960 per net ton ($46.00–48.00 per cwt), with an average of $940 per ton ($47.00 per cwt) FOB mill, east of the Rockies. The lower end of our range was up $20 per ton vs. last week, while the top end of the range was $20 per ton lower WoW. Our overall average was up $20 per ton compared to one week ago. Our price momentum indicator on Galvalume steel continues to point higher, meaning SMU expects prices will increase over the next 30 days.
Galvalume .0142” AZ50, Grade 80 Benchmark: SMU price range is $1,214–1,254 per ton with an average of $1,234 per ton FOB mill, east of the Rockies.
Galvalume Lead Times: 5-10 weeks
The SMU price range is $1,450–1,500 per net ton ($72.50–75.00 per cwt), with an average of $1,475 per ton ($73.75 per cwt) FOB mill. The lower end of our range was $10 per ton higher WoW, while the top end of our range was unchanged compared to the week prior. Thus, our overall average is up $5 per ton vs. one week ago. Our price momentum indicator on steel plate remains neutral, meaning there is no clear indication where prices will head over the next 30 days.
Plate Lead Times: 4-7 weeks
SMU Note: Above is a graphic showing our hot rolled, cold rolled, galvanized, Galvalume, and plate price history. This data is 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.
The US Department of Energy announced seven projects that could receive up to $7 billion in funding to establish regional hydrogen hubs across the country.
The funding is part of President Biden’s Infrastructure Investment and Jobs Act, also known as the Bipartisan Infrastructure Law.
The following projects were chosen to participate in negotiations with the DOE to receive the funds:
The DOE noted that: “Selection for award negotiations is not a commitment by DOE to issue an award or provide funding. Before funding is issued, DOE and the applicants will undergo a negotiation process, and DOE may cancel negotiations and rescind the selection for any reason during that time.”
“Together with tax incentives in the President’s historic Inflation Reduction Act and ongoing research and development efforts across the Federal government, [this] announcement will help drive private sector investment in clean hydrogen, setting the nation on a course to hit critical long-term decarbonization objectives,” the DOE said in a statement.
The selectee for the Midwest hydrogen hub is the Midwest Alliance for Clean Hydrogen. Regional steelmakers Cleveland-Cliffs and ArcelorMittal are listed as members on the Alliance website.
Cleveland-Cliffs applauded the announcement of the funding.
The “announcement marks the very beginning of a new era in steel producing,” stated Cliffs’ chairman, president, and CEO Lourenco Goncalves. “With clean hydrogen in our backyard, Cliffs’ hydrogen-ready blast furnaces and direct reduction plant will be first in the world to replace CO2 with a new byproduct that does not contribute to global warming: this new byproduct will be H20.”
“Furthermore, Cliffs’ willingness and ability to offtake a significant portion of the entire production of the hub eliminates the chicken-and-egg dilemma associated with clean hydrogen development and, in doing so, makes hydrogen viable for other industries, including the automotive sector,” Goncalves added.
Cliffs has publicly stated its intention to use more hydrogen in its steelmaking operations. In May, the steelmaker announced it had successfully completed a hydrogen injection trial at its Middletown Works blast furnace.
Global steel demand will reach more than 1.81 million metric tons (2 million net tons) in 2023, an increase of 1.8% over last year, the World Steel Association (worldsteel) said in its updated Short Range Outlook report.
The gain comes after steel demand contracted by 3.3% in 2022. Demand is forecasted to increase another 1.9% in 2024, reaching nearly 1.85 million metric tons, the report said.
The global economic outlook continues to be impacted by monetary tightening, a trend impacting the US domestic market as well. And while the construction sector has been negatively affected by high interest rates and a high cost environment, infrastructure investment remained positive, worldsteel said.
“Steel demand has been feeling the impact of the high inflation and interest rate environment,” said Máximo Vedoya, chairman of worldsteel’s Economic Committee. “Considering the delayed effect of the tightening monetary policy, we expect steel demand recovery in 2024 to be slow in the advanced economies.”
Worldsteel expects emerging economies to grow at faster rates than developed economies.
“It is worth noting that despite the weakening of construction activities due to high-interest rates, infrastructure investment is showing positive momentum in many regions, even in the advanced economies, reflecting the effect of decarbonization efforts,” added Vedoya.
For the US, that’s especially true given the growth in infrastructure, supported by the infrastructure bill and Inflation Reduction Act (IRA), even while manufacturing has been slowing, the report said.
The US and EU have apparently decided to move part way to a deal on steel and aluminum that will prevent a resumption of Section 232 tariffs.
The scheduled US-EU summit this week should include an announcement of at least a partial deal. This partial deal was made more essential because of events unfolding in the Middle East.
A recent opinion column in the Wall Street Journal described the global power structure thus: there are four Great Powers in the world. They are the United States, Russia, China, and the European Union. Russia and China are striving to change the world order (with help from Iran and others), while the US and EU are striving to preserve it.
This is not the only possible way to make sense of the world order. But it helps explain the moves that major players are making right now.
To paraphrase Sesame Street, one of these Great Powers is not like the others: the European Union’s clout is based on economic strength and “soft power,” rather than military strength. As Russia and China are trying to use miliary strength to change the world order, the “soft power” of the EU is looking like it isn’t quite up to the task.
How to make Europe’s position stronger? Get closer to the United States.
That helps explain the upcoming US-EU meeting in Washington (scheduled for Oct. 20) as a vehicle for demonstrating a new unity. Most of the movement has come from the EU.
Just last week, a report was leaked to both mainstream and trade publications describing the structure of a US-EU agreement on steel and aluminum. There are large areas of disagreement remaining—so an interim deal to postpone any thought of reinstating the US Section 232 tariffs harvests some low-hanging fruit.
First, the EU will launch an investigation of “non-market” subsidies on steel and aluminum exported to the EU. The investigation will surely include China, but it may hit other exporters as well, according to news reports quoting the head of Eurofer, the European steel association.
These investigations serve US interests too. They join Europe with the US on limiting dependence on China and give support to labor interests in both markets. The goal of the EU investigations, according to the leaked report, is 25% tariffs on steel and 10% on aluminum. Sounds familiar, eh? In exchange, the US will not reimpose Section 232 tariffs on the EU (and presumably not on the UK either).
Early this month, the EU announced a third subsidy investigation on Chinese exports of electric vehicles to the EU. The goal is the same—to discipline Chinese export practices.
The US and EU apparently will defer resolution of the “green steel” elements of the negotiations. The two sides are at loggerheads over the EU carbon border adjustment mechanism, or CBAM, because it would tax US exports to Europe. And Europe is opposed to the US approach of imposing tariffs on steel that is dirtier than the average of BOF and EAF production in the US.
The EU insists that it will conduct investigations before taking any trade-restrictive action. This permits the EU to say that it is following WTO procedures. But, for now, the WTO procedures remain broken because of the neutering of the dispute settlement system. The EU is willing to defend WTO principles, if only rhetorically. The US does the same—but continues to block any progress on resuscitating the dispute settlement system.
In the meantime, events on the ground, in Ukraine and the Middle East, suggest that the WTO (and perhaps even action on the climate) is among the lesser of the world’s worries at the moment. The EU’s “soft power” Great Power status is weakened by the spread of armed conflict. Things are likely to get worse before they get better.
U.S. Steel, in collaboration with DuPont, announced on Tuesday a new product, COASTALUME, engineered specifically for coastal environments.
The product is a combination of U.S. Steel’s AZ60 Galvalume and DuPont’s Tedlar PVF film, the Pittsburgh-based steelmaker said. The company noted that the combination provides enhanced protection against UV rays, excessive heat, saltwater, and hurricane-force winds.
“We combined our steel with the proven performance and durability of DuPont Tedlar PVF film, and fully address the unique needs of coastal construction, which must withstand the toll that wind and saltwater inflict over time,” Robert Kopf, VP of sales and marketing at U.S. Steel, said in a statement.
According to the product fact sheet, COASTALUME “covers roofing and siding products installed up to 300 feet from breaking surf, large bays, marshes, and other coastlines.”
U.S. Steel said the exclusive warranty also covers up to 50 years for finish warranty and 25 years for substrate.
The company said COASTALUME is being unveiled this week at the 2023 METALCON Industry Trade Show in Las Vegas.
After more than 40 years in the steel industry, James Bouchard announced he will be retiring as CEO of Esmark Inc., effective Nov. 23.
Bouchard will continue to serve as Esmark’s chairman of the board. He will also remain on as chairman of Ohio Coatings Co., the joint venture between Esmark Steel Group and TCC Steel.
Bouchard founded Esmark Inc. in 2003 when the Bouchard Group transferred all its steel assets to Esmark. The Bouchard Group, established in 1995, is the controlling shareholder of Esmark Inc. James Bouchard serves as chairman and CEO of the Bouchard Group.
“I’ve been in the steel industry for more than 40 years, and now is the time to step away from the day-to-day operations and empower the next generation of leadership. It’s also time for me to focus on my health and spend more time with family,” Bouchard explained.
Esmark’s EVP and CFO Randy Stanton will serve as acting CEO, responsible for the day-to-day operations of the company, also effective Nov. 23, until a permanent successor is found. Stanton has been with Esmark since 2013.
The United Steelworkers’ International President David McCall congratulated Bouchard on his retirement: “The USW commends Mr. Bouchard for his extensive work in steel, and in particular applauds his longstanding commitment to the domestic industry and his positive relationship with our union. We wish him a long and happy retirement.”
Esmark Inc. is a privately held family company with roots in the steel industry. The Esmark Steel Group is a flat-rolled steel processor and distributor with locations in Chicago, Ohio, and South Carolina.
Manufacturing activity decreased in New York in October, according to the most recent Empire State Manufacturing survey.
The headline general business index fell to -4.6 in October from 6.5 points in September. The new orders index dipped nine points month over month to -4.2, while the shipments index dropped 11 points to 1.4.
Twenty-four percent of survey participants reported that conditions improved over the past month. That was offset by the 29% who reported that conditions had declined.
Price and inventory indices were also flat or down.
“The prices paid index held steady at 25.5, reflecting little change in the pace of input price increases, while the prices received index fell eight points to 11.7, signaling a deceleration of input price increases,” the survey said.
The inventories index reflected a small decline at -2.1.
Despite the negative headline numbers, firms remain optimistic looking forward. The future business index stood at 23.1 in October. That’s down from 26.3 in September but still firmly in positive territory.
“New orders and shipments are expected to increase, though less so than last month, and employment is expected to grow,” the survey said.
Case in point: The index for number of employees moved up to 3.1, and the average workweek increased to 2.2. Both numbers indicate an uptick in employees and hours worked.
Raw steel production in the US declined slightly in the week ending Oct. 14, according to data released by the American Iron and Steel Institute (AISI) on Monday, Oct. 16.
Domestic steel output slipped 0.2% from the previous week’s 1,698,000 net tons to 1,695,000 tons. Although the change was negligible, it was the third consecutive week to show a decline. Production is up 3.1% from 1,644,000 tons in the same week last year.
The mill capability utilization rate for the week was 73.8% compared to 74.7% the week prior. During the same period a year ago, the mill capability utilization rate was 73.7%. The overall mill capability utilization rate has not been at or above 80% since early July 2022.
Adjusted year-to-date production through Oct. 14 was 70,163,000 tons at a capability utilization rate of 75.9%. That’s a decline of 1.1% from the 70,972,000 tons produced during the same time last year when the capability utilization rate was 78.8%.
Production by region is shown below with the week-over-week change shown in parenthesis:
Nucor’s president and CEO Leon Topalian has been named the new chairman of the World Steel Association (worldsteel).
Topalian, who last year served as vice-chairman of the board of Brussels-based worldsteel, takes the helm from Jeong-Woo Choi, CEO of South Korea’s Posco.
The vice-chairman positions will be held by Jeong-Woo Choi and CEO and managing director of India’s Tata Steel, Thachat Viswanath Narendran. Mark Vassella, CEO and managing director of Australia’s BlueScope Steel, will continue to serve as treasurer.
Timoteo Di Maulo, CEO of Luxembourg-based stainless and specialty producer Aperam, was again elected chairman of worldstainless.
Those elected to worldsteel’s executive board of directors hold office for one year.
Members of worldsteel represent about 85% of global steel production. The association maintains relationships with many international organizations, including the United Nations and the OECD.
Each year, worldsteel gives out ‘The Steelie Awards,’ recognizing member companies’ contributions to the steel industry. Two companies with operations in North America walked away with awards this year.
Pittsburgh-based U.S. Steel was awarded “Innovation of the year” for its development of a high-strength, high-formable, lean, single-phase, nano-precipitation strengthened sheet steel for automotive applications with a minimum tensile strength of 780MPa.
Ternium, headquartered in Luxembourg but with operations in Louisiana, Mexico and Latin America, was recognized for excellence in education and training.
Heating and cooling equipment shipments in the US ticked up in August, according to newly released data from the Air Conditioning, Heating, and Refrigeration Institute (AHRI).
Shipments in August totaled 1.9 million units, compared to 1.7 million units reported in July. Shipments were up 15% month over month (MoM) but down 2% year over year (YoY).
On a 12-month moving average (12MMA) basis, shipments are down to 1,819,312 units compared to 1,822,557 units the previous month.
The chart below shows the total heating and cooling shipments on a three-month moving average (3MMA) basis. Shipments fell 5% through August compared to the same period last year. The 3MMA basis has declined every month in 2023, with April seeing the largest decline at 12%.
Residential and commercial storage water heater shipments increased by 25% MoM to a combined 791,965 units, and increased 19% YoY from 666,626 units.
August shipments of warm air furnaces totaled 284,373 units, a 33% increase compared to July.
Central air conditioners and air-source heat pump shipments were up 2% MoM and down 9% YoY. A total of 541,108 air conditioner units and 336,092 heat pump units were shipped in August.
This year has seen more water heater and air conditioner/heat pump units shipped out of any of the last five years. However, the most warm air furnaces were shipped in 2021.
The full press release of this data is available on the AHRI website.
An interactive history of heating and cooling equipment shipment data is available on our website. If you need assistance logging in to or navigating the website, please contact us at info@steelmarketupdate.com.
River Metals Recycling (RMR), a subsidiary of Nucor, has acquired all the Cincinnati-based assets of Garden Street Iron & Metal.
This includes one feeder and one shredder yard of the recycler, Charlotte, N.C.-based Nucor said on Monday. It brings RMR’s total number of recycling facilities to 19. The feeder yard is located in Harrison, Ohio, a Nucor spokesperson told SMU.
The steelmaker noted that in December 2021, another Nucor scrap recycling affiliate, Trademark Metals, bought Garden Street’s recycling facilities in Fort Myers, Fla.
“We are excited to welcome the Garden Street teammates to the RMR/Nucor family,” Bob Eviston, VP and GM of RMR, said in a statement.
“This key strategic acquisition will allow us to increase our supply of sustainable raw materials for our growing steelmaking capacity in the region,” he added.
Nucor said the 43 employees of Garden Street have been offered positions with RMR. Also, the facility will be rebranded under the RMR name.
Fort Mitchell, Ky.-based RMR bills itself as the “largest scrap recycler in Kentucky and the Greater Cincinnati area,” according to the statement. RMR operates locations in Indiana, Kentucky, Ohio, and West Virginia.
It is a wholly owned subsidiary of Cincinnati-based Nucor subsidiary The David J. Joseph Company (DJJ).
Unifor members in Canada have ratified a new three-year labor agreement with General Motors, according to a bargaining update from the union.
Union members at GM’s Ontario facilities in Oshawa, St. Catharines, and Woodstock voted 80.5% in favor of the new deal.
Highlights of the new contract include pension improvements, general wage increases, a reactivation of cost-of-living allowances (COLA), new retiree allowance, reduced wage progression, EV transition supports, and two new paid holidays, among others.
The agreement will expire at 11:59 p.m. ET on Sept. 20, 2026.
Unifor and GM reached the agreement on Tuesday, Oct. 10, just hours after the union announced strike action at the automaker’s St. Catharines Propulsion Plant, Oshawa Assembly & Operations, and the Woodstock Parts Distribution Centre.
“Together, we’ve secured a deal that recognizes the many contributions of our 4,200 represented team members through significant increases in wages, benefits, and job security, while positioning GM Canada to remain competitive in the future,” said a statement from Marissa West, GM Canada’s president and managing director.
Unifor members ratified a labor agreement with Ford of Canada in late September. Only 54% favored ratification in that vote, but that was still enough for the vote to pass.
Unifor uses pattern bargaining. Now that new deals have been reached with Ford and GM, the union will move on to bargaining with Stellantis.
Meanwhile, in the US, the United Auto Workers (UAW) union remains on strike against the ‘Big Three’ Detroit-area automakers. The strike has been ongoing for a month now.
UAW workers are on the picket line at two of GM’s assembly plants in Michigan and Missouri and 18 of GM’s parts distribution facilities, as well at other Ford and Stellantis plants.
The UAW announced a new phase of its stand-up strike on Friday, Oct. 13, saying that it will be calling on workers to strike at certain facilities at will. This was a change from the tactic it had been using in the first three weeks of the strike, when it only made announcements of the strike’s expansion on Fridays.
Flat Rolled = 53.3 Shipping Days of Supply
Plate = 63.5 Shipping Days of Supply
US service center flat-rolled steel inventories declined for a second month as shipping rates picked up in September. At the end of September, service centers carried 53.3 shipping days of flat-rolled steel supply, according to adjusted SMU data. This is down from 54.1 shipping days of supply in August. Flat-rolled supply represented 2.66 months of supply in September, up from 2.35 months in August.
September had 20 shipping days, compared to August’s 23 shipping days. The daily shipping rate in September increased m/m, as it typically does, and this caused inventories to ease. The outlook on demand remains unclear, though, particularly because of the ongoing United Auto Workers union strike. Anticipation of the strike possibly pulled forward orders, and we have seen evidence that the amount of material on order is high relative to demand.
At the end of September, service centers shipping days of flat rolled supply on hand were up from the total shipping days of supply in August. The spike in material on order and decrease in inventories caused the amount of material on order to push inventories up in September vs. August. The result exceeded the previous high for the year set in February, and the amount of material on order could be at levels not seen since the Covid-related shortage (September 2021).
The elevated amount of material on order reflects some opportunistic buying to extend lead times, which could impact mills’ ability to place new orders. Sheet prices have reached a bottom for now, and contacts are seeing mill lead times extend with some help from outages. Buyers may be well booked for the rest of Q4, which is also a slower demand period.
US service center plate inventories continued to rise in September with weaker shipping levels. Plate inventories, measured by days of supply, have risen each of the last six months. At the end of September, service center plate inventories represented 63.5 shipping days of supply on an adjusted basis, up from 61.2 shipping days of supply in August.
Plate inventories in September represented 3.18 months of supply, up from 2.66 months of supply in August. The uptick in months of supply is more pronounced because September had three fewer shipping days than August. Still, the daily shipping rate for September was marginally lower m/m in what has historically been a stronger shipping month.
With bearish views on demand and plate pricing, service centers have been eager to offload inventory. The September daily shipping rate is down 7.2% y/y, according to SMU data. Total plate shipments in September were down 11.6% y/y, but September 2022 had one more shipping day.
Plate inventories appear to be slightly high relative to demand, and service centers remain focused on reducing inventories. The amount of plate on order at the end of September caused shipping days of supply to move up marginally from August. Plate on order saw inventories in September remain nearly flat compared to August.
The SMU survey published on Sept. 28 showed plate mill lead times at 4.86 weeks, which was lower than the 5.25-week lead time reported a month prior.
Steel Market Update’s Steel Demand Index remains in contraction territory despite repeated improvements since mid-September, according to our latest survey data.
The latest developments come on the heels of Cleveland-Cliffs’ late September price increase, mill outages, and idlings because of the ongoing UAW strike.
And while lead times for hot-rolled coil have also moved out, they are still within a normal range.
Despite the dynamics currently at play, demand for flat-rolled steel is stable at best, with some still concerned it’s still trending down.
SMU’s Steel Demand Index now stands at 45.5, up a half of a point from a reading of 45 at the end of September. The measure has improved by more than five points, however, since reaching a recent low of 40 back in late August.
Except for a short-lived bump when the market responded to mill price hikes in mid-June, SMU’s Steel Demand Index had been largely trending downwards and remaining in contraction territory since early April.
The index, which compares lead times and demand, is a diffusion index derived from the market surveys we conduct every two weeks. This index has historically preceded lead times, which is notable given that lead times are often seen as a leading indicator of steel price moves.
An index score above 50 indicates rising demand and a score below 50 suggests declining demand. Detailed side by side in Figure 1 are both the historical views and the latest Steel Demand Index.
Overall market sentiment remains mixed, but the unprecedented strike at union-represented automakers remains the wildcard, even as mill idlings and outages take shape. While most agree that demand is still down, especially for HRC, it seems Cliffs’ recent price target has stopped the price erosion and propped tags up. Cold-rolled, coated, and plate products have also followed.
SMU’s latest check of the market on Oct. 10 placed HRC at an average of $695 per ton ($34.75 per cwt) FOB mill, east of the Rockies, up $25 per ton vs. the prior week. Hot band is now up $35 per ton since reaching the recent low of $660 per ton in mid-September.
U.S. Steel’s idling at Granite City in response to UAW’s strike, coupled with ongoing and upcoming mill outages has helped push lead times out. But the trend doesn’t seem to have shifted buying patterns as the amount of material on order and service center inventories have declined repeatedly through the end of September.
With lead times currently stretching past the second half of Q4, present and upcoming maintenance outages or production cuts are likely providing a bit of support to prices and lead times for the time being. But if the ongoing UAW strike carries on and fundamental demand eases as the year-end holidays approach, there may not be much pricing support.
SMU’s demand diffusion index has, for nearly a decade, preceded moves in steel mill lead times. (Figure 2 shows the past five years.) Historically, SMU’s lead times have also been a leading indicator for flat-rolled steel prices, particularly HRC prices. (Figure 3 features the past five years.)
It’s still important to keep a close eye on lead times. While they have been moving up a bit of late, they had been in a holding pattern for the better part of the past four months. While planned outages will cycle through, the UAW’s unprecedented strike against Ford, General Motors, and Stellantis could potentially have a more extensive impact on both pricing and lead times. There appears to be little support for flat rolled prices, should demand remain down.
Our hot-rolled lead times averaged approximately 5.59 weeks this week, up roughly a week from 4.55 weeks in late September. They remain a ways away from a recent high of 6.69 weeks in mid-March, but lead times have been hovering around the 5-week mark since roughly mid-June.
Note: Demand, lead times and prices are based on the average data from manufacturers and steel service centers who participate in SMU’s market trends analysis surveys. Our demand and lead times do not predict prices but are leading indicators of overall market dynamics and potential pricing dynamics. Look to your mill rep for actual lead times and prices.
Specialty steel producer Grupo Simec has permanently closed down its Republic Steel mills in Canton, Ohio, and Lackawanna, in New York state, it has emerged.
In August, the company blamed an extremely challenging special bar quality (SBQ) market, competitive market pricing, decreased demand, higher input costs, and the general inflationary environment for an indefinite idling. Around 500 employees were furloughed.
A company lawyer has since told Ohio’s attorney general’s office that the closure is permanent. The office described the information as confidential but critical to share because of ongoing settlement negotiations of the state’s air pollution case against the company, local newspaper, The Canton Repository, reported.
Simec has insisted that Republic Steel, as the only producer of leaded steel in North America, took many steps over the years to remain compliant with ever-changing environmental regulations, particularly related to air quality. But continuing to produce in facilities up to 125 years old proved to be too challenging.
Therefore, the Guadalajara, Mexico-headquartered group transferred its leaded steel production to a new, state-of-the-art mill in Tlaxcala, central Mexico. The rest of Canton’s and Lackawanna’s output of SBQ, rod, wire, rebar, and other long products were also moved there during the initial idling.
SMU’s latest survey data are out, and they reflect a consensus among steel buyers that sheet prices have bottomed out and might rebound.
Lead times continue to extend. Fewer sheet and plate mills are willing to negotiate lower spot prices. And 70% of survey respondents think prices have already bottomed out or will later this month:
Also, 75% of respondents think that we’ll end the year with hot-rolled coil prices above $700 per ton:
That’s somewhat remarkable considering that there had been concerns – especially ahead of the UAW strike – that HRC could fall into the $500s per ton.
Notable, too, is that the sheet price increase led by Cleveland-Cliffs in late September appears to have gained more traction among service centers than a prior round of hikes announced in June/July:
Approximately one-third of service center respondents reported increasing prices to their customers in our latest survey. Compare that to only 8% following the increase led by U.S. Steel in mid-June.
We haven’t seen service centers following mills higher at this level since late Q4 of 2022, just ahead of a sheet price spike in Q1 of this year.
Meanwhile, more than 70% of respondents predicted that they would meet or exceed forecasts this month:
That trend has proven durable despite volatility in prices and current events.
Also interesting: Price expectations have firmed even as the consensus about the length of the UAW strike has shifted from 3-4 weeks to 7-8 weeks (or more).
Approximately 50% of survey respondents last week predicted that the UAW strike would last 7-8 weeks or longer. In September, shortly after the strike was announced, about 50% thought it would last only 3-4 weeks.
A month ago only 10% predicted that the strike would last more than seven weeks. How are prices rising even though most people underestimated the length of the UAW strike? Have idlings, maintenance outages, and strength in other markets offset lower demand from union-represented automotive companies?
I ask those questions partly because not all the data we collected in our survey supported the narrative that prices have bottomed out and rebounded.
A significant number of service centers, for example, continue to reduce inventories. Why is that?
Is it a reflection of typical, seasonal factors? Not wanting excess inventory in jurisdictions – Harris County, Texas, for example – that charge year-end inventory taxes? Recall that lead times for many flat-rolled steel products are into late November or December. And customers in such locations typically don’t want excess steel at year-end.
Is it because inventory carrying costs are higher because of higher interest rates? Or are some service centers concerned that the rebound in sheet prices that we’ve seen over the last few weeks isn’t sustainable?
Also, we’ve seen a modest increase in the number of respondents who report that they’re on the sidelines:
That may be just noise. I’m not reading too much into it unless we see the same trend continuing in future surveys.
But I can see why it has the potential to become a trend. Some big buyers bought large volumes at a significant discount to prevailing spot prices in September. Those deals mean some probably don’t need to return to the spot market (except to fill in holes) for the balance of the year.
And, as some of you continue to point out, these are uncertain times in the US and abroad.
At home, the UAW has said it will change tactics. It will no longer wait to announce strikes on Fridays. It will instead announce them at any time and with little notice.
Also, will there be a deal for U.S. Steel this year? What might a deal look like? And would it result in more consolidation or less consolidation at the mill level?
Finally, there is the possibility of an expanding conflict in the Middle East. What might the ramifications of that be, if any, for steel markets in the US?
Let me know your thoughts.
Our Steel 101 workshop on Oct. 24-25 near Charleston, S.C. – featuring a tour of Nucor Steel Berkeley – has sold out. Our next in-person Steel 101 will be in the spring. Stay tuned for the location and dates.
In the meantime, more companies continue to register for the Tampa Steel Conference, which we do together with Port Tampa Bay. Some of you told me last year that high hotel costs were an impediment. So register here before the hotel rates go up!
Prices for ore-based metallics were mixed month-on-month (MoM) as lower finished steel production weighs on pig iron demand. Supply out of the Brazilian market continues to tighten as producers look to raise prices in the near term.
In the CIS, pig iron prices increased $10 per metric ton MoM to $365 per metric ton FOB Black Sea. Local mills continue to focus on crude steel production, causing output and exports of merchant pig iron to decline substantially. The primary export locations for Ukrainian material remain Poland and Romania as exporters continue to face logistical issues, with the port of Danube sustaining an attack in September.
After reducing in July, Russian merchant pig iron shipments increased in August and September as logistical constraints in the Black Sea eased for Russian exports. The primary destination is the Asian market as demand from European buyers remains low because buyers are unwilling to take on the reputational risk of buying Russian material. Meanwhile, demand in Turkey remains soft due to sluggish demand for finished steel.
In Europe, pig iron prices declined $10 per metric ton to $385 per metric ton CFR Italy based on deals concluded in the last two weeks. Buying activity is limited as recent steel production cuts have softened demand in Europe.
Brazilian pig iron prices fell slightly, declining $5 per metric ton to $435 per metric ton and $405 per metric ton FOB for North and South respectively. Market participants report that there is limited buying activity as traders wait to see where US scrap prices move in the near term. Margins for Brazilian producers remain squeezed, causing producers to tighten supply and support prices over the coming months.
Despite softening demand caused by multiple planned outages, US pig iron prices remain unchanged at $440 per metric ton CFR NOLA as supply availability has become limited. Traders report that Brazilian producers were able to hold prices firm despite efforts from buyers to push prices downwards in recent weeks. With the recent price stability in the scrap market, producers increased offer prices this month as supply is expected to remain tight till profitability improves.
The LME aluminum 3-month price was stable on the morning of Oct. 13, trading at $2,201 per tonne at that time. The market is under negative pressure from the stronger-than-expected US inflation data released on Thursday.
The SHFE aluminum price was slightly lower, with the cash contract close to RMB19,015/t, down 1.1% from the previous day. After SHFE trading reopened on Oct. 9, the cash contract demonstrated a continuous weakness throughout the week and LME aluminum was back to the key $2,200 level as it lost its support from the SHFE.
On Oct. 10, the US Aluminum Association (AA) reported on shipments of extruded products. Total shipments in North America totaled 376.1 million pounds (170,596 tonnes) during August 2023 – a decrease of 15.6% year over year (YoY). Compared to the previous month, shipments increased 3.9% over the revised July 2023 total of 362.0 million pounds (164,200 t). Year-to-date shipments through 2023 totaled 3,151.1 million pounds (1,426,315 t), down 12% from the 2022 year-to-date total of 3,582.7 million pounds (1,625,085 t).
While an increase month over month (MoM), this marked the lowest August for extrusion shipments in over 10 years. Weak demand has been a theme throughout 2023 as B&C (bottles and cans), consumer durables, and other end-use sectors slow. However, this recent data release highlights the risk for a further slowdown in Q4. Trailer build rates were projected to decline sharply and recent data suggest they are falling faster than expected. Adding that to the ramp-up of the United Auto Workers (UAW) strikes to include higher output automotive plants slow expectations for the start of 2024.
On Oct. 12 the Australian Aluminum Council released the findings of a study that analyzed the entire life-cycle of the used beverage cans (UBCs) such as regulatory schemes, collection infrastructure, recycling and landfill rates and regional trade flows.
According to the study, Australians consume more than 9 billion aluminum cans per year, and this figure is projected to increase by 25% between 2020 and 2030 to 11 billion cans annually. The aim of the study was also to understand better what happens to these cans at the end of their life as Australia has limited domestic recycling capacity. For example, the CEO of the Australian Aluminum Council, Marghanita Johnson, pointed out that “the closure of Australia’s car industry a decade ago was accompanied by a closure in the two aluminum rolling mills, which also provided Australia with domestic aluminum recycling capacity. Since then, aluminum cans and other scrap have been exported for recycling.”
The study reveals that while a small proportion of cans are recycled within Australia, the majority are recycled in South Korea, Thailand, and Saudi Arabia. Additionally, 65% of recovered cans are reintegrated into producing a new generation of aluminum cans, closing the can-to-can recycling loop.
Regarding UBCs collection, Johnson also added that “Australia will have container deposit schemes in place in all States and Territories by the end of the year and already has a voluntary extended producer responsibility (EPR) scheme.” These initiatives will allow Australia to reach a can recovery rate of 74%. However, the report also highlights key improvement levers, including better awareness about the benefits of aluminum can recycling, investment in infrastructure and quality waste streams. If implemented, Australia should be able to reach recovery rates of >90% in the next five years.
LG Energy Solution will supply lithium-ion battery modules for Toyota Motor Corp. (TOYOF) beginning in 2025, the two companies announced. The 20 GWh-capacity batteries will be made of high-nickel NCMA (nickel, cobalt, manganese, aluminum) pouch-type cells. To meet the terms of the agreement, LG Energy will invest roughly $3 billion in new production lines at its Michigan battery plant.
“Having secure supplies of lithium-ion batteries at scale with a long-term relationship to support Toyota’s multi-pathway approach and growth plans for BEVs in North America is critical to achieve our manufacturing and carbon reduction plans,” Toyota Motor North America CEO Tetsuo Ogawa said in a press release.
The deal is LG Energy’s “largest single supply agreement … outside of joint venture[s],” the company said. LG Energy now supplies batteries to all of 2022’s five top-selling global auto manufacturers. “With our 30 years of experience in lithium-ion batteries, we will provide innovative power solutions to support Toyota’s push further into battery electric vehicles,” LG Energy CEO Youngsoo Kwon said in the statement. “The agreement also presents another big opportunity for us to strengthen our production capacity in North America,” Kwon concluded.
The spread between hot-rolled coil (HRC) and prime scrap prices widened slightly this month, according to SMU’s most recent pricing data.
SMU’s average HRC price increased this week, while the average price for busheling scrap this month was flat.
Our average HRC price stood at $695 per ton ($34.75 per cwt) as of Oct. 10, up $25 per ton from the previous week.
Busheling tags remained level in October vs. September at an average of $400 per gross ton. Figure 1 shows price histories for each product.
After converting scrap prices to dollars per net ton for an equal comparison, the differential between HRC and busheling scrap prices is $338 per net ton as of Oct. 13, up $5 from a month earlier. (Figure 2). As recently as the middle of April it stood at $667.
By the way, did you know our Interactive Pricing Tool has the capability to show steel and scrap prices in dollars per net ton, dollars per metric ton, and dollars per gross ton?
Figure 3 explores this relationship in a different way – we have graphed HRC’s premium over busheling scrap as a percentage. HRC prices now carry a 74% premium over prime scrap, up from 73% a month ago.
| Second quarter ended Aug. 31 (FY2024) | 2023 | 2022 | % Change |
|---|---|---|---|
| Net sales | $398.5 | $406.7 | -2% |
| Net earnings (loss) | $28.3 | ($57.6) | 149% |
| Per diluted share | $0.97 | ($1.91) | 151% |
| Six months ended Aug. 31 (FY2024) | |||
| Net sales | $789.4 | $613.8 | 29% |
| Net earnings (loss) | $56.9 | ($33.5) | 270% |
| Per diluted share | $1.95 | ($1.13) | 273% |
AZZ Inc. swung to a profit in its fiscal second quarter of 2024 as its metal coatings business was lifted by infrastructure spending.
The Fort Worth, Texas-based galvanizer and coil coater posted a profit of $28.3 million in its fiscal Q2 ended Aug. 31 vs. a loss of $57.6 million a year earlier on sales that slipped 2% to $398.5 million. (See chart above.)
“I am pleased to report that our second-quarter results were in line with our expectations and set us up well for the balance of the year,” President and CEO Tom Ferguson said in a statement.
AZZ’s Precoat Metals business faced softer market conditions. Sales of $228.7 million in Q2 dropped year over year by 5% due to lower volume in HVAC, transportation, and certain construction end markets, he said.
Recall that AZZ acquired Precoat, a steel and aluminum coil coater, in May 2022 for approximately $1.28 billion.
The company’s metal coatings business, a separate division from Precoat, “continued to benefit from infrastructure spending.” This segment had “record sales” of $169.8 million in the quarter, up 2.4% vs. a year earlier, Ferguson said.
On the operations side, construction on AZZ’s new plant in Washington, Mo., “continues to progress ahead of schedule and budget,” he said.
AZZ announced plans last November to build a greenfield aluminum coil coating facility near St. Louis.
Ferguson noted the company has decided to internally fund the construction of the plant instead of funding a portion of it through a sale/leaseback transaction.
AZZ expects a stronger half of this fiscal year vs. last year, even though the second half is typically seasonally slower, Ferguson said.
Among the reasons for that optimism are infrastructure and renewables spending, reshoring of manufacturing, and “continued migration to more environmentally friendly pre-painted steel and aluminum,” he said.
The latest data from oilfield services provider Baker Hughes shows the number of active rotary rigs in the US and Canada bounced back during the week ended Friday, Oct. 13.
The US rig count increased by three from the previous week to 622 rigs. Active gas rigs declined by one to 117, while active oil rigs rose by four to 501. Miscellaneous rigs were flat at four.
The US rig count has been trending downward since hitting a recent peak of 784 rigs in the first week of December 2022. The number of rigs active at present is comparable to early 2022.
Compared to this time last year, there are 147 fewer total rigs in operation: 109 fewer oil rigs, 40 fewer gas rigs, and two additional miscellaneous rigs.
Canada’s rig count rebounded from the week prior, rising by 13 to sit at 193 total rigs. Eight net oil rigs, four net gas rigs, and one miscellaneous rig were brought back into operation vs. the previous week.
The number of active rigs in Canada is now the same as it was during the week of July 28. To see a higher count, we have to go back to the week of March 17.
Canada’s count is 23 below this time last year when 216 rigs were in operation. Oil rigs are down by 34, while gas rigs are up by 10, and miscellaneous rigs are up by one.
The international rig count is updated monthly and is therefore unchanged from last week’s report, which showed 940 active rigs during the month of September.
The Baker Hughes rig count is important to the steel industry as 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. Wells are drilled to explore for, develop, and produce oil or natural gas. Baker Hughes’ rotary rig count includes only those rigs that are significant consumers of oilfield services and supplies.
For a history of the US and Canadian rig counts, visit the rig count page on our website.
The latest SMU 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.”
Historical 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 david@steelmarketupdate.com.
The pig iron trade is an important element to the US steel and foundry industry. The electric-arc furnace (EAF) thin-slab casting steelmakers need pig iron to make drawing quality steels for several consumers they are trying to serve.
The ferrous scrap available to them contains higher levels of copper, aluminum, and other elements. These have to be neutralized by adding virgin iron units, namely basic pig iron and/or direct-reduced iron (DRI)/hot-briquetted iron (HBI). The iron foundry industry relies on pig iron to make their various grades of iron castings. These foundries supply parts and products to virtually every sector of the US economy.
Since the early 1990s, the US ferrous industry has imported between 4-7 million metric tons per year of pig iron from mainly three countries: Brazil, Russia, and Ukraine. Having access to these amounts of virgin iron units is critical to these industries.
One may ask, why do we have to rely on imports to meet these critical needs? After all, pig iron is made in blast furnaces that smelt iron ore into pure iron. Why couldn’t we make that product here?
The truth is we did have a thriving pig iron business in the US for years. There were depots located across the country where foundries could source their needs with reasonable freight costs. In the 1950s, there existed over 3,000 foundries making castings, mostly iron castings. Today only 600-700 are still operating. So, what happened?
The answer is technological advancements in steelmaking changed the course of our domestic pig iron business. The advancement was the shifting to the Basic Oxygen Furnace (BOF) from the Open Hearth Furnace to refine iron from the blast furnace into crude steel. The Open Hearth used tremendous amounts of scrap in their process, whereas the BOF used minimal amounts of scrap.
This conversion had the effect of leaving much of the country’s scrap supply looking for a home. Consequently, the price of scrap spiraled downward for years.
Meanwhile, our foundries, feeling pressure from imports, were looking for ways to lower costs and domestic pig iron was relatively expensive. They noticed the price of scrap was more than reasonable and they engaged with the scrap facilities in their area to supply them with segregated grades of scrap to replace, at least partially, the need for pig iron. Starting in the 1950s, this changeover spread around the country until the last merchant pig iron producer closed its doors in 1992. This was due to poor demand from an ever-shrinking foundry market.
Another significant aspect of the Open Hearth to BOF conversion is it gave rise to the mini-mills. Companies, like Nucor, using an EAF, utilized the excess scrap available is the US, to make long products and compete with the integrateds.
Eventually, technological advancements made it possible to make flat-roll steels in the scrap-based EAFs, but they needed pig iron to do it. Today, approximately 70% of steel production in the US is made in electric furnaces.
Ironically, in 1993, the first EAF thin-slab casting mill opened for business. This was followed by a host of others, all needing low residual scrap and pig iron or HBI. But pig iron was the material of choice. This is why we had to import pig iron from Brazil and the Commonwealth of Independent States (CIS) region to drive this new technology. And we still do today!
The US Department of Commerce’s International Trade Administration (ITA) is updating the antidumping and countervailing duties (AD/CVD) on cold-rolled steel imports from South Korea.
The ITA gave notice of its preliminary results in administrative reviews of the duties in the Federal Register. The final results are to be issued by early February.
The AD review covers the one-year period ending Aug. 31, 2022.
The agency set initial weighted-average dumping margins of 1.3% for Hyundai Steel, 2.22% for KG Dongbu Steel, and 2.64% for Posco.
The dumping margins are higher than the 0% margins found for the three companies in the prior year’s administrative review.
The CVD review is considering the 2021 calendar year.
Preliminary subsidy rates were set at 0.78% for Hyundai Steel and 0.88% for Posco.
Again, these are higher than the rates found in the previous review. For 2020, the ITA set final rates of 0.27% de minimis for Hyundai, 0.20% de minimis for Posco, and 1.93% for non-selected companies. No duties are collected on de minimis rates, which are typically below 0.5%.
The US will host the European Commission and the European Council at a summit in Washington on Oct. 20. A trade agreement on steel and aluminum will likely be on the agenda.
It’s worth taking a moment to consider the importance of such a deal and what it could mean for American steelmakers and other manufacturers.
First, an agreement between the US and Europe on steel and aluminum would eliminate the risk of tit-for-tat tariffs that hurt everyone involved. In the absence of a deal, Trump-era tariffs on imported steel would automatically return, and retaliatory tariffs on US goods exported to Europe, such as whiskey and motorcycles, would likely come back, too.
Second, a smart trade deal would give preferential treatment to steel made with lower carbon emissions while sidelining steel made in inefficient processes that rely heavily on fossil fuels. Clean steel is essential to the low-carbon energy transition, and America leads the world in clean steel production. Europe is close behind.
Third, the Global Arrangement could reduce the economic threat to American steelmakers posed by steel from non-market economies that have excess steel capacity. China and other countries that subsidize production of dirty steel gain an unfair advantage in the global marketplace. Many of the producers of subsidized, coal-intensive steel are adding capacity, not reducing it. And the transshipment of steel products that originate in those countries makes enforcement of trade rules more difficult.
At the request of the US Trade Representative (USTR) Katherine Tai, the International Trade Commission (ITC) in the Commerce Department has undertaken a fact-finding investigation into carbon emissions produced during the manufacture of dozens of steel products by American steel mills.
The ITC plans to use a questionnaire to collect emissions data from every steelmaking facility in the country. A public hearing on the process is scheduled for Dec. 6, and the questionnaire will be sent to steelmakers soon afterward. The ITC must submit its report to the USTR in January 2025.
The Steel Manufacturers Association has coordinated tours for ITC commissioners and staff members at facilities at mills operated by several of our members, including Gerdau in Petersburg, Va.; Steel Dynamics Inc. in Butler, Ind.; and Nucor in Crawfordsville, Ind. You can learn more about one of the tours at https://steelnet.org/u-s-international-trade-commission-visits-sma-member-steel-mills/.
We welcome the ITC investigation. Good information is essential to good decision-making.
We also know the numbers will tell an important story about US manufacturing: American steelmakers, using capital they raised on their own and without government intervention, have invested in the cleanest, safest steel production in the world.
That’s why so much is riding on the Global Arrangement. Done well, it could not only improve trade relations between the US and Europe. It could also ensure that American steelmakers get the credit they deserve for leading the way on sustainable manufacturing and moving the global economy closer to its net zero target before it is too late.
The United Auto Workers (UAW) union announced a new phase in its ongoing stand-up strike against the “Big Three” Detroit-area automakers on Friday.
In the first three weeks of the strike, the union had been announcing which of the Big Three plants its members would be walking out of on Friday afternoons.
In a live webcast on the morning of Friday, Oct. 13, UAW president Shawn Fain said the union will now be calling on members at plants to strike “when we need to, where we need to, with little notice.”
The union utilized the tactic just days before making the announcement. On Oct. 11, it called on members at Ford’s Kentucky Truck Plant to stand up and walk out. Some 8,700 members answered the call and walked off the job.
Fain explained the move on Friday’s webcast. Just before the Kentucky Truck Plant walkout, Ford made a contract offer that was no different than the one rejected by the union two weeks earlier. Union leaders made the call then to not wait until Friday to expand its strike. “We didn’t wait a minute,” Fain said, as union leaders immediately put out the call to strike at Ford’s biggest plant.
“Ford thought they could sit back and not make further progress in bargaining because they thought they had the best deal on the table,” Fain said. Knowing the union would make an announcement on Fridays, Ford thought they could wait to make an offer until just before that, according to Fain. “They thought they’d figured out the so-called rules of the game, so we changed the rules,” he said.
“Now there’s only one rule: Pony up,” he stated.
Fain noted the union is still bargaining hard with all three automakers, but they’ve been put on notice that the union is “in a new phase of this fight.”
“Taking out Kentucky Truck sent a very clear message not only to Ford, but to GM and Stellantis as well. Don’t you dare slow walk us or lowball us. We will take out whatever plants they force us to,” the union leader said.
On Thursday, Oct. 12, Ford hosted a virtual briefing with analysts to discuss the Kentucky Truck work stoppage and its repercussions for the company and economy.
“The Kentucky Truck Plant is one of the most important manufacturing plants of any kind in America and certainly in the automotive industry,” an executive said.
Ford executives said there will be various aftershocks when a plant like this is taken down, including impacts to customers, employees, suppliers, dealers, and the economy.
Commenting on the last contract offer made to the UAW, a Ford executive said, “As a company, if we go further, we risk the ability to invest in the business and to profitably grow.”
Fain said there is “pathetic irony” in the statement that Ford has reached its limits with what it can offer in the contract, as Ford workers are the ones who’ve reached their limits after decades of falling living standards.
The UAW’s stand-up strike has now hit the following Big Three plants:
SMU’s Current Steel Buyers Sentiment Index edged down this week while the future index remained flat, based on our most recent survey data.
Every other week we poll steel buyers about sentiment. The Steel Buyers Sentiment Indices measure how steel buyers feel about their company’s chances of success in the current market, as well as three to six months down the road. We have historical data going back to 2008. Check our interactive graphing tool here.
SMU’s Current Buyers Sentiment Index was at +57 this week, down four points from +61 two weeks earlier (Figure 1). The United Auto Workers (UAW) strike does not seem to have hampered current sentiment as it stood at +56 on Sept. 14 on the eve of the work stoppage, but it has kept it subdued.
SMU’s Future Buyers Sentiment Index measures buyers’ feelings about business conditions three to six months in the future. This week, the index stood at +74, even with the previous market check (Figure 2). Future sentiment has been running above current sentiment since the beginning of August.
Measured as a three-month moving average, the Current Sentiment 3MMA fell slightly to +57.67 vs. +58.83 two weeks prior. (Figure 3).
This week’s Future Sentiment 3MMA increased to +69.50 from +67.83 at the previous market check (Figure 4).
“Large buyers/resellers… not making intelligent decisions on selling price.”
“We started to have problems with imports, due to their low prices while our orders have fallen.”
“We could have logistics problems with the war in Israel.”
“Shipments going well this month as we believe inventories are low.”
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.
Positive readings run from +10 to +100. A positive reading means the meter on the right-hand side of our home page will fall in the green area indicating optimistic sentiment. Negative readings run from -10 to -100. They result in the meter on our homepage trending into the red, indicating pessimistic sentiment. A reading of “0” (+/- 10) indicates a neutral sentiment (or slightly optimistic or pessimistic), which is most likely an indicator of a shift occurring in the marketplace. Sentiment is measured via SMU surveys twice per month.