HR prices for CSI, the company’s sheet subsidiary in California, also rose. Nucor aims to collect $760/st for HR from CSI, also up $5/st from last week. Note that sheet prices on the West Coast are typically higher than those east of the Rocky Mountains.

Lead times of 3-5 weeks will continue to be offered, but Nucor noted for customers to contact their district sales manager for availability.

SMU’s Aug. 13 check of the market put current HR coil spot prices in the range of $630-700/st, with an average of $665/st. That marked the third straight week of HR prices ticking higher.

Steel Summit 101

If you’re new to the event – which will be held Aug. 26-28 – you might not know that this is not only one of the biggest steel conferences in North America but also one of the easiest to attend too.

The GICC is connected to Hartsfield-Jackson airport by a tram. You can grab your bags, hop on the tram, and be at Summit in a matter of minutes – no rideshare, taxi, or subway required.

We typically start with a bang. This year will be no different. We’ll also seek the wisdom of the opening-day crowd with a few live poll questions. Over the course of the conference, we’ll talk about everything from steel price forecasts and demand trends to trade policy and the state of the economy.

And of course it’s an election year. That means we’re going to be talking about who might win in November and what the outcome could mean for steel. As the negative ads ramp up (especially in “battleground” states), feelings can run high.

Be nice, please

Here’s my ask: We might not agree on everything. But let’s keep it civil. Summit is about the industry we love, that supports us and our families, and about bringing people together.

To that end, I think you’ll really enjoy the opening keynote from Sirius XM radio host and CNN contributor Michael Smerconish. He’ll be talking about his latest creation – “The Mingle Project”.

Smerconish is a great speaker, as those of you who have attended past Summits already know. And I hope his words will set the tone for the rest of the conference. We want you to learn a lot, network a lot, and maybe make a few new friends along the way – even better if they’re ones from outside your usual social bubble.

Survey says

My colleague David Schollaert has a good summary of of SMU’s latest steel market survey here. Those results were released to our premium subscribers on Friday. (If you’re interested in upgrading to a premium account, please contact my colleague Luis Corona at Luis Corona Luis.Corona@crugroup.com.)

Below are a few survey findings that caught my attention too. For starters, most people think sheet prices will continue rising into the autumn months (75%):

That’s what you’d expect following mill price-increase announcements in late July and early August.

But a solid minority (25%) think prices have already peaked or will by the end of this month. I didn’t expect that result. After all, the conventional wisdom (whether that still holds is another question) is that prices tend to rebound after the “summer doldrums”. It’s not often that they fall into the fall.

Here is a sampling of what survey respondents had to say about where and when prices might peak. I’ve divided the responses up into bulls, bears, and centrists.

Bulls:

“Demand is picking up in heavy steel coil, and interest rates are starting to move down.”

“Demand will start to pick in late Q3 – similar to pre-Covid years. And mills will take advantage of the opportunity to push pricing as high as possible.”

“Customers seem to have overreacted in reducing inventory. As the market begins to turn, the domestic mills will push hard and create more upward movement than would have been the case based on fundamentals. Contract season will start soon, and the total focus will be on getting prices up.”

“We won’t see a true peak until late Q1/early Q2 of 2025.”

Bears:

“I do not agree that they are trending up. It’s a glitch to stop the decline.”

“We have definitely set a floor. But we are thinking it’ll be a mostly temporary one and that pricing will level and dip back a bit. Demand is still too slow.”

“This rally seems pretty weak.”

“Dead-cat bounce.”

Centrists:

“This next cycle will be more moderate than previous cycles. There is not enough economic activity to support a big ramp up. The market will be one where moderate returns will be the norm – neither good nor bad.”

“It will remain flat for a while. Then import positions/options change, and mill outages in back half of 2024 play a role.”

“The market will stay flat until elections are over.”

While not everyone agrees on when prices will peak, there is broad consensus that recent mill price increases have at least stopped the bleeding downstream.

Take a look at the chart below:

Among service center respondents, 64% said they were holding prices, 16% said they were increasing them, and only 20% said they continued to lower prices.

That’s a huge change from a month ago. Back then, 84% reported lowering prices, none said they were increasing them, and only 16% said they were holding the line.

If there is a fly in the ointment, it might be the data in this chart:

About two-thirds of service centers tell us that they’re releasing less steel now than they were a year ago. That’s a little better than 75-80% readings we saw earlier this summer – but not by much.

And that result might explain why 30% of respondents to our survey report that they’re not meeting forecast while only 5% say they’re exceeding it.

The good news is that most (65%) continue to meet forecast.

Here is what respondents had to say about their forecasts and what’s impacting them:

“Customers are down across the board. Ag layoffs, parts/productions moving to Mexico, high interest rates hurting automotive and home buying/upgrades is having a major impact.”

“As an OEM, we’re OK. But a lot of our peers certainly seem slow with demand off and internal layoffs are pretty abundant.”

“We will barely meet forecast. But expectations are for a strong September.”

“Yes. But after adjusting down.”

Download the Summit app!

Your feedback helps us make sense of the steel market. And we’ll be asking you a few questions to kick off Summit – just as we have in past years. What will hot-rolled (HR) coil prices be a year from now? How is demand? Who will win the election?

Is there anything else that you’d like us to ask 1,400 or so folks in the steel business? Let us know at info@steelmarketupdate.com. We might include any good suggestions in our live polls at Summit.

Fwiw, you’ll need to the Steel Summit 2024 app to participate in those polls. If you haven’t already, go to either the Apple or Android app stores and download it today.

PS – Thanks again for you continued support. And we can’t wait to see you on Aug. 26 in Atlanta!

Port Talbot closes BFs, shifts to EAFs

Last week, Tata Steel, the UK’s largest steel producer, announced plans to close a major production plant in Wales. That will make nearly 3,000 workers redundant. The union representing those workers, of course, is crying foul. But is it really foul?

The Port Talbot, Wales, plant employs about 5,000 workers. Tata plans to shutter two blast furnaces there, replacing them by 2027 with an EAF plant. The net job loss: about 2,800 workers, or more than 50%.

The changes threaten the town of Port Talbot with the loss of critical (and well-paying) employment. Politicians are understandably worried. The union complains that the transition is too quick. The union and the company also argue about whether certain steel products can even be made with EAF steel.

Both sides have a point about that. But the trend clearly favors EAF steelmaking. In the US and elsewhere, “minimills” have expanded their product offering. No longer can it be said that only long products can be made in scrap-based minimills, while truly high-purity steels for automotive, pipelines, shipbuilding, and appliances must be made in blast furnaces.

How long will the integrated business model work?

The business model for traditional blast furnace companies is changing as a result. Giant steel mills can no longer rely on an indefinite “baseline” demand for products that can only be made in blast furnaces. There are some products where blast furnace steel still predominates, such as automotive steels, plate for ships, and pipelines. But EAFs are making inroads in these product lines as well.

The inconvenient truth: Multimillion-ton blast furnace plants (in Britain and the US) can no longer produce as much steel because the buyers aren’t there anymore. There are, of course, domestic buyers and foreign buyers. In both the US and Britain, foreign suppliers have captured large market shares in both countries. Trade remedy actions have proliferated, especially in the US. But new products that can only be made abroad are an increasing feature of both markets.

To survive over the long term, blast furnace producers must adapt to new market conditions. Serving global markets requires competition with China, which has largely been shut out of the US market. Britain has not been able to do that as effectively. Indeed, the British steel industry is principally owned now by Indian (a delicious irony) and Chinese parents.

Change requires more than trade protections and handouts

Competing in export markets will require US companies to become much more efficient and cost-competitive than they are now. The current protective regime is not going to help the industry get where it needs to be.

Of course, environmental concerns also are increasingly important. The summer of 2024 increased attention to global warming, with heat indexes setting records across the northern hemisphere. While steel is still an important product for modern life, substitutes that are more climate-friendly will continue and increase. And while all steel producers are under pressure to make progress on clean steel, the blast furnace companies must make more progress on that than the minimills.

British companies have chosen to transition away from blast furnace production to EAF production. That hard of a turn may not be right for the US for a variety of reasons. The defense sector, for example, needs armor plate for ships, that still needs to be made from “virgin” steel. It’s a similar story for certain applications in transportation and for the energy grid. But demand volumes for these highly specialized products may require scaling back the companies that make blast furnace steel.

The financial resources necessary to manage even a partial transition away from blast furnace production are huge, and the political challenges are too. Companies that need to transition the most may not have enough financial staying power to handle it. That is why, IMHO, the Nippon-US Steel deal makes sense. Government handouts sufficient to guide this transition don’t seem to be in the cards.

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.

US CR coil prices averaged $915 per short ton (st) in our check of the market on Tuesday, Aug. 13, up $10/st from the week before. Despite the slight improvement of late, CR tags are still down roughly $390/st from a year-to-date high of $1,325/st in January.

Domestic CR prices are, theoretically, 15.3% more expensive than imports. That’s up marginally from 11.9% last week. While US CRC prices are still higher than offshore material, the US CR premium is down from a 31.5% premium in early January.

In dollar-per-ton terms, US CR is now, on average, $107/st more expensive than offshore product (see Figure 1). That compares to $81/st costlier on average last week. That’s still down from 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 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 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, Aug. 15, the CRU Asian CR price was $535/st, down $18/st week over week (w/w) and down $64/st over the past month. Adding a 71% anti-dumping duty (Japan, theoretical) and $90/st in estimated import costs, the delivered price to the US is $1,005/st. The theoretical price of South Korean CR exports to the US is $625/st.

The latest SMU CR average of $915/st theoretically puts US-produced CR $90/st below CR product imported from Japan. But US tags are still $290/st more expensive than CR imported from South Korea.

Italian CR coil

Italian CR prices were down $12/st to roughly $704/st this week. After adding import costs, the price of Italian CR delivered to the US is, in theory, $794/st.

That means domestic CR is theoretically $121/st more expensive than CR coil imported from Italy. The spread is up $22/st from last week but still $359/st below a recent high of $453/st mid-December.

German CR coil

CRU’s German CR price was largely flat, down just $1/st vs. last week. After adding import costs, the delivered price of German CR is, in theory, $810/st.

The result: Domestic CR is also theoretically $105/st more expensive than CR imported from Germany. The spread is up $11/st w/w but still well below a recent high of $431/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.

“This equitable deal with our team at Dearborn is the latest illustration of our strong commitment to a collaborative relationship that benefits our employees and Cliffs as a whole. We are pleased to solidify this partnership with the UAW for another four years,” Cliffs’ Chairman, President, and CEO Lourenco Goncalves said in a statement.

Cliffs’ Dearborn Works in southeast Michigan produces slabs, galvanized steel, and advanced high-strength steels. According to SMU’s Blast Furnace Status Table, the mill’s blast furnace has an annual capacity of approximately 2,190,000 short tons.

Every two weeks, we poll hundreds of steel buyers about their companies’ chances of success in today’s market, as well as business expectations three to six months from now. We use this information to calculate our Current Steel Buyers’ Sentiment Index and our Future Sentiment Index, which we have been tracking since 2008.

SMU’s Current Buyers’ Sentiment Index increased by four points to +38 this week (Figure 1). Recall that Current Sentiment had fallen to +34 in both the first and last weeks of July. Those were the lowest readings recorded since August 2020. Year to date, Current Sentiment has averaged +53. This is significantly lower than the +69 average seen in the same time frame of 2023. This time last year, Current Sentiment was 19 points higher at +57.

SMU’s Future Buyers’ Sentiment Index measures buyers’ feelings about business conditions three to six months down the road. This index fell to +55 this week, its lowest point in over a year (Figure 2). Future Sentiment has averaged +64 since the beginning of the year, down just one point from the same period of 2023. Future Sentiment this week is 16 points lower than the same week last year.

Measured as a three-month moving average, Buyers Sentiment eased further this week, a trend in place for most of the last year. The Current Sentiment 3MMA slipped to +41.60 this week, its lowest reading since August 2020. The Future Sentiment 3MMA declined slightly to a five-month low of +63.72 (Figure 3).

What SMU survey respondents had to say:

“Working through higher-priced inventory … and trying to push price – not much luck yet.”

“We seem to buy well and turn our inventory well.”

“Low raw material prices are below financial forecast.”

“I believe our market will begin to increase, and steel will increase and provide better margins.”

“Spot price increases should help future business.”

About the SMU Steel Buyers’ Sentiment Indices

The SMU Steel Buyers’ Sentiment Indices measure the attitude of buyers and sellers of flat-rolled steel products in North America. They are proprietary products developed by Steel Market Update for the North American steel industry. Tracking steel buyers’ sentiment can be helpful in predicting their future behavior. A link to our methodology is here. If you would like to participate in our survey, please contact us at info@steelmarketupdate.com.

TAB Bank, an online bank focused on serving small businesses, recently announced a $27.8-million credit facility for an aluminum extrusion manufacturer based in Southern California. This financial package, which includes a $20-million revolving line of credit and a $7.8-million term loan, is designed to support the manufacturer through challenging times, particularly after facing difficulties with its previous lender.

Brett Horwitz, TAB Bank’s managing director and head of originations for the Western Region, expressed the bank’s enthusiasm, stating, “TAB Bank is excited about the potential of this partnership, as the leading aluminum manufacturer plays a crucial role in the overall economy and infrastructure of our country.”

He added, “This new credit structure not only provides opportunities for growth but also supports more efficient operations. We look forward to supporting the company’s management team as they continue to scale the business.”

Gulf Extrusions wins Gaia Award


Gulf Extrusions (Gulfex) has been recognized as a winner of this year’s esteemed Gaia Awards. These awards are among the construction and building materials industry’s most prestigious honors, celebrating innovative products and equipment that contribute to a more sustainably built environment. Gulfex received the award for its X-ECO aluminum alloy line.

Alba reports its financial results for Q2 & H1

Alba announced its results for Q2’24 and H1’24. The producer reported an EBITDA of $289 million in Q2, up 42% y/y. For H1’24, EBITDA of $469 million was reported, up 8% y/y amid sales of $1.9 bn, down 2% y/y. This led to a profit of $182 million in Q2’24 and a profit of $247 million for H1’24, up 129% y/y and 20% y/y, respectively.

Commenting on the results, Alba’s CEO Ali Al Baqali said: “The aluminum industry continues to face economic headwinds. However, focusing on the aspects within our control has enabled us to navigate these challenges while positioning ourselves for sustained growth when market conditions improve.”

In terms of operational performance, Alba produced 403,737 metric tons of primary in Q2’24, down 0.5% y/y, with a VAP sales share representing 73% of the mix versus 70% in Q2’23. The company’s top and bottom lines were driven by higher LME prices in Q2’24 and H1’24, which were 11% and 1% higher y/y, respectively. However, lower premiums (down 21% in Q2’24 and 32% in H1’24 compared to the previous year) partially offset these gains.

Alba’s Chairman of the Board of Directors Khalid Al Rumaihi said: “Building on our Q1 performance and despite navigating a challenging market landscape marked by depressed premiums, we are pleased to report another quarter of solid results thanks to our dedication to operational excellence. This performance has enabled us to return value to shareholders through an interim cash dividend of US$70 million. We are confident that if premiums had held steady at Q2’23 levels, our performance would have been even more robust. We remain optimistic about our prospects for the remainder of 2024.”

To learn more about CRU’s services, visit www.crugroup.com.

Key points and takeaways

We go over the big highlights of the survey in Final thoughts. Here are some other key points that we think are worth your time. (And, again, our premium subscribers can follow along with the latest results here.)

• Steel Buyers’ Current Sentiment edged back up but is now only four points above a four-year low (slide 9). Future Sentiment (slide 11) moved lower by nine points vs. the prior market check.
• Lead times for HR coil are still largely stable though moving marginally higher. Lead times for tandems products have improved modestly, as have those for plate (slide 13).
• On pricing, buyers said that most mills remain willing to negotiate. But there was still a steady decline in the number willing to cut deals after both Nucor and Cliffs held HR prices around $700/st (slide 16). We’ll keep tabs on whether negotiation rates continue to slide in the weeks ahead.
• On the raw materials front, about two-thirds of respondents expect scrap prices to be sideways again in September (slide 19). Another 31% expect prices to move up next month, while just 6% anticipate a decline.
• What might keep sheet prices from a sharp rally? Some 65% of respondents said they expect to meet forecast in August, while another 30% said they will miss their business forecast this month (slide 20). Only ~5% think they will exceed forecasts in August. Also, more than two-thirds of service centers said they are releasing less steel (slide 28) than a year ago.
• What might support higher prices? Only 20% of service centers reported lowering prices – likely a continued reaction to mills trying to hold the line. (See slide 38, one of our favorites.) That’s a significant shift from the nearly 85% who were cutting prices just two about a month ago. But it might be too soon to predict any surge in prices. Just about 16% of service centers reported increasing prices.

There’s a lot more to unpack in the survey. Be sure to check out this week’s Final thoughts for some of the comments and key reactions directly from our sources.

US rigs

Through Aug. 16, the number of active drilling rigs in the US declined by two week over week to a total of 586 rigs. Oil rigs fell by two to 483, gas rigs rose by one to 98, and miscellaneous rigs eased by one to five.

There were 56 fewer active rigs in the US this week compared to one year ago. The number of active oil rigs is down by 37, gas rigs are down by 19, and miscellaneous rigs are unchanged.

Canadian rigs

The number of rigs operating in Canada held steady at 217 in the week ended Aug. 16. Oil rigs rose by four to 151, gas rigs fell by three to 66, and miscellaneous rigs declined by one to zero.

Currently, 28 more drilling rigs are operating in Canada than there were at this time last year. Oil rigs are up by 32, gas rigs are down by four, and miscellaneous rigs are unchanged.

International rig count

The international rig count is updated monthly. The total number of active rigs for the month of July fell to 934. That’s 23 less than the June count and down by 27 from July 2023.

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.

The Chinese National Bureau of Statistics (NBS) announced that July automobile production and sales both fell m/m and y/y, reflecting generally sluggish local demand. As a result, HR coil spot prices hit a seven-year low in the week. In China’s domestic market, for the first time, all major Chinese mills surveyed by CRU reported lower local sales this week.

The local market’s poor performance prompted Chinese exporters to cut HR coil offers by up to $30 from last week. However, this only scared away most overseas buyers, who bid at extremely low levels or simply remained on the sidelines this week.

In the face of bleeding bottom lines, some mills started production cuts this week, but the effect has not been observed yet as the oversupply in China’s steel market is likely to persist and depress steel prices in the near term.

Turkey HR coil prices downtrend persists

HR coil export prices remained unchanged for the fifth consecutive week at $555 per metric ton (mt) FOB. This is because Indian suppliers continued to halt export offers in response to the recent sharp decline in Asian prices. Market sources suggest that some traders tested the market by reducing price offers for Indian-origin HR coil by $30/mt w/w, but there was no acceptance as these prices were still much higher than the latest offers from China. CRU contacts on the supply side expect export activity to resume in late August when European buyers return after the summer holidays.

The downtrend in the Turkish sheet market persisted, resulting in a $5/mt w/w fall in HR coil export quotes. Turkish sellers have come under pressure from the overall price weakness observed in export markets. In Asia, markets have been impacted as Chinese mills continued to drop prices amid a lack of domestic demand. HR coil offers from China were heard at $510-520/mt CFR in Turkey.

The discount of Turkish HR coils in Southern Europe fell to $30/mt, duties included. Buying interest in Europe remained weak due to the holiday season, while local prices trended downwards.

Turkish longs prices remained stable w/w, with rebar and wire rod being at $575/mt and $585/mt, respectively. Buying activity from Central and Western Europe remained seasonally weak. Meanwhile, heavily discounted long products from China have limited interest from the Middle East.

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

But lead times aren’t galloping away like some of the more bullish corners of the market might have hoped. And those for cold-rolled and coated products are largely unchanged.

Lingering summer doldrums?

Also, while some mills are less willing to negotiate lower prices, steel buyers tell us that most remain willing to cut a deal to bring in an order.

That’s an improvement from a few weeks ago – when it seemed like everyone was willing to slash prices. But it’s not the sharp decline in the negotiation rate that we’ve seen in the past when price hikes have gained traction in the market.

Basically, the price hikes we saw in late July have succeeded mostly in stabilizing the market. And the modest drop in the negotiation rate looks more like a round of price hikes in the summer of 2023. That one “stopped the bleeding” or “slowed the slide.” What we’re not seeing is the negotiation rate plunge like it did last fall, for example, when multiple rounds of price hikes stuck and sent tags soaring higher.

Meanwhile, as Estelle Tran notes here, service center sheet inventories remained high in July – slightly above May-June levels and well above July of last year. What does that say about demand?

We’ll have more granular data available on that when we compile the results from our full steel market survey for our premium members on Friday. (Btw, if you’re not a premium member, that survey is a good reason to consider upgrading.) My best guess in the meantime is that demand is not great, but not terrible either. (I realize that blanket statement might not fit everyone.) So there is no obvious catalyst for prices to move sharply higher or sharply lower.

I mean, it’s great that retail sales are up, for example. That probably means talk of a US recession is overblown. But it’s not exactly comforting to see China’s largest steelmaker saying that “winter is coming” for steel demand.

And on the raw materials side, as SMU’s sister publication Recycled Metals Update (RMU) notes, Turkey is contending with low-priced Chinese billet. Turkey is a large destination for US scrap exports. And weakness in the Turkish market is not a great sign if you’re hoping domestic scrap markets will settle higher in September.

And what about those Sept/Oct outages at US sheet mills? Some had hoped the primary result would be sharply higher sheet prices and longer lead times. Could it instead be pressure on scrap prices next month?

By the way

By the way, I want to give a shoutout to CRU, our parent company, for some news headlines that SMU might not otherwise have had, given our focus on North American flat-rolled steel markets.

Case in point: The US Defense Department is investing significantly in steel for artillery at Metallus (previously known as TimkenSteel). When was the last time you saw a headline like that? And what does that tell you about the state of global affairs?

Also, when was the last time you saw a headline about someone easing import restrictions in our more protectionist/regionalist times? That’s just what the UK is doing as it shuts down blast furnaces a few years before starting up new EAFs to replace them.

It brings up an interesting question, one I’ll probably be asking at Steel Summit. The US and Europe disagree sharply over the specifics of decarbonization. But both intend to limit imports of steel from countries with more pollution. Could that create at least a temporary opportunity for US mills, which sport low carbon footprints, to export not just scrap but also finished steel across the Atlantic?

SMU Steel Summit

So, what’s the good news – what numbers are still going up and to the right? Attendance at the 2024 Steel Summit! We’re at nearly 1,400 and closing in on another all-time record.

You can see the latest agenda and register here. We’re looking forward to seeing all of you Aug. 26-28 in Atlanta. We don’t care whether you get there by gas guzzler, EV, plane, or a midnight train to Georgia.

HR falters

The futures contango structure continues to roll forward, with an approximately $90/st spread between August and December contracts. Limited positive data and bearish headlines have weighed on the futures complex.

The seasonal doldrums seem to be in effect in paper markets during the late summer, as daily contract volumes struggled to break past 30,000 st on any given day. And several days in the first part of August saw less than 16,000 st traded. Open interest has declined from levels seen in July, with 436,000 st open as of Wednesday’s close, down from 520,000 st at the end of July.

A sideways CRU print at $658/st for the pricing period has failed to inspire broader confidence in futures values. The global macro picture also remains precarious, as industrial indicators such copper and iron ore prices have moved down well off their Q2 highs. And various reports this week of Chinese mill Baowu warning of faltering demand in China and overseas further dampened sentiment.

US commercial participants in futures have described a mixed bag. Some say they are seeing an increase in demand inquires for physical tons. Others have said demand remains soft and hardly enough to justify a sustainable bounce in values. Commercial players with exposure to the auto sector have noted the effects from a decline in motor vehicle production.

BUS open interest dries up

The CME busheling scrap contract (BUS) is steady to softer. The lead September BUS contract is essentially flat on the month at $410 per gross ton (gt). The December contract is down intramonth approximately $10/gt at $425/gt.

Nonetheless, open interest in the BUS contract continues to decline and now sits at only 40,000 gt across all contract months. That comes amid ongoing industry debate about the accuracy of the underlying assessment, which has kept fresh interest sidelined.

Disclaimer: The content of this article is for informational purposes only. The views in this article do not represent financial services or advice. Any opinion expressed should not be treated as a specific inducement to make a particular investment or follow a particular strategy. Views and forecasts expressed are as of date indicated. They are subject to change without notice, may not come to be, and do not represent a recommendation or offer of any particular security, strategy or investment. Strategies mentioned may not be suitable for you. You must make an independent decision regarding investments or strategies mentioned in this article. It is recommended you consider your own particular circumstances and seek the advice from a financial professional before taking action in financial markets.

Negotiation rates by product

The negotiation rate for hot-rolled coil declined two percentage points from two weeks ago and is now at 75% and in territory not seen since April (Figure 2). Cold rolled buyers reported a negotiation rate of 63%, a considerable drop from late July (79%) and also down to levels last seen in April. Mills’ willingness to negotiate on galvanized products ticked three percentage points higher over the last two weeks to 80%, while Galvalume’s rate eased from 89% to 78%. Plate remains the most negotiable product, with 89% of buyers reporting mills are willing to talk price. This is the second-highest rate recorded since November, just behind the late-July rate of 90%.

Here’s what some survey respondents had to say about mills’ willingness to negotiate:

“If you have tons, they will move on price.”

“Mills will only flex on pricing with higher-than-normal tons.”

“Yes, on big orders.”

“Negotiable, but slowing.”

“Seems to be more room for negotiation on this product [galvanized].”

“[Negotiable on plate] – with tons.”

“Quietly negotiable.”

“The mills are holding pricing now and not very negotiable.”

Note: SMU surveys active steel buyers every other week to gauge their steel suppliers’ willingness to negotiate new order prices. The results reflect current steel demand and changing spot pricing trends. Visit our website to see an interactive history of our steel mill negotiations data.

The upper and lower limits of our lead time ranges have extended for all products compared to our late July data. The longest lead time in our HR range has increased from six weeks to seven weeks. The upper range for all tandem product lead times has extended from eight weeks to nine weeks. And the bottom end of our plate lead time range has risen from two weeks to three weeks.

Survey results

Just over half of the companies we surveyed this week remarked that current mill production times were shorter than usual. The remainder responded that lead times were within normal levels, while 3% commented they were slightly longer.

We also asked buyers where they think lead times would be two months from now. The majority of our respondents (66%) believe lead times will be flat through October (vs. 62% in our prior survey). Only 29% forecast production times will extend in that time (down from 33% previously), while 5% expect them to shrink further (unchanged from late-July).

Here’s what respondents are saying:

“Flat, unless mills reduce capacity to match poor demand…”

“Lead times will remain short. Some outages at Nucor pushed out lead times but demand has not improved. Still decent demand but the lead-time adjustment had more to do with supply.”

“Lead times are leveling off.”

“Contracting, all based on lighter demand in Q4.”

“There remains too much available capacity out there with more coming online. No reason to see things extended from here.”

“I don’t think Q4 will have long lead times, mills will want to fill tonnage.”

Figure 1 below tracks lead times for each product over the past two years.

3MMA lead times

To better highlight trends, we can view lead time data on a three-month moving average (3MMA) basis and smooth out the variability seen in our biweekly readings. Through this week, 3MMA lead times ticked lower for all products, now at low levels not seen since September and October 2023. This downward trend has been evident for the last six months.  

The HR 3MMA lead time is now down to 4.77 weeks, cold rolled is at 6.70 weeks, galvanized at 6.92 weeks, Galvalume at 6.90 weeks, and plate at 4.80 weeks.

Figure 2 highlights lead time movements across the past four years.

Note: These lead times are based on the average from manufacturers and steel service centers participating in this week’s SMU market trends analysis survey. SMU measures lead times as the time it takes from when an order is placed with the mill to when it is processed and ready for shipping, not including delivery time to the buyer. Our lead times do not predict what any individual may get from any specific mill supplier. Look to your mill rep for actual lead times. To see an interactive history of our steel mill lead times data, visit our website. If you’d like to participate in our survey, contact us at info@steelmarketupdate.com.

Oil and gas spot prices

The weekly West Texas Intermediate oil spot market price has remained rangebound across the last two years, hovering between $70-90 per barrel (b) since September 2022. The spot price has decreased over the previous five weeks, falling to a two-month low of $76.33/b last week (Figure 1). The EIA expects oil spot prices to recover soon and average between $85-90/b by the end of the year, which is in line with their prior estimates. Their 2025 forecast has been revised downwards to $88/b, attributed to reduced consumption.

Following historical lows seen earlier this year, natural gas spot prices ticked up in May and June but have trended downward since July. 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. Natural gas prices fell to a three-month low of $1.88/mmBtu last week. The July STEO forecasts natural gas to remain below $2.50/mmBtu for the next three months. EIA forecasts natural gas prices from November through March to average $3.10/MMBtu, following regular seasonal patterns. This increase is supported by increased seasonal heating demand and higher gas exports from new Texas and Louisiana facilities. 

Rig counts

The number of active US oil and gas drill rigs has stabilized over the last six weeks, remaining near a two-and-a-half-year low (Figure 2). According to Baker Hughes, the latest US count was 588 active drill rigs as of August 9. Active US rig counts are 10% lower than last year.

Canadian rig activity continues to improve after bottoming out in May, nearing a five-month high of 217 rigs just last week. As seen in Figure 3, Canadian counts experience seasonal swings each spring as warmer weather sets in and thawing ground conditions limit access to roads and sites. Canadian rig activity is up 14% compared to levels recorded one year prior.

Stock levels

US crude oil stocks have eased over the last two months following the 14-month high in June. Earlier this month, US stock levels declined to a nearly six-month low of 805 million barrels. The August 9 rate is up slightly to 807 million barrels. While down, July stocks are 3% higher than levels at the start of the year and up by 2% vs levels one year ago (Figure 4).

Despite this summer’s “challenging near-term pricing and uncertain macroeconomic conditions,” Algoma Steel CEO Michael Garcia said the company is focusing on what it can control: operating safely, providing exceptional customer service, and successfully executing its capital programs.

On Wednesday, the Sault Ste. Marie, Ontario-based steelmaker reported earnings for its fiscal 2025 first quarter ended June 30. All told, Algoma’s net income of CA$6.1 million tumbled 95% from last year, on sales that fell 21% to CA$650.5 million.

Garcia pointed out that the company’s quarterly results mirrored the current challenging conditions of the steel market, with slower shipments and softer prices. Shipments declined 12% y/y to 503,152 short tons (st), and revenue per ton fell 11% to $1,453.

He highlighted Algoma’s capital expenditure projects, including its modernized plate mill and its transition to EAF steelmaking.

“We are on the cusp of a new chapter for Algoma and believe that we are on track to deliver strong shareholder value as we transition to becoming one of North America’s greenest steel producers,” he noted.

Plate mill modernization

Algoma’s plate mill was offline for three weeks during the quarter to complete all remaining upgrades. The company had planned for another multi-week outage later this year, but it now expects “any remaining items to be addressed with other planned maintenance activities over the coming year.”

Product quality has been enhanced and plate shipments are ramping up, Garcia commented on an earnings call with analysts on Wednesday. Plate shipments totaled 61,000 tons in the quarter and are expected to be ~90,000 tons in the current quarter. A steady ramp up is expected through the 2025 fiscal year, with the goal of reaching the expected annual run rate capacity of more than 650,000 st.

For reference, about 30% of Algoma’s annual plate volumes are shipped to the US market.

“With the maintenance outages on the blast furnace and the plate mill upgrade complete, our operations are running normally, and we continue to expect solid production levels in the second half of calendar 2024,” Garcia noted.

“I think the main challenge right now, frankly, is the market,” he said on the call. “We’re in a soft market … demand is not necessarily robust right now.”

“I don’t see any near-term catalyst for increased pricing over the balance of the year, and that’s probably going to be the same around demand,” he commented.

EAF transition

Garcia said Algoma is “in the home stretch” of its CA$875-million EAF project. Commissioning activities are expected to begin by the end of 2024 and steel production by the end of Q1’25.

He said all equipment is on site, the building’s exterior and tie-in to the adjacent operations are largely complete, the EAF transformers are in place, and many cranes are already being commissioned.

“We have been on this journey to bring electric-arc furnace steelmaking to Sault Ste. Marie for close to five years. Our entire company is energized as we approach this major milestone,” Garcia said.

Algoma’s start-up plan is for normal production at its existing steelmaking facility while simultaneously ramping up EAF output in 2025, and then for a complete switch to EAF steelmaking. “Sometime in 2026,” the plans are to reach 2.4 million tons of EAF production, Garcia revealed.

He mentioned on the call that Algoma’s headcount will be reduced by ~1,000, with most changes happening after the BF and coke ovens are no longer operating. “The cost of making that headcount reduction is pretty well laid out in the [collective bargaining agreements], and we have good visibility to it,” he noted.

“Near-term pricing weakness can’t dampen our excitement for what’s happening at our company and the huge step forward it represents for Algoma Steel and our community,” he stated.

“We are in a really exciting place right now and we’ll be making EAF steel in over six months,” he added.

Last year, the index peaked at 10.8 in June and has only indicated improving business conditions in nine of the last 32 months.

Manufacturing activity slipped in August, driven by modest declines in new orders and weak labor conditions due to “a small decline in employment and a sharp drop in hours worked,” commented New York Fed economic research advisor Richard Deitz. “Firms continued to be somewhat optimistic that conditions would improve in the months ahead.”

The new orders index fell 7.3 points this month after staying flat for the previous two months, while the inventories index indicated lower stocks for a second straight month. Firms remain “fairly” optimistic about future business conditions, as 45% of respondents expect improvement over the next six months. The full release is available here.

On a three-month moving average basis (3MMA), the index rose in August to its highest reading of the year, -5.77 (see Figure 1). Recall that in March, the Index reached -22.33, the fourth-lowest 3MMA figure within our 15-year data history, which was only higher than the months of April, May, and June 2020.

An interactive history of the Empire State Manufacturing Index is available here on our website.

SMU’s check of the market on Tuesday, Aug. 13, put domestic HR tags at $665 per short ton (st) on average, up $10/st from last week. Stateside hot band – still just $30/st from a 20-month low – remains $180/st below a recent high of $845/st in early April.

Domestic HR prices are now theoretically just 2.3% cheaper than imports. They were 6% cheaper last week.

In dollar-per-ton terms, US HR is now, on average, $15/st cheaper than offshore product (see Figure 1). That compares to $39/st cheaper on average last week. That’s a huge change from late last year, when US HR was often hundreds of dollars more 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 US HR coil weekly index to the CRU HR coil weekly indices for Germany, Italy, and East and Southeast Asian ports. 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 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, Aug. 15, the CRU Asian HRC price was $449/st, down $14/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 $651/st. This contrasts to the latest SMU HR average of $665/st for domestic material.

The result: US-produced HRC is theoretically $14/st more expensive than steel imported from Asia. That is up $27/st vs. last week. In late December, in contrast, US HR was $281/st more expensive than Asian product.

Italian HRC

Italian HR coil prices were down $11/st to roughly $601/st this week. After adding import costs, the delivered price of Italian HR coil is, in theory, $691/st.

That means domestic HR coil is theoretically $26/st cheaper than HR coil imported from Italy. That is down $21/st from last week. Just five months ago, US HR was $297/st more expensive than Italian hot band.

German HRC

CRU’s German HR price moved to $608/st, which is $14/st lower than last week. After adding import costs, the delivered price of German HR coil is, in theory, $698/st.

The result: Domestic HR is theoretically $33/st cheaper than coil imported from Germany, down from a $57/st discount last week. At points in 2023, in contrast, US HR was as much as $265/st more expensive than 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, while 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.

“These changes have resulted in higher imports and parts of the current quota being exhausted, creating uncertainty and driving up costs for steel users,” said the TRA’s chief executive Oliver Griffiths.

The authority suggests creating two sub-groups from its Category 1 for steel: Category 1A with an unchanged quota accessible to those importing for commercial applications, and Category 1B for downstream processing only and set 89% higher than that of 1A.

The TRA also proposes Category 1B’s quota is allocated globally to allow companies to establish reliable supply chains, but with a cap between 37% and 42% to ensure no country’s exports dominate the new quota.

The import allowance under Category 1A is just over 1 million tons per year of hot rolled sheet and for Category 1B around 1.9 million tons per year. If the limits are breached, imports will attract a 25% tariff.

Interested parties have until Aug. 19 to comment on the proposals, which follow a review by the TRA requested by Tata Steel and Kromat Trading in February.

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

High-priced vehicles have been one factor preventing sales from pushing back into their pre-pandemic range of 16.5-17.0 million units. Minimal interest rate relief has also plagued buying, but potential Fed inflation cuts could help pull more buyers off the sidelines, with a trickledown effect on assemblies.

North American vehicle production, including personal and commercial vehicles, totaled 1.098 million units in July, a 14.4% decrease from 1.283 million units in June. It’s roughly 1.5% behind the 1.11 million units produced one year ago.

Below in Figure 1 is a five-year snapshot of North American light-vehicle production since 2019 on a rolling 12-month basis with a y/y growth rate. Also included is a five-year snapshot of the average monthly production, which includes seasonality since 2019.

A short-term snapshot of assembly by nation and vehicle type is shown in the table below. It breaks down total North American personal and commercial vehicle production into US, Canadian, and Mexican components. It also includes the three- and 12-month growth rates for each and their momentum change.

For the three months and 12 months through July, the growth rate for total personal and commercial vehicle assemblies in the USMCA region is largely negative. The momentum change also remains noticeably behind for both personal and commercial vehicle segments.

Personal vehicle production

The longer-term picture of personal vehicle production across North America is shown below. The charts in Figure 2 show the total personal vehicle production for North America and the total for the US, Canada, and Mexico.

In terms of personal vehicle production, this segment saw a 14.6% m/m decline in July, down for a second straight month. The result was not as pronounced as the same period one year ago, with just a 0.9% loss.

The US saw a 14.9% m/m production loss, with 90,973 fewer units produced in July. Mexico produced 33,430 fewer units (-13.9%), while Canada’s production was down by 13,548 units (-15%).

Production share across North America was little changed. The US saw personal vehicle production share of the North American market at 65.2%, followed by Mexico and Canada at 25.1% and 9.6%, respectively.

Commercial vehicle production

Total commercial vehicle production for North America and the total for each nation within the region are shown in the first chart in Figure 3 on a rolling three-month basis. Commercial vehicle production in the US and Mexico and their y/y growth rates, as well as the production share for each nation in North America, are also shown.

North American commercial vehicle production was no better in July either. The region saw a 14% m/m decline with a total of 290,381 units, down by 47,380 from June. Output is down for a second consecutive month after almost reaching a five-year high in May. The result was also down 2.9% from last year.

The US saw a 16.1% m/m drop, with 36,031 fewer commercial vehicle assembled in July. Canada followed, down 35.2% (-4,971 units) and then Mexico, down 6.2% (-6,378 units).

Despite the sharp decline, July marked Canada’s 33rd consecutive month of assembling commercial vehicles, after ceasing production for nearly two years from January 2020 through October 2021.

The market share across the region was also largely unchanged. The US total share was 66.2%, followed by Mexico with a 30% share, and Canada with a 3.8% share in July.

Presently, Mexico exports just under 80% of its light-vehicle production, with the US and Canada as the highest-volume destinations.

Editor’s note: This report is based on data from LMC Automotive for automotive assemblies in the US, Canada, and Mexico. The breakdown of assemblies is “Personal” (cars for personal use) and “Commercial” (light vehicles with less than 6.0 metric tons gross vehicle weight rating; heavy trucks and buses are not included).

The improvement in monthly results, as expected, reversed last month’s pullback which was weighed down by a cyberattack at CDK Global – a software company that offers dealer management services for over 15,000 dealers in the US and Canada.

Auto sales rose 9.1% y/y, while light trucks increased 3.1% from last year. Light trucks again accounted for 81% of July’s total sales, slightly above its 80% share last year.

July’s average daily selling rate (DSR) was 50,925 – calculated over 25 days – down from July 2023’s 51,917 daily rate.

Year-to-date (YTD), sales have totaled 9.08 million units, 1.4% above 2023’s YTD of 8.95 million.

Below in Figure 1 is the long-term picture of sales of autos and lightweight trucks in the US from 2019 through July 2024. Additionally, it includes the market share sales breakdown of last month’s 15.8 million vehicles at a seasonally adjusted annual rate.

The new-vehicle average transaction price (ATP) continues to be impacted by the lack of base time models. While auto production has largely recovered from the pandemic, inventories have slowly edged higher but remain considerably below 2019 levels.

July’s ATP of $48,401 was 0.5% lower m/m and just 0.1% (+$67) higher y/y, according to Cox Automotive data.

Incentives saw a boost of over 10% m/m, hitting a 39-month high of $2,892. With the m/m increase, incentives are roughly 6% of the average transaction price. Incentives are up about 59%, or $1,072, from last year.

The annualized selling rate of light trucks for June was 12.821 million units, up 3.1% vs. the prior month and 0.7% higher y/y. Annualized auto selling rates diverged a bit more over the same period, up 9.1% m/m yet down 6.6% y/y.

Figure 2 details the US auto and light truck market share since 2014 and the divergence between average transaction prices and incentives in the US market since 2020.

Editor’s note: This report is based on data from the US Bureau of Economic Analysis (BEA), LMC Automotive, JD Power, and Cox Automotive for automotive sales in the US, Canada, and Mexico. Specifically, the report describes light-vehicle sales in the US.

Plate = 60.9 shipping days of supply

Flat rolled

Flat-rolled steel supply at US service centers grew in July with restocking as service centers anticipated the bottom of the market and slow shipments. At the end of July, service centers carried 64.2 shipping days of supply on an adjusted basis, according to SMU data. This is up from 60.9 shipping days of supply in June and 56.1 shipping days in July 2023.

Flat-rolled steel supply in July represented 2.92 months of supply, down compared to 3.05 months in June. July had 22 shipping days compared to June’s 20. Sheet steel shipments typically hit a lull in July, though the drop-off in shipments seemed to be more pronounced this year. The SMU survey with data through July 31 reported that 77% of service centers said they were releasing less steel compared to a year ago, while 18% said they were releasing the same amount, and 5% said they were releasing more steel.

Flat-rolled steel prices seem to have stabilized in the last few weeks after mills made some large-volume deals. Mills have been publicizing higher prices but lead times have been slow to react. The July 31 SMU survey pegged hot-rolled coil lead times at 4.54 weeks, nearly flat compared to two weeks prior and down from 4.66 weeks on July 3. The SMU survey also found that 21% of service centers described mill lead times for new orders as “extremely short,” and 53% said lead times were “shorter than normal.” Service center inventories ballooned at the end of July, though.

The perception that prices were at or near the bottom at the end of July drove many service centers to buy heavily toward the end of the month. Because of the spike in flat-rolled steel on order and the lackluster demand outlook, it is unlikely that inventories will fall meaningfully in August. Even with the slew of planned mill outages, the market seems to be oversupplied relative to demand.

Plate

US service center plate supply edged up in July because of sluggish demand. At the end of July, service centers carried 60.9 shipping days of plate supply, up from 59 shipping days of supply on an adjusted basis for June. Plate inventories represented 2.77 months of supply in July, down from 2.95 months of supply in June. In July 2023, service centers carried 60 shipping days of plate supply, representing 3 months of supply.

Plate mill lead times are much shorter this year, though. The SMU survey from July 31 found plate mill lead times at 3.93 weeks, down from 4.62 weeks a month prior. The survey a year ago reported plate mill lead times at 5.81 weeks. Ramped-up capacity this year and weaker-than-expected demand have kept the US plate market oversupplied. With prices falling and weak demand, service centers have been trying to destock for months. There has been little incentive to restock though, with lead times so short. As a result, material on order remains extremely low for plate.

While inventories appear to be more than sufficient to meet immediate demand, the lower level of material on order could suggest a drop in inventories in August. This, combined with SSAB’s pulled-forward outage, could allow plate price decreases to start to taper off.

Prices for tandem products are back up to levels last seen mid-July. Our cold rolled and galvanized indices rose $10/st w/w to $915/st and $900/st, respectively. Galvalume prices jumped $25/st w/w to an average of $925/st.

Following a dip last week, plate prices held steady this week at $1,005/st. Plate prices have overall trended downward over the last eight months.

SMU’s sheet price momentum indicator remains at higher following our Aug. 6 adjustment. Our plate price momentum indicator remains at lower.

Hot-rolled coil

SMU’s price range for HR coil is $630-700/st, with an average of $665/st FOB mill, east of the Rockies. The lower end of our range is up by $20/st w/w, while the top end is unchanged. The overall average is up $10/st w/w. Our price momentum indicator for HR remains at higher, meaning we expect prices to increase over the next 30 days.

Hot rolled lead times range from 3-6 weeks, averaging 4.5 weeks as of our July 31 market survey. Look for a lead-time update in this Thursday’s newsletter.

Cold-rolled coil

The SMU price range is $880–950/st, averaging $915/st FOB mill, east of the Rockies. The lower end of our range is up $20/st from last week, while the top end is unchanged. Our overall average is up $10/st. Our price momentum indicator for CR remains at higher, meaning we expect prices to increase over the next 30 days.

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

Galvanized coil

The SMU price range is $850–950/st, with an average of $900/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. Our overall average is up $10/st w/w. Our price momentum indicator for galvanized sheet remains pointing higher, meaning we expect prices to increase over the next 30 days.

Galvanized .060” G90 benchmark: SMU price range is $947–1,047/st, averaging $997/st FOB mill, east of the Rockies.

Galvanized lead times range from 6-8 weeks, averaging 7.0 weeks through our last survey.

Galvalume coil

The SMU price range is $870–980/st, averaging $925/st FOB mill, east of the Rockies. The lower end of our range is up $20/st w/w, while the top end is $30/st higher. Our overall average is up $25 w/w. Our price momentum indicator for Galvalume remains at higher, meaning we expect prices to increase over the next 30 days.

Galvalume .0142” AZ50, grade 80 benchmark: SMU price range is $1,164–1,274/st, averaging $1,219/st FOB mill, east of the Rockies.

Galvalume lead times range from 6-8 weeks, averaging 7.0 weeks through our latest survey.

Plate

The SMU price range is $940–1,070/st, with an average of $1,005/st FOB mill. The lower end of our range is down $10/st w/w, while the top end is up $10/st. Our overall average 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 last 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.

I’m looking forward to learning from executives across the supply chain – from steel mills and service centers to OEMs, analysts, and more.

One tradition that I’m also looking forward to: Gauging the mood of the room when we do our annual poll questions. As we’ve done for at least the past four years, we’ll seek to measure how those in attendance see the steel market developing over the next year.

We’ll of course ask people where they think hot-rolled (HR) coil prices will be this time next year. We’ll probably ask about demand. We might even ask a question or two about the upcoming presidential election.

It’s not a scientific discovery process for forecasting purposes. And our collective track record is average at best, let’s be honest. But the polls do serve as a good indication of industry sentiment.  

A quick look in the review mirror

In 2020 and 2021, our predictions were pretty terrible. A black swan here (pandemic) or there (Russia invades Ukraine) will do that. But we saw solid improvement in 2022 and again in 2023.

Steel Summits in 2020 and 2021 were polar opposites. If 2020 marked peak bearishness, 2021 was peak bullishness (see Figure 1).

In August 2020, HR prices averaged $485 per short ton (st) when we held a virtual Summit because of Covid. The consensus was that prices would be at or below $400/st come 2021. We might have rivaled some of Miss Cleo’s best fortune-telling skills with that one… or not. We were just $1,500/st or so off the mark.

In August 2021, HR tags were $1,915/st during Summit. And 51% of Summit delegates predicted prices would moderate at a new normal of around $1,200/st on average. Twelve months later, HR was at $770/st. We got a lot better. We were only off by about $400/st!

And we were pretty dang close to right in 2022 and again in 2023. Most predicted in August 2022 that HR prices would average in $700-900/ton in August 2023. HR prices stood at $750/st during last year’s Summit.

At last year’s Summit, with a nearly 50% response rate from the 1,438 registered attendees, 49% predicted that HR prices would be $600-800/st come August 2024. (See Figure 2). SMU’s HR price stands at $665/st on average as of today, within consensus poll results from a year ago.

If there is one constant over the last four years, it’s that we’ve speculated that future prices will be more or less like current prices. That what we’re seeing today we’ll see 12 months from now – unless life (or geopolitics) throws us a curveball. Will this year be any different?

What’s in store for Summit ’24

It appears we’re getting better at this prediction game the further we move away from recent black swan events. And it will be fun to see the results trickle in when we ask the room this year where HR prices will be in August 2025. Don’t hesitate to chime in. You can’t do much worse than we all did in 2020 and 2021.

Also, we have a jam-packed agenda for our three-day Summit. That includes our highly anticipated Fireside Chats. It also includes panels that will cover the latest developments in automotive, trade policy, and decarbonization. You can find full details here.

Steel Summit 2024 app

If you’re attending Steel Summit this year, make sure to download the Steel Summit 2024 app from the Apple or Android app stores.

You will use it for networking, receiving agenda updates, and participating in polls as well as Q&A sessions. You can also use the app to live stream and replay the proceedings of any sessions you might miss.

Steel Summit of course starts on Monday, Aug. 26., and runs through Wednesday, Aug. 28 at the Georgia International Convention Center (GICC) in Atlanta. If you haven’t signed up yet, you can register here.

And, most importantly, from all of us at SMU, we thank you for your continued support.

The mills will produce welded structural tubes with outside diameters of 3/4 to 7 9/16 inches (19-193 mm), and equivalent square and rectangular sections, with wall thicknesses up to 0.287 inches (7.3 mm).

Operations are expected to commence by the end of 2025.

Achv Aceros has a “well-established commercial network,” according to Danieli.

Achv Aceros is presumed to be Aceros Chula Vista, a Monterrey-based steel distributor and importer.

As expected, the company completed the deal in Q3 after the Canadian Competition Bureau confirmed it would not challenge the proposed transaction.

“We have worked very closely with the Samuel team over the past several months in coordinating for an orderly transition, and we now welcome the Samuel employees to the Russel family,” said John Reid, Russel’s president and CEO.

The seven Samuel facilities included in the transaction are in Winnipeg, Manitoba; Calgary and Nisku, Alberta; and Langley and Surrey, British Columbia, in Canada; and Buffalo, N.Y.; and Pittsburgh, in the US.

An Aug. 9 statement from AHMSA said that a final extension of the conciliation stage has expired, and it will now enter the bankruptcy phase. It said an official bankruptcy declaration by the Second District Court is forthcoming.

Mexico’s Instituto Federal de Especialistas de Concursos Mercantiles will appoint someone to assume control of the company during the bankruptcy proceedings.

Search for new buyer

AHMSA said its current management and financial advisors are courting “both domestic and foreign groups interested in capitalizing on the company, with the primary objective of resuming operations as soon as possible in Monclova.”

The steelmaker claims it is currently in discussions with seven potential investors and steel companies. Due diligence visits have already been conducted by two companies, and more are anticipated in the coming weeks, it said.

“If an agreement is reached in the next months, the possibility of reactivating the company and preserving the source of employment would open,” AHMSA declared in the statement.

Status of assets

AHMSA’s assets have reportedly fallen into a state of disrepair since it ceased operations in December 2022. Mill and mining equipment are said to have been stolen or “lost.”

AHMSA’s restructuring plan had been for US-based investors Argentem Creek Partners to invest $2.2 billion to restart the company, with a staggered startup to begin next month.

SMU has heard rumors that the emerging markets investment firm was asset stripping with no real intentions of restarting the steelmaker’s operations.

Neither Argentem nor AHMSA returned SMU’s requests for comment.

ITA intends to issue the final results of both reviews by Dec. 10.

Recall that South Korea has an absolute quota in place in lieu of Section 232 tariffs. Its 2024 hard limit is 183,326 short tons (st) of hot-dipped galvanized flat-rolled products and 210,366 st of coated flat-rolled products. Quarterly quotas are also in place. These limits can not be surpassed; excess material must be warehoused or shipped out of the country until the quarterly quota resets.

AD

Commerce preliminarily found that certain CORE products from Korea were sold in the US at prices below normal value during the one-year period of July 1, 2022, through June 30, 2023.

Period of review	2022 calendar year	2021 calendar year
Producer/exporter
Dongbu companies	5.49%	6.48%
Hyundai companies	0.80%	0.82%
Posco companies	2.68%	1.60%
SeAH companies	2.68%	1.60%

CVD

Commerce’s preliminary determination is that countervailable subsidies are still being provided to CORE producers and exporters in Korea.

Period of review	July 1, 2022 to June 30, 2023	July 1, 2021 to June 30, 2022
Producer/exporter
Dongbu companies	1.74%	0.53%
Dongkuk companies	1.74%	0.53%
Hyundai companies	0%	0%
Posco companies	1.74%	0.53%
SeAH companies	1.74%	0.53%

The CVD rate for the Hyundai group of companies continues to be 0% as it has had no shipments to review during the review periods.

Editor’s note: This story has been updated to reflect that South Korea has an absolute hard quota in place and not a tariff-rate quota, as was originally published.

First quarter ended June 30	2024	2023	Change
Net sales	$114.6	$137.3	-17%
Net earnings (loss)	$2.6	$7.7	-67%
Per diluted share	$0.37	$1.04	-64%

“We are pleased to report profitable results for our first quarter in a period of challenging price dynamics,” said President and CEO Michael J. Taylor in Friedman’s latest earnings report.

The Longview, Texas-based steel processor credited its positive earnings primarily to hedging gains, reported at $5.38 million in the quarter, saying its hedging strategy “worked as intended to help offset physical margin compression we experienced during the quarter as HRC price continued a downward trend.”

Friedman attributed weakening sales to difficult customer market conditions, as well as longer than expected downtimes for equipment upgrades at its plants in Sinton, Texas, and Decatur, Ala.

Flat rolled, tubular operations

Friedman said its flat rolled segment’s sales totaled $103.4 million in fiscal Q1’24, down from $125.2 million in Q1’23. Sales volumes were comprised of approximately 109,000 short tons (st) from inventory and another 24,000 st from toll processing vs. 120,000 st from inventory and 24,000 st of toll processing a year earlier. Between these two quarters, the average selling price per ton declined from approximately $1,038 to $932.

The tubular segment yielded approximately $11.2 million of sales in Q1’24, down from $12.1 million in Q1’23. Tons sold rose from approximately 9,000 st to 10,000 st, while average selling prices fell from approximately $1,358/st to $1,140.

Outlook

The company is optimistic about future demand, forecasting similar sales and a recovery in steel prices in the current quarter. If sustained, it expects improved margins by the end of the current quarter and into the following quarter.

“Despite the current macro-economic headwinds, I see a favorable long-term demand outlook for the industry and our products,” Taylor said. “Friedman remains in strong financial position and ready to capitalize on both short-term and long-term opportunities.”

Other business developments referred to by Metallus include installation of an automated grinding line, in-line saw and new camera inspection technologies. “Our capital investment strategy not only enhances our capacity and efficiency, but reflects the confidence placed in us by the Department of Defense,” said president and CEO Mike Williams, along with release of the company’s Q2 financial results.

Sales revenue declined 7.6% quarter on quarter (q/q) to $295 million because of shipments falling 3.3% to 150,100 short tons, an unfavorable price and mix, and a decline in raw material surcharges due to scrap prices falling.

Metallus attributed the decrease in deliveries to fewer dispatches to the industrial and energy end markets. Shipments to automotive clients were higher. Melt utilization dropped to 53% from 72%, which contributed to higher production costs. The company’s net income in Q2 shrank by 80.8% q/q to $4.6 million.

For Q3, the Ohio-based company is predicting lower shipments than in Q2 and shorter lead times, with bars’ to early September and tubes’ to early October.

“The third-quarter product mix is expected to be less favorable compared with the second quarter while base price per ton is anticipated to remain relatively steady,” Metallus added.

CEO Williams said, “We continue to face softness in the industrial and energy end markets given global economic conditions and elevated imports, customer and supply chain inventory positions, and scrap price uncertainty.”

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