The dumping margins are “significant” for all four countries, according to the case initiation notice.

The EC’s investigation of dumping and determination of injury to member states’ markets will cover the period April 1, 2023, to March 31, 2024.

Provisional measures may be imposed in 7-8 months. The EC intends to conclude the investigation in 12-14 months.

Raw steel production is in addition up 0.4% from the same week one year ago, when output totaled 1,742,000 st.

The mill capability utilization rate for last week was 78.1%. That’s higher than the week prior (77.5%) and than this time last year (76.6%).

Year-to-date production stands at 54,156,000 st at a capability utilization rate of 76.5%. This is down 2.1% vs. the same year-ago period, when 55,334,000 st were produced at a capability utilization rate of 77.2%.

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

• Northeast – 127,000 st (down 3,000 st)
• Great Lakes – 580,000 st (down 2,000 st)
• Midwest – 207,000 st (down 4,000 st)
• South – 752,000 st (up 19,000 st)
• West – 69,000 st (up 3,000 st)

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

The agency preliminarily determined that Al Jazeera sold pipe at below normal value during that time. It set the company’s weighted-average dumping margin at 0.61%.

The rate is down from the 2.31% rate assigned to Al Jazeera and three other Oman companies in the prior one-year period.

Commerce will issue the final results of the review in early December.

The scope of this AD order covers welded carbon steel standard pipe, fence pipe and tube, sprinkler pipe, structural pipe, and mechanical tubing with outside diameters up to 16 inches. The duties were first put in place late in 2016, and then renewed after a 2022 sunset review.

The two leaders called China’s overcapacity a “clear and present danger.” They urged the government to take action to “protect Canada from the real threat of unfair trade to our economic prosperity and to our trading relationships in North America.”

Cobden and Simard point out that Canada’s USMCA trading partners, the US and Mexico, have already taken action to restrict imports of Chinese steel and aluminum. They said this is the opportunity for Canada to align itself with its partners “to ensure we live up to the trade partnerships we have forged over the past decades.”

“Failure to act exposes Canada to becoming the North American entry point for steel, aluminium as well as EVs from China’s high carbon excess capacity,” the leaders stated.

They called for swift action and a holistic approach with one tariff package covering steel, aluminum, and EVs, aligned with the tariffs Canada’s largest trading partner, the US.

“Relying solely on the use of traditional trade remedy actions or lengthy investigations would leave Canada far behind its trading partners, and highly vulnerable,” they warned.

“A CUSMA full tariff alignment for aluminum and steel should be seen as part of a comprehensive package of measures including EVs to be put in place against China,” they stated. “For steel, at least 25% tariffs should be imposed on all melted and poured Chinese steel entering Canada. For aluminum, full alignment in scope and quantum with final US Section 301 tariffs on imports of Chinese aluminum products.”

The HR coil base price for Nucor subsidiary CSI is up $10/st from two weeks ago but flat from last week at $755/st.

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. 6 check of the market pegged current HR coil spot prices in the range of $610-700/st, with an average of $655/st. That marked the second consecutive week of HR prices ticking higher.

I’m writing this on a Sunday afternoon. And you might be reading this on Monday morning. So we’ll know the answer soon enough.

We’ve had some fun guessing what the Nucor HR price (also known as its consumer spot price, or CSP) will be in any given week. And we’ve speculated whether it’s mostly algorithmic pricing or perhaps driven in part by rivalries between competing mills or even personalities.

That’s fun for water-cooler gossip. But I think a few important things are worth remembering.

The big picture: Can one mill tame volatility?

Nucor said when it introduced the weekly HR price in April that the goal was, basically, to reduce volatility in the US HR market. Nucor’s number initially drove volatility when it posted $830/st, $70/st lower than Cliffs’ $900/st. (You can follow along with SMU’s price announcement calendar.)

The move sent a market that was trying to gain momentum into a tailspin instead. (Whether that momentum was really justified is a separate question.) HR prices then drifted lower throughout the second quarter and into July. Yet even as price fell, data from the American Iron and Steel Institute (AISI) indicated that production was still rising.

I can see why some people concluded that domestic mills lacked discipline. They didn’t cut production even as big-volume discounts and CRU-minus contracts fell close to or even to breakeven. That wasn’t supposed to happen (again) in a market that has seen significant consolidation since 2020.

What will be interesting to see now is how Nucor manages its weekly price (and how other mills react to it) in an upward market. Because this is the first time we’ve seen an upswing with a weekly HR price in place.

A pre-CSP price spike

Let’s consider the last big upcycle, which happened the fall of 2023. It was driven largely by the dynamics of the UAW strike against Ford, GM, and Stellantis.

Cliffs said it would seek $750/st for HR on Sept. 25. That was $90/st more than SMU’s spot price of $660/st for HR at time. As often happens immediately after a mill price increase, our spot price dropped a little (to $645/st on average) the following week. The decrease probably reflected last-minute deals at the “old price.” The low end of our range dropped, for example, lower to $600/st, according to our pricing archives.

But then prices shot up from there. On Dec. 6, Cliffs said it would seeking $1,100/st for HR. SMU’s price never got quite that high. But we ended 2023 at $1,040/st – or $440/st higher than the low end of our range in late Sept.

I think the question Nucor is trying to address is this: Should that kind of rapid increase in spot prices be considered a success?

Will a post-CSP gain be different?

If we go back to last fall/winter, how many tons were booked at approximately $600-650/st, the low point of the cycle? And how many were booked at ~$1,000/st or more, the high end of the cycle? My guess: Buyers placed a lot more with mills at the lower end of that range. And Nucor is trying to prevent that from happening again.

Let’s talk in round numbers. Some of you have said, for example, that you tried to place 1,000 tons with Nucor. But the steelmaker asked that you split that order up into four orders of 250 tons, placed once a week over a month. (I’m using 1,000 tons here as a theoretical example. I’ve heard similar stories from folks looking to place anywhere from 800 tons to 8,000 tons.) Maybe you decided to go along with that. Maybe you decided to go with another mill that was willing to let you buy 1,000 tons at once.

So, again, the goal with the weekly HR price is probably to get more tons placed more evenly across the cycle. Or at least to moderate the feast/famine that characterizes steel buying and the boom/bust nature of HR prices. Whether that effort will be successful remains to be seen.

Supply tightening?

Weekly prices aside, there are some signs that mills are being more disciplined lately. Raw steel output fell again last week, according to AISI figures. And we learned from U.S. Steel’s earnings call that the first coil from BRS2 won’t be made until Q4 – a little later than rumors of a first coil shortly after Labor Day.

Also, we’ve heard from some of you that US mills have been able to export a little more to Mexico in recent months with AHMSA still down and with labor issues at ArcelorMittal there. We have some evidence of that. The US exported approximately 359,000 metric tons (mt) to Mexico in June, up from roughly 341,000 mt in May, according to US government figures. July data isn’t available yet. We’ll be curious to see whether the trend continued when it is released.

And, as Lewis Leibowitz notes in his column, Commerce hitting Vietnam with “non-market economy” (NME) status is significant. It means that any trade case brought against imports from Vietnam could result in sharply higher duties – potentially high enough to effectively stop, or severely limit, Vietnam’s participation in the US steel market.

The takeaway: Let’s say domestic supply might be contracting at the margins. Does that give US mills a stronger hand to enforce higher prices? Or does uncertainty around the economy and the elections offset that?

By the way

By the way, we’re curious to see what happens with AHMSA in the days and weeks ahead. Will it be bought for pennies on the dollar out of bankruptcy, liquidated, or perhaps sold to a group of investors relatively new to the scene there?

Also, it’s not just the US that is looking to restrict imports from Vietnam. As some of you have noted to me, the European Union on Aug. 8 launched a trade case targeting HR not only from Vietnam but also from Egypt, India, and Japan.

Will that have any knock-on effects in the US market? As always, feel free to share your thoughts with us at info@steelmarketupdate.com.

SMU Steel Summit

Wow, times flies. There are just two weeks to go until Steel Summit kicks off on Aug. 26 at the Georgia International Convention Center (GICC) in Atlanta.

Nearly 1,350 people have registered. Last year’s record attendance was a little over 1,400. I honestly didn’t think we’d come close to beating that number this year. But we might.

If you haven’t made plans to attend, you can see the agenda here, a list of companies attending here, and registration information here. Help us make this year another record one for Summit!

Also, a huge ‘thank you’ from all of us at SMU to those who have already registered, who read our newsletters, and who participate in our surveys. You are what makes our success possible.

But what are the implications for Vietnam and for other countries with the same status?

Background

Vietnam is the least likely candidate for NME status among those countries that still have it. Other than China and Vietnam, all NME countries designated by the Commerce Department are 10 of the 15 former Soviet Republics of the USSR: Russia, Moldova, Kyrgyzstan, Uzbekistan, Tajikistan, Turkmenistan, Belarus, Armenia, Azerbaijan, and Georgia.

Russia, of course, is subject to numerous sanctions. It was deemed a market economy in 2002. But its status reverted to NME in 2022. Kazakhstan, Ukraine, and the Baltic States have been designated market-economy countries. The Baltic States are members of NATO. And it is well-known that Ukraine would like to be.

NME status changes the analysis of “dumping.” Most cases measure the extent (or “margin”) of dumping by comparing selling prices in the market of production with those to the United States. NME status removes that measure of comparison. Instead, the “factors of production” of the product under investigation are analyzed based on the costs of similar factors in market-economy countries. Commerce is to choose the market economy based on its development in comparison with the NME. The comparable country need not be identical to the NME. And it need not be similar with respect to the specific product under analysis.

Suffice it to say that Commerce has broad discretion to apply costs and factors of production.

It is also not debatable that Commerce’s goal is normally to find dumping margins of mammoth proportions, which will effectively stop imports. Dumping margins in NME cases are normally significantly higher than in market-economy countries.

Vietnam seeks to remove its NME status to avoid antidumping and subsidy cases that will likely lead to a cessation of trade.

The skinny

Vietnam is by and large a partner of the US and the West. Trade between the US and Vietnam has exploded in the last 20 years. Trade statistics show that bilateral trade first passed $1 billion in 2000. In 2023, bilateral trade was $123 billion ($114 billion in US imports and $9 billion in US exports).

Geopolitically, Vietnam is more of a competitor with China than with the US. It borders China, and there was a brief border war between the two countries in the late 1970s. Vietnam and the US have cooperated on issues such as nuclear non-proliferation and counterterrorism in recent years.

The effort by Vietnam to remove its NME status, while perhaps premature, is based on its increasing cooperation with the US in many areas and its desire to maintain or improve its position as the tenth most important US trading partner. It is the only country in a position of cooperation rather than competition with the US that has NME status.

The Commerce Department certainly has the authority to designate Vietnam an NME. The six-part statutory test Commerce must apply (all of which allow Commerce a large degree of discretion) could apply to almost any country. For example, the second factor is the “extent to which wage rates in the foreign country are determined by free bargaining between labor and management.” The Commerce analysis of this factor noted “notable progress in labor market reforms.”

Latest wrinkles

But in the last analysis, Commerce found remaining “deficiencies” – including the continuation of a single authorized labor union in the country and difficulty in initiating strikes. That sort of “one hand, other hand” analysis could support any conclusion that Commerce wanted. Obviously, the agency wanted to maintain NME status for Vietnam.

The Office of Enforcement and Compliance of Commerce prepared this analysis in connection with a specific antidumping order on honey from Vietnam. But the public comments on the analysis included input from many industries that are concerned about imports from Vietnam. U.S. Steel filed 188 pages of comments urging Commerce to keep Vietnam an NME. These comments were submitted the week after the announcement of the US Steel-Nippon Steel agreement for selling control of U.S. Steel. Filings were made by other domestic industries with an interest in controlling, if not stopping, Vietnamese imports from penetrating the US market.

Why it matters

Clearly, this job is easier (but not impossible) if Vietnam remains an NME. The fact that Vietnamese imports have increased 100-fold in the last 20 years clearly shows that NME status is not an insurmountable obstacle. But it does mean that new industries are interested in bringing or sustaining trade remedy cases so that imports from Vietnam are a less imposing threat.

Politicians are hopping on board too. Many members of Congress raised concerns about changing Vietnam’s NME status.

The antidumping and countervailing duty laws of this country are capable of sharply decreasing imports even without the extra punch of NME analysis. Countries around the world complain about the unfairness and arbitrary results of market economies and NMEs alike. Not without reason.

But NME status has a ring to it. Going back to Nazi Germany and Imperial Japan, trade remedy petitioners have played on the notion that trading partners are not interested in economic gain but geopolitical gain.

Commerce has good reason to listen to these fears. And Congress has given Commerce nearly unbridled authority to declare any country an NME.

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.

In the 2021-22 sunset review of the duties, the International Trade Commission (ITC) cumulatively assessed hot-rolled steel imports from Australia alongside the same imports from other countries in the review – Japan, South Korea, Netherlands, Russia, Turkey, and the United Kingdom. Brazil was the only country in the review that didn’t have its shipments cumulated with the others.

The sunset review resulted in the removal of the antidumping duty (AD) order on Brazilian HR but the continuation of duties on HR from the other seven countries.

Sunset challenge

On Jan. 1, 2023, BlueScope Steel and its US affiliates, BlueScope Steel Americas and North Star BlueScope, challenged the ITC’s decision to cumulate the imports in the CIT. Specifically, they disputed the “finding that subject imports from Australia would likely compete under similar conditions of competition to those faced by imports from other subject countries,” according to a court document.

The ITC found that BlueScope, Australia’s only producer, has an incentive and a demonstrated interest in competing for sales in the US market.

The CIT said the ITC is allowed to cumulatively assess imports if they are likely to compete with each other and domestically produced product and if they are likely to negatively impact the domestic industry.

But BlueScope argued that its sales to its US affiliate Steelscape shouldn’t be considered sales in the US merchant market. Therefore, they would not be in competition with US-produced product.

However, considering BlueScope’s production capacity, the ITC said its sales wouldn’t be limited to Steelscape alone. Since other US steel producers can compete in the Western US, where Steelscape is located, the ITC determined that BlueScope’s sales would be in direct competition with domestic producers.

CIT decision

Despite BlueScope’s arguments, the CIT upheld the ITC’s decision to cumulate Australia’s HR exports with the other countries, saying it was lawful and supported by evidence.

The CIT concluded that the ITC “reasonably determined that BlueScope would maintain an incentive to export hot-rolled steel to the US market upon revocation of the antidumping duty order.”

As such, Judge Gary S. Katzmann signed the CIT opinion sustaining the ITC’s sunset review determination.

Note that domestic producers Cleveland-Cliffs, Steel Dynamics Inc., SSAB, Nucor, and U.S. Steel participated as defendant-intervenors in the case.

BlueScope could not be reached for comment by the time of this story’s publication.

Trends

Calculating supply levels on a three-month moving average (3MMA) basis can smooth out the month-to-month variability to better highlight long-term trends. After reaching an 11-month high in May, the 3MMA through June eased to 8.55 million st. Compare this to the 2023 monthly supply average of 8.49 million st and the 2022 average of 8.83 million st. Supply on a 3MMA basis has generally trended downward over the past few years, following the late 2021 peak of 9.87 million st.

Looking at the past four months, June had the lowest monthly apparent supply rate. The decline from May to June was primarily due to a 517,000-st (-23%) drop in finished imports, combined with a 279,000-st (-4%) decrease in domestic mill shipments.

Figure 4 shows year-to-date (YTD) monthly averages for each statistic over the last four years. The average monthly supply level for the first half of 2024 now stands at 8.46 million st, 3% below last year. 2023 holds the highest YTD monthly average in our recent history at 8.68 million st. Over this time we have seen consistent growth in finished imports, while domestic shipments and total exports have fluctuated.

For an interactive graphic of our apparent steel supply history, click here. If you need any assistance logging into or navigating the website, contact us at info@steelmarketupdate.com.

Monthly averages

Looking at exports on a 3-month moving average (3MMA) basis can smooth out the monthly fluctuations. Shipments had trended downward throughout the second half of 2023, falling to an 11-month low in December. The 3MMA changed course as it entered 2024, rising each month through April. The latest 3MMA through June remains relatively high at 800,000 st, down 3% from the seven-month high in April.

Exports can be annualized on a 12-month moving average (12MMA) basis to further dampen month-to-month variations and highlight historical trends. From this perspective, steel exports have steadily trended upwards since bottoming out in mid-2020. The 12MMA reached a five-and-a-half-year high of 805,000 st in February. The 12MMA has eased since then but remains strong through June at 782,000 st.

Exports by product

Changes in monthly export rates were mixed across the major flat-rolled steel products we track. The biggest monthly movers from May to June were plate in coils (+25%), other-metallic coated (-17%), galvanized (-8%), and hot rolled (-8%).

Significant year-on-year (y/y) declines were seen in June exports of hot rolled (-33%), plate in coils (-19%), plate cut lengths (-17%), and other-metallic coated (-15%). Cold-rolled steel was the only product with a y/y increase (+3%).

Figure 4 shows a history of exports by product on a 3MMA basis.

Note that most steel exported from the US is destined for USMCA trading partners Canada and Mexico. 51% of all exports in June went to Mexico, followed by 41% to Canada. The next largest recipients were the Dominican Republic and China at less than 1% each.

On an annualized 12-month moving average (12MMA) basis, shipments have been trending lower since their post-Covid surge, flattening out in late 2023. The latest 12MMA for total shipments is 1.76 million units through June. This is 4% lower than the same period last year and 13% lower than the 12MMA seen two years prior.

June shipments of residential and commercial storage water heaters eased 4% m/m to a six-month low of 769,883 units. Recall that in March, we saw water heater shipments reach a two-year high of 887,000 units; they have since declined steadily.

June shipments are 2% below levels of one year ago. Combined water-heater shipments have averaged 798,087 units per month over the past year.

Warm air furnace shipments surged 24% m/m to a combined 246,825 units. This is 16% higher than last year. In the past year, monthly furnace shipments have averaged roughly 248,000 units.

Shipments of central air conditioners and air-source heat pumps jumped 19% m/m to a two-year high of 1.08 million units. Note that air conditioner/heat pump shipments are very seasonal, with slowdowns experienced throughout the winter months, as evidenced in Figure 2.

Total air conditioner and heat pump shipments were more than 10% higher than last year. Over the past year, shipments have averaged about 740,000 units per month.

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.

Reforming the existing model for new productive forces

The Third Plenum historically marks a pivotal moment in China’s policy landscape. Deng Xiaoping’s 1978 reforms – launched at a previous plenum – catalyzed decades of rapid growth. While subsequent meetings yielded less dramatic changes, the recent gathering was highly anticipated due to unusual delays and, more importantly, the economy’s challenges.

However, the plenum’s focus on refining rather than overhauling the economic model disappointed markets, but it still aligned with our expectations. The subsequent release of a comprehensive (yet incremental) reform blueprint outlined a five-to-ten-year roadmap to modernize China. Central to this plan is the cultivation of “new productive forces” (NPFs) to drive technological advancement and supply chain resilience – a response to China’s waning productivity growth (see chart below).

While the whole-of-nation approach to developing NPFs promises breakthroughs in strategic sectors such as green tech, it also risks distorting market forces and hindering long-term efficiency. The push for innovation, particularly in high/green-tech manufacturing, is likely to drive demand for specialized metals and rare-earth elements.

However, the state-led innovation push could further risk exacerbating production overcapacity, resource misallocation and deflationary pressures, potentially undermining long-term productivity growth.

Tax reforms to improve local public finance

During the Third Plenum, the Chinese authorities addressed fiscal challenges through tax reforms aimed at enhancing local government revenues. The recent resolutions propose increasing the share of tax revenues allocated to local authorities and reducing their spending obligations.

This approach includes reallocating consumption tax revenue to local levels and exploring new revenue streams from digital economy sectors. These measures are crucial in light of weakened revenue collection capacities and declining land sales, necessitating a robust framework to ensure fiscal sustainability at both local and national levels (see chart below). 

Looking ahead, we expect fiscal reforms to enhance public finance sustainability, particularly at local levels. The central government will increase spending and borrowing to counteract local governments’ fiscal cutbacks, constrained by off-budget debt clean-up and reduced land sale revenue due to the property downturn. Authorities might allocate more tax revenue to lower government levels or transfer some local responsibilities to the central government.

Efforts to boost local fiscal revenue are anticipated. The tax authorities will be shifted downward to expand local tax bases and develop local tax types. Among China’s four major taxes, value-added tax, corporate income tax, and personal income tax are shared between central and local governments, while the consumption tax is currently central only (see table below).

If the consumption tax is partially shared, local governments’ tax bases would broaden, increasing their incentive to promote consumption and shift the economic structure towards consumption. Otherwise, the heavy reliance on land sales and VAT in local revenue could push local governments to keep expanding production tax bases, resulting in overcapacity and redundant construction.

New urban push drives housing and infrastructure demand

A few days after the Third Plenum, China unveiled its new urbanization action plan to accelerate urban development while improving living standards. By easing restrictions on rural-to-urban migration, fostering industrial clusters, enhancing infrastructure, and improving urban resilience to natural disasters, the plan emphasizes the importance of people-centered urbanization. This ensures that all residents – particularly migrant workers and their families – have access to public services and opportunities.

This new urbanization plan is set to impact China’s real estate and infrastructure sectors. The increased demand for housing, driven by granting migrant workers urban resident status (i.e., “Hukou”) and improved living standards, will likely digest the housing inventory in the property market.

By 2029, the plan could unleash an additional 1.2 billion square meters of living space demand compared to our baseline scenario (see left-hand side of the chart below). Meanwhile, the infrastructure sector stands to benefit from the planned investments in transportation, utilities, and public facilities as local governments accelerate the issuance of local-government special purpose bonds (see right-hand side of the chart below).

Enhanced plans to boost investment and consumption

China is also expanding its equipment upgrade and durables trade-in program. Initially rolled out in March, the program faced challenges due to insufficient funding and lack of local incentives. However, the revised program will repurpose 30% of the RMB1 trillion (~US$140 billion) in special treasury bonds for this initiative, significantly increasing fiscal support.

Doubling subsidies for passenger cars and expanding incentives for commercial vehicles and home appliances are expected to drive consumption and investment (see table below). This demand-side policy, though limited in scope, represents a crucial effort to invigorate economic activity amid subdued consumer sentiment.

Incremental policy changes limit the upside to growth

China’s recent policy decisions underscore an incremental approach. On one hand, a strong emphasis on supply-side reforms, technological innovation, and industrial policy aims to address structural economic challenges and foster long-term growth. While these initiatives are crucial, the absence of substantial demand-side measures – particularly in the real estate sector – remains a significant concern. The property market, a key economic driver, continues to face headwinds, and the government’s cautious approach to policy adjustments has limited its recovery potential.

The push for industrial upgrading and infrastructure development could drive demand for certain metals such as copper and steel. However, broader market sentiment remains subdued due to concerns over economic growth, policy uncertainty, and potential market distortions arising from state-led initiatives. The effectiveness of the government’s policies in stimulating sustained economic growth and improving market confidence will be crucial in determining the future trajectory of China’s economic outlook.

If you are keen to hear more about our views on China and the global economy, please refer to our Global Economic Outlook and/or get in touch with CRU economists:

Henry Hao: Hangwei.Hao@crugroup.com

Alex Tuckett: Alex.Tuckett@crugroup.com

Further contribution from intern Brian Tan.

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

In the week ended Aug. 9, the number of active drilling rigs in the US improved by two from the previous week for a total of 588 rigs. Oil rigs were up three to 485, natural gas rigs fell by one to 97, and miscellaneous rigs held steady at six.

There were 66 fewer active rigs in the US during the week compared to the same week last year. The number of active oil rigs was down by 40, gas rigs were down by 26, and miscellaneous rigs were unchanged.

Canadian rigs

The number of rigs operating in Canada decreased by two from the week prior to 217. Oil rigs dipped by three to 147, gas rigs were unchanged at 69, and miscellaneous rigs were up to one.

Currently, 27 more drilling rigs are operating in Canada than there were one year ago. Oil rigs were up by 31, gas rigs were down by five, and miscellaneous rigs were up one.

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 down by 23 compared to the June count and 27 less than levels one year prior.

The Baker Hughes rig count is important to the steel industry because it is a leading indicator of demand for oil country tubular goods (OCTG), a key end market for steel sheet. A rotary rig rotates the drill pipe from the surface to either drill a new well or sidetrack an existing one. For a history of the US and Canadian rig counts, visit the rig count page on our website.

The prices paid in the Great Lakes region for August shipment are:

Busheling	$400/gt
Shredded	$385/gt
No. 1 HMS	$320-340/gt (est.)

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

Flooding saps Novelis’ results

Despite higher turnover and shipments, US-based aluminum products manufacturer Novelis’ bottom line slipped 3.2% y/y to $151 million in fiscal Q1 to June.

A factor was the company’s plant at Sierre, Switzerland, being flooded during heavy rainfall at the end of June which halted operations. The fiscal Q1 cost was $30 million on fixed assets and $10 million on inventories.

“Additionally, we expect to incur costs related to repairs, clean-up, business interruption, and other costs related to this event until the operations are restored at the facility,” the company said. It anticipates restarting production by the end of September, with costs to total $80 million, after insurance compensation.

Atlanta-based Novelis said other factors in the lower fiscal Q1 profit were higher restructuring expenses and an unfavorable metal price lag. Sales revenue went up 2.4% y/y to $4.19 billion and shipments by 8.2% to 1,048,300 st. Shipments increased y/y in all regions, up 4.8% in North America, 5.2% in Europe and 10.2% in Asia. The company explained that the increased deliveries resulted in a return to normal demand for beverage packaging sheets following the previous year’s quarter, where customers had reduced their inventory.

USTR issues update on Section 301 tariffs related to imports from China

Last week, the Office of the US Trade Representative (USTR) issued a notice informing the public that it continued to review public comments on a proposed increase of Section 301 tariffs on various imports from China. The USTR said that it received more than 1,100 comments.

After consultation with the Section 301 committee, the USTR indicated that it would continue reviewing all comments and expected its final determination to be issued in August 2024. Furthermore, the USTR said the modifications slated for 2024 would take effect approximately two weeks after it makes the final determination public.

On May 28, the USTR proposed increasing tariffs on Chinese imports as part of Section 301, which is related to technology transfer, intellectual property, and innovation. The Aluminum Association has since discussed this announcement and said the increased duties may come sometime in the late summer or early fall.

Alcoa warns of Indonesian threat

According to Alcoa’s president and CEO, William Oplinger, the Australian government needs to keep a close eye on Indonesia’s push into the aluminum industry.

The Southeast Asian country’s promotion of its nickel industry – which began with a ban on exports of unprocessed ore in 2020 – has led to Indonesia dominating the global nickel market, depressing prices and forcing operations to shut down in Australia. Canberra needs to set its policy correctly, including putting the entire aluminum value chain, from bauxite to aluminum, on the country’s critical minerals list in order to guarantee Australia’s world-class alumina remains at the bottom of the global cost curve, Oplinger said.

While China’s attempts to curtail excess production have generally been good for producers elsewhere, Oplinger feels Australia’s aluminum industry is vulnerable to global developments. Though the Indonesian government is looking to repeat its nickel policy with aluminum, progress on applying an announced 2021 plan to ban bauxite exports has been slow. The country’s energy and mineral resources department has conceded that only one of eight planned alumina refineries had made significant progress.

Despite talk that Indonesia may relax its bauxite export ban, Oplinger argued that the Australian government should keep a close eye on developments. “It would help the government understand that there are early signs of vulnerability in the marketplace … It would certainly make it easier for us to make investment decisions,” he was quoted as saying by The Australian newspaper.

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

And now, after reaching levels not seen since November 2022 ($635 per short ton), hot-rolled (HR) coil prices moved up $20 per short ton (st) to $655/st in our last check of the market on Tuesday, Aug. 6.

Despite the upturn in prices, the direction of other indicators remains mixed. HR lead times have been holding around 4.5 weeks on average since mid-June. But buyers are finding mills somewhat less willing to negotiate lower prices, according to our last full market survey.

The modest decline in the number of mills willing to cut deals came after increase announcements by Nucor and by Cleveland-Cliffs. We’ll be curious to see whether negotiation rates continue to go down in the weeks ahead following those price hikes.

And while prices have finally turned upward, SMU’s Buyers’ Sentiment Index has dipped back down to levels not seen since the Covid-19 pandemic. But take that with a grain of salt. Sentiment was terrible in August/September 2020 – even as lead times and prices were stabilizing and showing early signs of recovery.

On the raw materials front, predictions are mixed as to where prime scrap prices will land this month. A solid majority expect sideways again in August, according to our survey. But some think that prime will move higher. It’s just a matter of days before we’ll know where scrap has settled.

Will HR prices rally or will they stabilize at a slightly higher level? A solid number of you (nearly 88% in last week’s survey results) expect prices will range between where they are now (approximately $650/st) and $750/st come Q4.

Here’s some of the other data we’ve been looking at.

Steel demand index

SMU’s Steel Demand Index has been in contraction territory since early May. The index – now at 40 – is up three points from a reading of 37 in late July, its lowest mark since July 2022.

The index, which compares lead times and demand, is a diffusion index derived from the market surveys we conduct every two weeks. An index score above 50 indicates rising demand, and a score below 50 suggests declining demand. Detailed side by side in Figure 1 are historic data and the latest Steel Demand Index.

Our index has been in contraction territory for the better part of the past year. The index has had some small bumps into growth. But they’ve mostly been short lived and in the wake of mill price hikes. Generally speaking, it has been down more often than not over the past 18 months.

Why should you pay attention to SMU’s demand diffusion index? It has for years preceded moves in steel mill lead times (Figure 2). And SMU’s lead times have themselves been a leading indicator for flat-rolled steel prices, particularly HRC (Figure 3).

What to keep tabs on

Lead times should remain in focus. If demand is indeed soft, will they remain largely unchanged? Or could we see them extend on the back more order activity over the last couple of weeks?

What about the steel buyers who make up the bulk of our survey respondents? How are their businesses doing? More than 35% of respondents in our last survey said they missed their business forecasts in July. Only ~5% exceeded forecasts last month. Also, more than three-quarters of service centers said they were releasing less steel than a year ago. Will things improve this month?

We have seen early signs that service centers are at least holding the line on prices. Only 40% of service centers reported lowering prices in our last survey – a reaction to mill price hikes. That’s a significant shift from the nearly 85% who were cutting prices in mid/late July. But only 4% of service centers reported increasing prices last month. Will see see that number increase in August?

And what does all of this mean for contract negotiation season? Will lackluster prices and less-than-stellar demand continue? Or have we finally turned a corner on demand? Let me know what you think!

SMU Steel Summit

We’re just about two weeks away from the start of the 2024 SMU Steel Summit, and it promises to deliver big once again.

We’re happy to report that the mobile networking app is now live. Download it in Apple or Android app stores and start networking with more than 1,300 (and counting) industry leaders today!

We look forward to seeing you on Aug. 26-28 at the Georgia International Convention Center (GICC) in Atlanta. You can learn more about the Summit and our agenda here. And you can register here.

And as always, your business is truly appreciated by all of us at Steel Market Update.

It’s been more of a stop to the bleeding rather than a reversal for now on the index. But since our last report, weakness in futures is pretty modest. Month over month it looks like this:

While we had hit lower lows than the above in the interim (October actually got as low as $723/ton on July 23^rd), it has hardly been a brutal rout of the bulls here. Spot prices are down about the same amount as the futures above. And while this is usually a momentum market, we still see September and beyond pricing in nearly a $100/ton premium to most spot offers available (or more depending on the particulars). This in turn prompts a lot of questions yet again about how much premium needs to be baked into the forward price in order to get physical inventory holders to sell futures.

All eyes on interest rates

The answer is more art than science, and there are a number of obvious moving pieces (liquidity, access to credit and cost of credit, storage costs, etc.). Some of them can vary substantially from one entity to the next. But we still think the relevance of interest rates here is high. An imminent rate cut would likely be positive for underlying fundamentals. It would also the ease the financing costs and make a higher premium less necessary for carry traders.

Little has changed in those carries as the number is in line with where it was a month ago. The market is paying about $150/ton to hold HR until December. As far as how attractive that level has been to sellers, naturally the interest varies. But the relatively low exchange volumes might be implying that the number of “risk off” pessimists carrying inventory in HRC is not a tremendously high number – or we might expect to see more volume at these levels. Certainly, the continued optimism about trade protectionism, especially in an election year, is a factor.

Higher interest rates are a factor. And yet it’s hard to shake the feeling that part of the contango in this market is simply based on the assumption that we do not have a lot of downside room here in the spot price unless there is significant economic contraction imminent.

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SMU’s check of the market on Tuesday, Aug. 6, put domestic HR tags at $655 per short ton (st) on average, up $15/st from last week. Stateside hot band – still just $20/st from a 20-month low – remains $190/st below a recent high of $845/st in early April.

Domestic HR prices are now theoretically 7.8% cheaper than imports. They were 8.9% cheaper last week.

In dollar-per-ton terms, US HR is now, on average, $51/st cheaper than offshore product (Figure 1). That compares to $57/st cheaper on average last week. That’s a huge change from late last year, when US HR was hundreds often 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. 8, the CRU Asian HRC price was $485/st, up $22/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 $697/st. This contrasts to the latest SMU HR average of $655/st for domestic material.

The result: US-produced HRC is theoretically $42/st cheaper than steel imported from Asia. That is down $14/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 up $3/st to roughly $622/st this week. After adding import costs, the delivered price of Italian HR coil is, in theory, $712/st.

That means domestic HR coil is theoretically $57/st cheaper than HR coil imported from Italy. That is down $12/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 $619/st, which is $5/st lower from last week. After adding import costs, the delivered price of German HR coil is, in theory, $709/st.

The result: Domestic HR is theoretically $54/st cheaper than coil imported from Germany, down from a $74/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.

The DMI tracks the value of nonresidential construction projects entering the planning stages. It typically leads construction spending by about 12 months.

“While data centers have had an outsized influence on nonresidential planning activity in recent months, more momentum is building across many other major sectors and diversifying the story behind July’s growth,” said Sarah Martin, associate director of forecasting at Dodge.

The increased prospect of Fed rate cut in September and slower inflation was “driving owners and developers to remain optimistic about 2025 market conditions and pushing more projects into the planning queue,” Martin added.

The commercial building index was up 6.8% month over month (m/m) in July and up 35% vs. July 2023. While growth was widespread across all segments, the network noted that data centers were still a driving force of growth. Retail planning, though, has also been steadily accelerating over the past eight months.

Institutional planning jumped 11.1% higher in July from June, with healthcare the primary driver of this month’s expansion. Despite the m/m gain, the segment was down 14% vs. year-ago levels.

A total of 23 projects valued at $100 million or more entered planning throughout the month of June, DCN said.

Second quarter ended June 30, 2024	2024	2023	% Change
Revenue	$716	$841	-15%
Net earnings (loss)	$67	$117	-43%
Per diluted share	$1.22	$2.12	-42%

The Hamilton, Ontario-based company reported second quarter net income of CAD$67 million (USD$48.7 million). While that’s a slight increase compared to the first three months of the year — CAD$63 million (USD$45.8 million) — it’s a 43% drop compared to a year ago, when the company saw net earnings of CAD$177 million (USD$85 million).

Stelco attributed the year-over-year (y/y) drop to several factors: a CAD$61 million decrease in operating income, CAD$10 million change in finance income and other losses, and CAD$3 million increase in finance costs.

The company is in the process of being acquired by Cleveland-Cliffs in a deal valued at USD$2.5 billion (CA$3.4 billion). The deal is expected to close in the fourth quarter.

Alan Kestenbaum, executive chairman and CEO, noted that Stelco led its reporting peers by generating a 21% Adjusted EBITDA margin, a position it has held for 11 of the past 15 quarters.

“This continued strong level of performance is one of the factors that attracted the interest of Cleveland-Cliffs, and we are working hard to continue delivering results, while also working towards the successful completion of the transaction announced on July 15th,” Kestenbaum said in a press release.

Revenue dropped 15% to CAD $716 million (USD$520.7 million) y/y in Q2’24, primarily due to an 11% decrease in average selling price per net ton and a 3% decrease in shipping volume, according to the company

The average selling price of Stelco’s steel products fell from $1,217 per short ton (st) in Q2’23 to $1,085/st in Q2 ’24. Shipping volume dropped 19,000 st to 634,000 nt over the year.

Looking at imports on a three-month moving average (3MMA) basis can smooth out the variability seen month-to-month. On a 3MMA basis, imports through final June data are at 2.60 million st. Recall that we saw a 22-month high 3MMA of 2.73 million st the previous month. The 3MMA is lower for July, now at 2.43 million st.

Semi-finished vs. finished breakdown

Imports of semi-finished steel fell 30% from May to June to an eight-month low of 421,000 st. July licenses currently total 347,000 st, down another 17% from June. For reference, semi-finished imports averaged 524,000 st per month last year. Thus far, 2024 has seen a monthly average of 555,000 st through July figures.

Meanwhile, June finished steel imports totaled 1.73 million st, a 23% decline from May’s 22-month high. The latest finished import tally through July has rebounded 12% to 1.94 million st. Finished imports averaged 1.83 million st per month in 2023, whereas the monthly average for the first seven months of 2024 now stands at 1.97 million st.

Imports by category

Figure 3 graphs monthly imports by product category. June flat-rolled steel imports are down 20% from May’s 23-month high to 888,000 st. July license data shows a potential recovery of 14%.

Imports of long products tumbled 36% in June to a 9-month low of 342,000 st. (This follows an 11-month high seen one month prior.) July licenses currently show a complete reversal, rising 40% to 480,000 st.

Pipe and tube imports fell 16% in June to 417,000 st. Licenses are down another 17% in July, potentially an eight-month low.

Stainless imports fell 15% from May to June to 84,000 st, easing further from the 20-month high seen in April. July stainless projections are currently 16% higher than June at 98,000 st.

Flat-rolled imports

Figure 4 shows flat rolled imports by popular products. Imports eased for all but one material from May to June. The largest monthly decline was seen in cut-to-length plate (-44%), followed by tin plate (-41%), cold rolled (-39%), plate in coils (-23%), and galvanized (-13%).

July licenses are mixed across the products we track; current data indicates significant swings in tin plate (+124%), cut-to-length plate (+112%), and Galvalume (-21%).

Imports by product

The chart below provides further detail into imports by product, highlighting high-volume steel products. Explore this steel trade data deeper on the Steel Imports page of our website.

Year-to-date (YTD) shipments through the first six months of 2024 stood at 43,759,681 st, down 3.9% from the same period last year.

Comparing YTD shipments through June to the first six months of 2023 shows: cold-rolled sheet, up 4%; corrosion-resistant steel, down 2%; and hot-rolled steel, off 4%.

On the demand side, there still is no evidence of increased demand from scrap buyers. Most scrap programs at major mills are no better than in July. However, there is enough demand that steel mills will want to keep scrap flows intact. RMU has not spoken to anyone on either side of the metallic aisle who thinks scrap prices will be down.

As always, scrap prices are reliant mainly on demand for finished steel. Demand has been down this year, and so have prices for ferrous scrap.

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

Want to share your thoughts? Contact david@steelmarketupdate.com to be included in our market questionnaires.

Steel prices might have bottomed out and may be inflecting up. How do you expect prices to trend over the next three months?

“I think this is a temporary bottom. We are expecting a few ticks upward but then things drifting back lower. Demand is just too soft and now with this recent selloff, folks are spooked by the markets. That is a bad combo.”

“Flat to down – until there is a clearer picture on the horizon, people will be hesitant to buy more than what they need.”

“I think near term we see a gain, but not seeing a runaway market, potential to bounce along the bottom because of weak demand.”

“I feel small increases for the next few months with mills and service centers supporting the price movement up, but the lack of overall demand not backing it, so we won’t see the typical rapid increase after a bottom is hit.”

“Conflicting signals. Prices should trend up but with the recent ‘spooking’ of stock markets across the globe, we may see a rapid decline in demand which will counter that.”

“I think we will see a slow movement upward over the next three months as mills do their best to prepare for quoting contracts.  But until the economy improves or this election plays out, it’s going to be tough.”

“Lower, slowing economy and high interest rates.”

“Near bottom now. May take a small reduction on the inflation news.”

“Slowly rising as inventories work down and we see low levels of imports for the balance of the year.”

“Prices should increase over the next several months due to mill maintenance, potential trade action and restocking at the service center level.”

“Up, futures indicate this trend.”

“Prices will increase as imports decrease.”

“Slightly upward but not drastic.”

Is demand improving, declining or stable?

“Stable – confidence level still not great. We’ll see many more small orders.”

“Stable for the year, but down from prior years and our forecast.”

“Stable – no one is speculative buying.”

“Demand is stable for us, but the bigger the shop or the bigger the service center, the slower they are.”

“Demand is stabilizing due to interest rates starting to be reduced.”

“Demand remains very weak and soft. Future economic situation is uncertain, especially if higher tariffs for imports are applied after the election, taxing consumers and raising inflation risks.”

“Stable to declining – automotive is OK, but pretty much everything else is down and inventories are still destocking.”

“Declining, but not off the cliff.”

“Declining – slowing economy and high interest rates.”

“A few people coming off the sidelines, but most is stable.”

“Improving.”

Is inventory moving faster or slower than this time last year?

“Slower.” – 10 respondents

“Slower than last year.”

“Slower, demand is lower than last year.”

“Slower as demand remains soft.”

“Inventory is starting to move slower, due to people hesitating or being overextended.”

“Inventory remains moving at a good clip, but we continue to run hand-to-mouth by design.”

“Faster.”

Are imports more attractive than domestic material?

“More attractive.”

“Imports are still attractive.”

“Not yet, but soon the balance will return. Value added will be the first to be attractive again, HRC the last.”

“Imports are always less expensive than domestic.”

“More attractive from a price standpoint but not from a delivery standpoint.”

“Lead times are the killer. Of course if the domestics try to raise things too much too fast (which of course they will), imports will be knocking on our door again.”

“Not really due to high logistics cost and domestic mill pricing is the same with much better lead times.”

“No, spread not great enough in the soft domestic market.”

“No, market is too volatile.”

“Imports are not attractive with longer lead times and uncertain trade case risks.”

“They are not enough of an advantage to domestic prices.”

“Depends on the steel.”

“Not attractive due to our customer requirements.”

What’s something that’s going on in the market that nobody is talking about?

“Are we now seeing the effects of a soft recession catching up to the manufacturing markets?”

“The market is gearing up for another sharp incline. When demand comes back, low production numbers will promote quick increases. This saw tooth model that we have seen the last three years is going to start changing behaviors.”

“The potential strike by the Longshoremen.”

“I feel there is less confidence in where things are headed not just with the steel market but globally than I can remember in a long time – US politics, wars, trade cases, economy… and it’s been a roller coaster ride for the last 4+ years!”

“Will there be more mill producer consolidation in the next year?”

“Outages are coming.”

“Where is all the infrastructure jobs and where is the money?”

“Inflation fears.”

“If import tariffs are applied by a new government after the election how will that affect imports of steel and aluminum to the US?”

“I’ve seen it here a few times, but any real news on AHMSA or Evraz NA would be welcomed. Just rumors out there right now.”

“AHMSA may now formally enter in bankruptcy and liquidation of assets. A major step.”

“Evraz sale and FBI raid.”

HR coil prices were little changed for a third week in a row, with our first assessment in August coming in $1 per short ton (st) above last week at $659/st. CR coil prices rose by $9/st to $927/st, while HDG coil base prices declined by $8/st to $859/st  

The general consensus among market participants this week was that prices have now reached a bottom, and the market is poised to turn higher. However, the magnitude of a price increase will be limited by lackluster demand, and buyers said they are in no rush to jump into the market to beat said increase. On top of this, doubt that demand will recover meaningfully this year, potential macroeconomic headwinds, and uncertainty regarding other geopolitical developments have made some buyers take a more cautious stance toward purchasing activity.

However, we have also seen some large-volume, low-priced deals take place recently, which may help extend mill lead times soon. Increases in publicly announced price levels from mills appear to be gaining some traction, which helps support this notion. In some cases, sellers said that upcoming maintenance outages may be enough to tighten for yet more price increase announcements to be realized.

Europe

European sheet prices were mostly down last week amid seasonally slow trading activity, especially in Italy, where all sheet products have decreased by between €6–14/metric ton (mt) w/w. German and Italian HR coil were assessed at €626/mt and €616/mt, respectively, down by €10/mt and €14/mt.

Buying activity has been weak, both for real demand and for restocking. While some of this downturn can be attributed to the usual seasonal impact of summer holidays, underlying real demand remains subdued even when accounting for seasonality.  

Market activity in Europe is expected to remain quiet in the short term as steelmakers perform maintenance. Both producers and service centers are expected to extend their maintenance shutdowns to three or four weeks because of slow end-use demand. Lead times for HR coil are currently four weeks in Italy and six weeks in Germany.

HR coil import offers from Turkey declined w/w due to lower offers from Chinese manufacturers, which put downward pressure on prices. Turkish HR coil imports were reported into southern Europe at $565–575/mt FOB (down $5–10/mt w/w). Although Turkish mills are trying to maintain price levels, they are making weekly concessions due to weak demand.

Meanwhile, the European Commission is set to formally launch an anti-dumping investigation into HR coil imports from Egypt, Japan, India, and Vietnam following a request from Eurofer. This investigation could impact more than half of European HR coil imports. The EU’s introduction of a 15% cap on HR coil volumes from individual countries within the “other countries” quota category in June 2024 already reduced this quota by around 30% in Q3’24. If anti-dumping measures are implemented, it could further tighten supply, supporting European prices.

China

Domestic Chinese sheet prices edged down by RMB10-20/mt w/w given weak demand and deteriorating market confidence amid a summer slowdown. The official manufacturing PMI data remained below the 50 mark in July, coming in at 49.4 and indicating that the domestic manufacturing sector has yet to return to growth territory. Demand remains weak seasonally, and a rise in July’s auto inventory index published by China’s Auto Dealers Association placed further worries on sheet demand. However, domestic sheet production remained elevated despite production halts and maintenance by mills. As such, sheet inventories increased w/w.

Asia

Prices of imported sheet products in Asia remain low due to limited buying interest.

Offers for HR coil SAE1006 grade increased by $10/mt to $520/mt CFR Vietnam for October shipment. However, buyers did not accept this increase, and bids were held at $500/mt CFR Vietnam.

For commercial grade HR coil, offers fluctuated in the range of $490-500/mt CFR Vietnam with very thin buying interest.

Last week, Hoa Phat also announced its new offers for October to domestic customers. The new price was $522-525/mt CFR Vietnam for both SAE1006 and SS400 grades, marking a ~$30/mt fall from its last offers.

CRU assessed HR coil at $510/mt CFR Far East, flat w/w. CR coil and HDG coil prices were both down by $10/mt w/w to $610/mt and $630/mt, respectively.

India

Indian sheet prices fell by INR700–1200/mt ($8–14) w/w as buying activity remained subdued due to low-priced import offers exerting downward pressure on the domestic market. Construction activity weakened further as rains intensified across key demand regions, while manufacturing end users bought material only on an as-needed basis because they had enough inventory at hand. Several buyers also awaited fresh price offers from mills for August output, where they expect some reduction.

For downstream products, drawing grade CR coil commanded a price premium of INR1200–1500/mt ($14–18) over base grade CR coil as suppliers cited better demand for drawing grade material. Meanwhile, Indian sheet export offer prices stayed unchanged amid weak overseas buying interest.

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

The gains aren’t huge. SMU’s hot-rolled (HR) coil price is at $655 per short ton (st) on average. That’s up $15/st from last week and up $20/st from two weeks ago. (You follow can follow along with our archives here.)

That’s nothing compared to past price cycles. But it marks the first time since early April that we’ve seen consecutive gains.

We’ve heard that activity has picked up over the last approximately two weeks. Some of you tell us that last-minute deals are still being negotiated (see the low end of our prices) and are driving that activity. But we’re also hearing from more and more of you that mills are indeed collecting higher prices.

I’m not going to predict how long our momentum indicator will remain pointed upward. We saw it stay there for only seven days in early April before Nucor published its first weekly spot price, which was lower than many had expected. It was telling that that move alone took a lot of momentum out of the market.

The market isn’t exactly strong now. As I’ve noted in prior Final Thoughts, demand remains a concern. And so the current upswing could prove as fragile as the one we saw in April. That said, mills were trying to collect a lot more then. Cliffs was seeking $900/st for HR.

It was a very different story before this latest round of hikes. Mills had gotten to or below breakeven for very large orders and some contract deals priced at a discount to spot indices. ArcelorMittal, for example, noted in its Q2 earnings report that steel prices in the US and Europe were “below the marginal cost.”

In other words, mills have real reason to dig their heels in and push for higher prices in the weeks ahead. Especially if scrap at least holds steady this month and as lead times press into the typically busier fall months.

Another data point to watch: Approximately 75-80% of buyers responding to our steel market survey last week said that mills were willing to negotiate lower prices. That might not sound like much, but it was down from as high as 100% in mid-July. And I would not be surprised if we see that number move lower still when we conduct our next full survey next week.

Plate momentum still down

It’s a different story for plate, of course. We saw plate prices decline this week. SMU’s plate price is $1,005/st on average, down $15/st from a week ago.

Nucor surprised some in the market by announcing that it would keep plate prices flat rather than decreasing them. Many had expected another decrease. We would like to see plate prices stabilize before we consider changing our momentum indicator for that product.

A friendly wager

Early on Monday, before Nucor announced that it had raised prices for the second consecutive week, we made some friendly bets on where the company’s weekly HR number would land. (Only pride was wagered.)

Educated guesses ranged from a modest cut, to flat at $675/st, to matching Cliffs at $700/st. Nucor, as we all know now, posted $690/st.

Why $690/st? I know a lot probably goes into that price. And I don’t want to oversimplify it. But here are a few theories that we came up with:

• Nucor wanted to increase prices but didn’t want to grant market leadership to Cliffs,
• $690/st leaves the door open for an additional increase to or above Cliffs’ $700/st,
• A more modest increase didn’t fly in the face of huge declines in stock markets around the world on Monday. Of course, the two are not directly related. But trouble on Wall St. doesn’t exactly help sentiment anywhere, including in steel. (It’s part of the reason we were initially leery about changing our sheet momentum indicators to upward.)

Where do you think Nucor will land next week: A big increase, a modest increase, or flat? Or are you going to take the long odds on a decrease? We welcome all opinions. Let us now what you think at info@steelmarketupdate.com.

SMU Steel Summit

There are less than three weeks until the SMU Steel Summit on Aug. 26-28 at the Georgia International Convention Center (GICC) in Atlanta. Nearly 1,300 people have already registered to attend. Join us! You can see the agenda and register here.

Plate prices drifted lower this week following two weeks of stability, now standing at $1,005/st. This downward trend has been occurring for the past eight months.

SMU’s sheet price momentum indicator has been shifted from neutral to higher. Our plate price momentum indicator remains at lower.

Hot-rolled coil

The SMU price range is $610-700/st, averaging $655/st FOB mill, east of the Rockies. The lower end of our range is up $10/st w/w, while the top end is up $20/st. Our overall average is up $15/st w/w. Our price momentum indicator for HR has been adjusted to 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.

Cold-rolled coil

The SMU price range is $860–950/st, averaging $905/st FOB mill, east of the Rockies. The lower end of our range is unchanged w/w, while the top end is up $10/st. Our overall average is up $5/st w/w. Our price momentum indicator for CR has been adjusted to 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 latest survey.

Galvanized coil

The SMU price range is $850–930/st, averaging $890/st FOB mill, east of the Rockies. The lower end of our range is up $10/st w/w, while the top end is up $30/st. Our overall average is up $20/st w/w. Our price momentum indicator for galvanized has been adjusted to higher, meaning we expect prices to increase over the next 30 days.

Galvanized .060” G90 benchmark: SMU price range is $947–1,027/st, averaging $987/st FOB mill, east of the Rockies.

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

Galvalume coil

The SMU price range is $850–950/st, averaging $900/st FOB mill, east of the Rockies. The lower end of our range is up $10/st w/w, while the top end is down $10/st. Our overall average is unchanged w/w. Our price momentum indicator for Galvalume has been adjusted to higher, meaning we expect prices to increase over the next 30 days.

Galvalume .0142” AZ50, grade 80 benchmark: SMU price range is $1,144–1,244/st, averaging $1,194/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 $950–1,060/st, averaging $1,005/st FOB mill. The lower end of our range is down $10/st w/w, while the top end is down $20/st. Our overall average is down $15/st w/w.  Our price momentum indicator for plate remains at lower, meaning we expect prices to decline over the next 30 days.

Plate lead times range from 2-6 weeks, averaging 3.9 weeks through our latest survey.

SMU note: Above is a graphic showing our hot rolled, cold rolled, galvanized, Galvalume, and plate price history. This data is also available here on our website with our interactive pricing tool. If you need help navigating the website or need to know your login information, contact us at info@steelmarketupdate.com.

“From his many years of service in Congress to his time as governor of Minnesota, Gov. Walz has fought for working families every step of the way,” the union added.

The USW noted that “Walz understands the importance of mining and manufacturing to the economy of Minnesota and to the future of this country, and he will never stop fighting for workers across all industries.”

Though many had tipped Pennsylvania Gov. Josh Shapiro as the presumptive choice, Harris selected Walz on Tuesday. The USW had previously endorsed President Biden before he exited the race, and subsequently Vice President Harris.

The company recorded shipments of 1.2 million tons in Q2’24, up 11.5% from the year-ago quarter.

“Despite a challenging environment, we achieved a solid result and made further progress in implementing our strategy,” Guido Kerkhoff, CEO of Klöckner, said in a statement on Aug. 1.

“With the acquisition of Amerinox Processing in North America, we further expanded our range of higher value-added products and services,” he added.

Klöckner announced the acquisition of full-range stainless steel and aluminum toll processor Amerinox Processing’s Camden, N.J., location last month.

The company said the purchase by its US subsidiary, Kloeckner Metals Corp., strengthened its position in North America. Amerinox employs approximately ~60 people in Camden. Klöckner said it would use the company’s “strategic location to build competitive, global supply chains.”

Kloeckner Metals Americas

The Kloeckner Metals Americas segment logged sales of €1.05 billion (USD$1.15 billion), up from  €930 million a year earlier. It posted Ebitda of €41 million (USD$44.9 million) in the quarter, down from €65 million in Q2’23. Shipments totaled 741,000 tons in Q2’24, up from 598,000 tons.

The company said the Metals Americas segment saw a significant correction in steel prices in 1H’24. Still, compared to Europe, the Americas segment benefited from better economic conditions overall, Klöckner said.

Note that Klöckner has a substantial North American presence through its Kloeckner Metals subsidiary, which is based in Roswell, Ga., and which has more than 55 branches in North America.

Outlook

Klöckner noted that year-to-date demand has been weaker than originally expected, especially in Europe. Still, the company expects a slight increase in shipments for fiscal year 2024 vs. fiscal 2023.

But the steel price correction means, “a slight year-on-year decline in sales is projected for 2024.”

Despite such lower prices and a tough macroeconomic environment, the company said it expects Ebitda before material special effects in the range of €20 million to €60 million in the third quarter of 2024 and of €120 million to €180 million for fiscal year 2024.

The announcement indicates that Nucor will keep plate prices at $1,075 per short ton (st), the price it specified in early July. Recall that Nucor slashed plate prices by $125/st on July 1.

There had been speculation that Nucor might lower plate prices. But following a round of sheet price hikes, some wondered if Nucor would instead seek to keep plate tags flat.

Note that the sheet hikes resulted in hot-rolled coil prices inflecting up slightly after declining for the better part of the year.

SMU’s plate price stands at $1,020/st on average, unchanged from a week ago. Our HR price is at $640/st on average, up $5/st from a week earlier. That information comes from our pricing archives, which you can find here.

Market reaction

There was no real price consensus with the market. Some expected a sideways move, while others figured Nucor would cut prices again after slashing them by $125/st last month.

What all seemed to agree with was that regardless of pricing, nothing would entice buying.

And based on multiple market sources, that was the driving rationale Nucor provided customers after keeping tags flat with the opening of its September order book.

“They don’t believe a decrease would change demand or draw in buyers,” said a service center executive. “All it would do is piss people off and devalue inventories.”

A prudent call, sources told SMU.

“They are selling all products below their book’s prices,” said a manufacturing executive. “They could have shocked the market and gone down big again to make their price sheet relevant or go lateral and keep negotiating off the book price.”

A third source said the delay might have been indecision on what to do with prices. “They were probably sitting in Charlotte contemplating what to do – sort of a damned if they do and damned if they don’t scenario at the moment.”

What may be of greater interest is the apparent delay in opening the September order book and its pricing letter. With just three-and-a-half weeks until September, Nucor is still notifying buyers of August availability, a shift from the typical six-week lead time on order books.

It aligns with recent comments from Nucor’s Q2 earnings call that its Brandenburg, Ky., plate mill was operating at around 20% capacity. Additionally, the company said it was no longer focused on volume, instead focusing on the mill’s capabilities due to soft market conditions.

Regardless, sources agreed that lead times not just from Nucor but across North American mills are between 2-3 weeks, with some noting the turnaround for small orders can be as quick as one week.

To keep track of the latest mill price increases and decreases, visit SMU’s price increase calendar.