The two steelmakers said on Wednesday that they had received the final approvals needed to close the deal under the Investment Canada Act and Strategic Innovation Fund.

This means the deal, first announced in July, will have been completed in under four months’ time.

That’s much faster than the other big M&A story of 2024: Nippon Steel’s proposed $14.9-billion acquisition of U.S. Steel, first announced in December 2023, which has faced opposition from the start. The two companies still hope to close that deal by the end of this year.

Recall that the Cliffs/Stelco deal has the support of the United Steelworkers (USW), while the Nippon/USS deal still does not.

On Friday, upon Cliffs closing the Stelco deal, 1,800 USW members will join the Cleveland-Cliffs team, which already includes over 15,000 workers represented by various unions across its US mills.

We’ll hear more about the plans for the combined company when Cliffs releases its third-quarter earnings report next week.

If you need help accessing the webinar replay, or if your company would like to have your voice heard in our future webinars, contact info@steelmarketupdate.com.

Each month, SMU is invited to join a discussion of the galvanized sheet market with the Sheet Metal/Air Handling Council of Heating, Air-Conditioning & Refrigeration Distributors International (HARDI). Participants are wholesalers, service centers, distributors, and manufacturers who buy or sell galvanized sheet.

More of the same

“Unprecedented stability is the headline,” one participant quipped. He added that inventories are balanced, with customers aiming to buy at what could be the bottom of the marketplace.

He doesn’t see change coming anytime soon unless there’s a big alteration on the trade policy front (a possibility, given the election).

Looking at SMU’s interactive pricing tool over the last three months shows our average galvanized pricing in a relatively narrow band from $870 per short ton (st) on July 30 to a high of $945/st on Oct. 1.

SMU’s current galvanized coil price stands at the low end of that range, at an average of $870/st FOB mill, east of the Rockies, as of Oct. 29.

(Note that we adjusted our price momentum indicator for galv to neutral this week, meaning we see no clear direction for prices over the next 30 days.)

Viewed from another angle, the HARDI call moderator said that market prices for galv have only increased (by more than $0.50/cwt or $10/st) three out of 44 weeks this year.

“It has been a tough year for profit,” he added.

Fast forward to the current market, and another participant said there is plenty of steel to be had, with more supply from mills.

Bottom reached, outlook?

The recent price increases from U.S. Steel and Nucor “are big news,” the second participant added.  

Recall that Nucor said it is seeking $740/st for hot-rolled (HR) coil this week, up $20/st from the previous week. And last week, USS said it’s aiming for an increase of $30/st for sheet products in general. (The company did not announce a target price for HR.)

With the new year just around the corner, the second participant said he was “optimistic about 2025 on conversations on questions with economists and customers.”

However, sluggish demand for electric vehicles was a concern.

“Battery trends are a big driver of commercial construction, and if that’s on hold, that could be a problem – especially if it becomes a trend,” he said.

The first buyer was slightly less upbeat about the prospects for next year.

He expects a “slow melt-up next year as demand improves, so reverse of this year with its slow meltdown.”

Galvanized sheet prices

Each month on the HARDI Sheet Metal/Air Handling Council call, a survey is conducted to see where members see galvanized steel prices moving in one, six, and 12 months.

On September’s call, 58% thought prices would be flat month over month, while the remainder thought prices would rise. Turned out prices were a soft sideways, falling slightly.

The call moderator noted that galvanized prices have declined ~$1.00/cwt since last month’s call to ~$43.50/cwt ($870/st).

This month, a whopping 88% of members on the call predicted galvanized prices will be flat (+/- $2/cwt) a month from now. Only 6% think prices will be up more than $2/cwt in 30 days, while the remaining 6% predict they’ll increase by more than $4/cwt.

Regarding pricing six months out, opinion was much more diverse, with only 12% anticipating flat tags. Additionally, 53% think galv prices will rise more than $2/cwt over the next six months, 29% believe they will be up more than $6/cwt, and 6% expect prices to increase more than $10/cwt.

As for pricing a year from now, 63% think galv prices will be in the range of $50-59/cwt, 19% predict a range of $60-69/cwt, and, on the opposite side, 19% anticipate a range of $40-49/cwt.

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

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

Steel prices remain largely steady. How do you expect prices to trend over the next three months?

“Stay the same. Overall, running with lower inventories until the election results come in. Q4 FOB mill pricing is down.”

“It may go up slightly, but I doubt we will see any large increases and we may still see some decreases. The balance of this year is going to be more of the same.”

“Flat.”

“Not much movement either way.”

“Steady.”

“Flat to slightly down.”

“Who knows… could be a huge run-up. There seems to be growing pent-up demand while we are currently doing what I call skipping across the bottom.”

“Price should be bottoming out soon. Costs are low and should be increasing. Demand is in a holding pattern until after the election.”

“I expect prices to slowly trend up as mills try to establish a bottom. It will not be a slam dunk.”

“I’m expecting increased prices.”

“I feel they will be rising once we start having lead times push into 2025.”

“Plate will be up $100 per ton over the next three months.”

“Slightly upward after the election.”

“Despite the recent increase attempts, we think things will fall from here – demand is just too weak and lead times are just too short.”

“Pricing will move down slightly to year end.”

“Down – slowing economy.”

Is demand improving, declining or stable?

“Demand is steady on our end, but the bigger the shop (or SSC), the slower they seem. A lot of folks seem worried still.”

“Stable but far from robust.”

“Stable, other than mill steel out of Canada. Service centers can deliver basic galvanized in a matter of days.”

“Stable.”

“Stable/declining as folks sit on their hands until they understand what way the political winds will blow.”

“Still sluggish. I’d say stable at best.”

“Demand is weak and many are waiting until after the election to make any strong buying decisions.”

“Stable or declining for the balance of the year. Demand will improve as interest rates fall.”

“Declining – slowing economy and high interest rates.”

“Plate demand is stable now, will see an uptick post-election.”

“It will pick up after the election results are clear – whenever that is.”

“Improving.”

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

“Slower – demand is slow and supply is still stable.”

“Slower – we feel due to the same reasons we hear in the market: election, interest rates, etc.”

“Slower until the election is over.”

“Smaller orders shipped more often.”

“Same pace; fair but not at pandemic level.”

“Slightly slower than last year.”

“Trying to hold steady.”

“Inventory is moving faster on our end, but our levels are also much lower (by design).”

Are imports more attractive than domestic material?

“Imports are not that attractive due to less price advantage and uncertainty.”

“No, too many unknowns.”

“No, too much risk on [galvanized] quality.”

“No, lead times are too long.”

“No, too much uncertainty at this point.”

“No, spread too thin and US upside not yet substantial enough.”

“Less attractive – trade case and tariff concerns.”

“Our customers require domestic.”

“Imports remain somewhat attractive/on par with domestics, but the lead times are obviously longer.”

“If the Euro declines a bit further, they might. Value-added is already not too shabby.”

“Imports are always more attractively priced.”

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

“What is the fallout to steel if government-backed projects are further delayed or canceled.”

“Mexican HR. By all accounts AHMSA won’t be a factor, but what about Ternium (especially on the West Coast)? And does anyone actually know what is happening with Evraz NA?”

“CORE cases are just not having any effect. No shortage of futures I guess due to more domestic capacity.”

“Why are service centers giving away their index contract discounts….why why why why? Also, nobody downstream needs a price break, almost all goods prices are highest ever and staying or continuing to go up at the endpoint of the supply chain.”

“Force reductions.”

“Certainly not the election.”

“Although the supply chain has extended destocking through the third quarter, it is not sustainable and the value of our hot-rolled product continues to be reflected in a $750/ton base price,” the steelmaker said in a letter to customers on Wednesday.

The $750/st price applies to all new spot orders.

The letter adds for customers to inquire about lead times and availability.

Cliffs’ published HR base price is $10/st higher than competitor Nucor’s $740/st spot price set at the start of this week. Nucor posts its HR base price weekly, while Cliffs posts its market price monthly.

You can stay up to date on price announcements from North American mills with SMU’s price increase calendar.

The company suggested the price cut was to stay competitive, adding that it was due to market conditions and to provide customers with “pricing transparency.”

“We will continue to monitor the levels of import arrivals and other market activity to ensure our pricing remains competitive in the market,” the letter said.

Nucor said the decrease was effective immediately. The price for normalized plate decreased to $1,175/st, it said in a revised letter Wednesday morning.

Absent from the steelmaker’s pricing notice letter was any pricing on quenched-and-tempered products. However, Nucor noted quenched-and-tempered at $2,345/st on its price list sheet.

SMU’s plate price stands at $895/st on average, down $10/st from a week ago. Our HR price is at $685/st on average, unchanged from a week earlier – up just $50/st from a recent low of $635/st in late July. That information comes from our pricing archives, which you can find here.

Also, you can track mill price announcements here.

On the dry van side, spot rates also ticked up 2.5% in the post-hurricane aftermath. Unlike flatbed, seasonal dry van demand sees an increase in Q4 as retailers stock their shelves prior to Christmas. It is entirely possible that we see dry van rates continue to increase, at least out of heavy import markets, in Q4.

Contract rates are still about 5% higher than spot rates, with the spread varying in certain markets. There are a lot of RFPs taking place this time of year and we expect contracts rates for all modes to continue falling as large shippers reset their network pricing. As we have highlighted, contract rates tend to follow spot pricing trends on a lagging basis. So until we see marked increases in the spot market, we can expect contract pricing to remain relatively flat to negative. We will find out in a few weeks whether or not things will begin to pick up once the US election is decided, and shippers remain optimistic about a demand rebound in 2025 and 2026. The IRA, CHIPS and Science Act, and Infrastructure Investment and Jobs Act should all lead to an increase in flatbed shipments.

For the most part, the flatbed market is humming along without incident. Demand constraints continue within the broader market, although there is some variability at the local level. Supply in the marketplace is willing to move to regions and/or shippers where they can offer projects or consistent lanes to drivers. These supply and demand trends have led to relatively stable rates this year but are still slightly lower overall than last year.

Workforce losses

Overall capacity in the marketplace continues to outpace demand and, as a result, total jobs within the trucking sector continue to shrink. Transportation jobs fell by 700 on a seasonally adjusted basis in September, a result of poor market rate conditions and increased contract rate competition. Nearly 12,800 trucking jobs have disappeared since April 2023, including 4,400 in the past four months. This downward trend will likely continue as private fleet investment decelerates, and carriers struggle to operate within the current rate environment.

However, recent spot volatility plus the upcoming retail peak season could mitigate further job losses until early next year. One of the more notable impacts on the capacity environment could occur on Nov. 18, when drivers with prohibited status will become ineligible for employment by law. According to ACT Research, approximately 177,000 drivers are currently in prohibited status. Though many are currently unemployed, all drivers with this status have all been eligible for employment until now. Removing this population from the workforce amid holiday peak season volatility could create significant disruption.

Editor’s note: The views, thoughts, and opinions expressed in the content above belong solely to the author and do not necessarily reflect the opinions and beliefs of Steel Market Update or its parent company, CRU Group.

Does HR get to approximately $750/st this time around? It’s probably too early to say whether these increases from Nucor and U.S. Steel will stick. But let’s consider a couple of possibilities.

On the one hand

Sheet prices have been sliding recently and HR has dipped back into the $600s/st. We saw ~90-100% (depending on the sheet product) of respondents to our last steel market survey saying that mills were willing to negotiate lower steel prices.

Was that a case of last-minute deals before mills try to hold the line? Or maybe these increases represent an attempt to get buyers off the sidelines and stop the bleeding – especially amid contract talks.

It probably doesn’t help that some have lead times as short as 4-5 weeks not only for hot-rolled products but for coated as well. And on a very basic level (see chart below), how can you increase prices when roughly 80% of service center respondents to SMU surveys say that they’re releasing less steel than they were a year ago?

I know some larger buyers don’t give these latest price hikes much credence. They’re seeing certain mills willing to match or come close to matching South Korean offers of approximately $620-630/st. And they think domestic mills will get to $600/st or even into the $500s/st before the year is out. They are saying they’re going to stay on the sidelines a little longer in anticipation of that happening in November or December.

On the other hand

Mills could be raising prices based on some good fundamentals. Lead times are close to (or into) 2025 at some mills. Q1 is typically busier. And the impact of the coated trade case should be felt more in earnest by next year. Let’s say imports and service center inventories tick lower too. Why shouldn’t mills start positioning themselves now for a potentially better new year?

For every sheet buyer who says HR will fall to $600/st again, I know another who thinks prices are already near a bottom. They think the market should improve once uncertainty around the election has cleared and as lead times stretch into (or further into) 2025.

How to square these divergent viewpoints? I think some of our other data is worth sharing here as well.

For starters, sheet inventories are still high compared to 2022 and 2023. But they moved lower in September vs. August.

We won’t have October inventory data available until mid-November. But take a look at the chart below:

Very few buyers are restocking. So I would not be surprised if we saw inventories drop in October and perhaps again in November. (December is a little squirrely because of the holidays. So I wouldn’t read too much into that.)

September marked the lowest point for steel imports this year. October import license data aren’t complete yet. But it wouldn’t be shocking if imports moved lower again.

Yes, new capacity will fill some of that void. Still, let’s say demand is better in 2025 than it is now. Maybe, just maybe, instead of the slow slide in prices that we’ve seen this year, we’ll see slow but steady gains – a melt up, if you will – next year.

It’s worth thinking about. In the meantime, thanks to all of you from all of us at SMU for your continued business.

SMU Community Chat

Don’t forget to tune into the Community Chat on Wednesday at 11 am ET with trade attorney and SMU columnist Lewis Leibowitz. You can register here.

We’ll talk steel, trade policy, the election, geopolitics – and we’ll take your questions too. It should be a good chat. And, with any luck, my internet connection won’t cut out this time. (And if it does, Dave Schollaert will capably fill in for me as he did with Barry Zekelman on Oct. 16.)

SMU’s hot-rolled steel index held steady at $685/st this week, while cold rolled slipped $10/st to $915/st. Our galvanized index fell $10/st week over week (w/w) to $870/st, while Galvalume declined $15/st to $905/st. Plate prices fell $15 w/w to $895/st. They now stand at lows not seen since the first week of 2021.

Recently announced price increases from U.S. Steel and Nucor have had limited impact on prices as of yet. But it’s still too soon to say. We have adjusted our sheet price momentum indicator from lower to neutral this week as we wait to see whether the price hikes will stick. Before last week, our sheet momentum indicator had been at neutral for six weeks. We have adjusted our plate price momentum indicator to neutral for similar reasons following SSAB’s price hike.

Hot-rolled coil

The SMU price range is $640-730/st, averaging $685/st FOB mill, east of the Rockies. The lower end of our range is down $10/st w/w, while the top end is up $10/st w/w. Our overall average is unchanged w/w. Our price momentum indicator for hot-rolled steel has been adjusted to neutral, meaning we see no clear direction for prices over the next 30 days.

Hot rolled lead times range from 3-6 weeks, averaging 4.6 weeks as of our Oct. 23 market survey.

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 unchanged w/w, while the top end is down $20/st w/w. Our overall average is down $10/st w/w. Our price momentum indicator for cold-rolled steel has been adjusted to neutral, meaning we see no clear direction for prices over the next 30 days.

Cold rolled lead times range from 5-9 weeks, averaging 6.4 weeks through our latest survey.

Galvanized coil

The SMU price range is $840–900/st, averaging $870/st FOB mill, east of the Rockies. The lower end of our range is unchanged w/w, while the top end is down $20/st w/w. Our overall average is down $10/st w/w. Our price momentum indicator for galvanized steel has been adjusted to neutral, meaning we see no clear direction for prices over the next 30 days.

Galvanized .060” G90 benchmark: SMU price range is $937–997/st, averaging $967/st FOB mill, east of the Rockies.

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

Galvalume 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 down $20/st w/w, while the top end is down $10/st w/w. Our overall average is down $15/st w/w. Our price momentum indicator for Galvalume steel has been adjusted to neutral, meaning we see no clear direction for prices over the next 30 days.

Galvalume .0142” AZ50, grade 80 benchmark: SMU price range is $1,154–1,244/st, averaging $1,199/st FOB mill, east of the Rockies.

Galvalume lead times range from 6-7 weeks, averaging 6.8 weeks through our latest survey.

Plate

The SMU price range is $840–950/st, averaging $895/st FOB mill. The lower end of our range is up $20/st w/w, while the top end is down $50/st w/w. Our overall average is down $15/st w/w. Our price momentum indicator for plate has been adjusted to neutral, meaning we see no clear direction for prices over the next 30 days.

Plate lead times range from 2-6 weeks, averaging 4.0 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.

Ryerson swung to a loss in the third quarter of 2024 as it navigated a “contractionary” environment in industrial metals and manufacturing.

The Chicago-based service center group reported a net loss attributable to Ryerson of $6.6 million in Q3’24 vs. net income of $35 million a year earlier. Sales slid nearly 10% to $1.13 billion in the same comparison.

Eddie Lehner, Ryerson’s president, CEO, and director, said in a statement on Tuesday:

“Two things can be true at the same time:

1) The industry is experiencing a cyclical bottoming marked by 24 months of moving average demand and price contraction; and

2) Ryerson’s record investments in systems, capital expenditures, and acquisitions over this same period are positioning the company well for the next cyclical upturn.”

The company said Q3 revenue performance was hurt by “seasonal and weather-impacted volume declines of 4.5%, in addition to average selling prices decreasing 3.7%.”

Lehner noted that despite the challenging conditions, the company experienced improvements in some key performance indicators. These included cash flow and expense and working capital management.

Ryerson shipped 382,000 short tons of carbon steel in Q3’24, off 3.8% from the previous quarter but up 3% from the same period a year earlier.

Outlook

Looking ahead, Lehner said, “We are seeing investment-related growth pains and disruptions across our network beginning to subside as we move through the balance of 2024, with budding optimism for 2025.”

For Q4’24, Ryerson expects customer shipments to seasonally and counter-cyclically decline 8% to 10% from the prior quarter.

Net sales in Q4’24 are anticipated to be in the range of $1.00 billion to $1.04 billion. Average selling prices are seen between falling 1% to increasing 1%.

Primetals plans several investments at workshops in Santa Cruz, Brazil, and Apodaca, Nuevo Leon, Mexico, to support 10-year and five-year service agreements, respectively.

“As a long-standing partner, I am pleased to announce our customer’s decision to renew our contracts in Brazil and Mexico,” Eberhard Karnitsch-Einberger, Primetals Technologies head of metallurgical services, said in a statement on Monday. “Our commitment to excellence and continuous investment in improving our services have significantly contributed to our operational success, enabling our partner to cast higher-quality steel.”

Terms of the agreements were not disclosed.

Primetals Technologies is a worldwide engineering, plant-building, and life-cycle services partner for the metals industry. It offers a complete technology, product, and service portfolio that includes integrated electronics, automation, and environmental solutions. The company is a joint venture of Mitsubishi Heavy Industries (MHI) and Siemens.

Import trends

Looking at imports on a three-month moving average (3MMA) basis can smooth out the monthly variability and better highlight trends. On a 3MMA basis, September imports eased to an eight-month low of 2.31 million st. The September 3MMA is down less than 1% month on month (m/m) but is up 4% from the start of this year. The 3MMA at this time last year was slightly lower at 2.28 million st. The right graph in Figure 1 shows total steel imports on a 3MMA basis.

Imports by category

Preliminary data shows that import volumes eased across all categories from August to September (Figure 2):

• Semifinished steel imports dropped 18% to 429,000 st.
• Flat-rolled steel imports declined 8% to 914,000 st.
• Pipe and tube imports eased 3% to 379,000 st.
• Long product imports fell 12% to a one-year low of 325,000 st.
• Stainless imports slipped 18% to a seven-month low of 81,000 st.

SMU will publish a full import analysis after final September data is released next week. We will also explore October import licenses collected to date.

It’s also down notably from posted EBIT of A$718.4 million in H1’24 and A$620.8 million in H2’24.

Mark Vassella, BlueScope’s managing director and CEO, said the downward revision in guidance reflects the challenging conditions the company and the broader global steel industry are facing.

“These challenges include the continued softness in East Asian spreads off the back of record levels of Chinese steel exports, ongoing cost inflation, and a period of pause and uncertainty in the US pending the outcome of the elections and timing of further rate cuts,” he noted.

North American operations

BlueScope expects its North American operations to deliver results that are less than half those recorded in H2’24.

The company said profit margins at NorthStar BlueScope have been lower than expected, and improvements in run-rate volumes have been unable to offset this. The segment’s H1’25 results will be “slightly below one-third of” H2’24 results, in which it posted underlying EBITDA of A$362.5 million on sales of just over A$2 billion with steel despatches of 1.37 million metric tons.

Additionally, the company revealed that customers of the Buildings and Coated Products North America division have been deferring orders due to election and interest rate uncertainty.

“Whilst an improvement in performance was expected in the half, the BlueScope Coated Products business has suffered a deterioration in its performance, particularly in its heavy-gauge business,” BlueScope stated.

The company said that BlueScope Coated Products continues to struggle. As such, it has tasked John Nowlan, chief technical and development officer, with turning the Coated Products business around.

Note that BlueScope established its Coated Products segment after its 2022 acquisition of metal painter Coil Coatings for $500 million.

Global operations

BlueScope’s Australian steel operations are being impacted by continued softness in East Asian steel prices and global coke prices.

Soft demand and pricing are also plaguing the company’s business in New Zealand, it said.

Additionally, BlueScope noted that softness in China’s economy is hurting its Coated Products Asia segment.

Because of this environment of prolonged weakness in spreads and with rising costs, “BlueScope is targeting a further improvement in annualized earnings through the identification and delivery of approximately A$200 million of cost and productivity initiatives across the group,” it said.

The company will provide further progress updates when it releases its full half-year results on Feb. 17, 2025. That will include updates on NorthStar’s capacity expansion and plans for a Midwest greenfield cold rolling and coating facility.

Speaking at a rally at New York City’s Madison Square Garden (MSG) on Sunday, Trump first reminded the crowd, which he said included steelworkers: “I saved our steel. I saved our steel plants.”

That was most likely in reference to the Section 232 duties he had imposed on steel imports in 2018 under the guise of national security. Those duties remain mostly on the books today.

“I don’t like Japan buying U.S. Steel,” Trump continued in his speech on Sunday.

The businessman-turned-politician told MSG attendees that the US wouldn’t be going to war, and certainly not World War III, under his presidency.

However, “On the long shot that we do,” he added that sourcing steel from elsewhere is always possible.

“But we need steel. And I would not approve U.S. Steel being bought by Japan,” he stated.

As has been heavily reported by SMU and numerous news outlets, Nippon Steel, Japan’s largest steelmaker, has offered $14.9 billion to buy the Pittsburgh-based steelmaker. The two companies hope to close the deal by the end of this year.

And while Japan itself isn’t trying to buy USS, veteran trade attorney Alan Price points out that Nippon Steel could be using ‘green’ subsidies from the Japanese government to offset the cost of the acquisition.

Raw production last week was 3.1% lower than the year-to-date weekly average of 1,712,000 st. Production is down by 0.2% compared to the same week one year prior when mill output totaled 1,664,000 st. 

The mill capability utilization rate last week was 74.7%. This is up from 73.4% one week prior and up from 72.4% this time last year.

Year-to-date production has reached 72,729,000 st at a capability utilization rate of 76.4%. This is 1.7% less than the same period of last year when 74,002,000 st had been produced at a capability utilization rate of 76.4%.

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

• Northeast – 130,000 st (up 15,000 st)
• Great Lakes – 601,000 st (up 20,000 st)
• Midwest – 196,000 st (down 2,000 st)
• South – 675,000 st (down 11,000 st)
• West – 58,000 st (up 7,000 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.

Elfgren tapped as head of SSAB Special Steels

In a separate announcement, the company said Per Elfgren has been appointed the new head of SSAB Special Steels, effective Nov. 1. He will also become a member of SSAB’s Group Executive Committee.

Elfgren, who joined SSAB in 1996, was previously head of market development at SSAB Special Steels.

“Per has played a major role in taking SSAB Special Steels forward to its present position, and he knows both the company and the culture well,” SSAB’s new President and CEO Johnny Sjöström said in a statement on Tuesday.

With over 30 years of experience in the steel industry, Butterworth has been on CRU’s newly formed Sustainability team since August 2021. He joined CRU in 2012 and was later responsible for CRU’s analysis across the whole steel value chain. He holds an MBA from Warwick University and a PhD in theoretical chemistry from Manchester University.

I sat down with Butterworth recently to discuss his presentation and issues such as the Carbon Border Adjustment Mechanism (CBAM) and whether the European market was willing to pay a premium for green steel. These are familiar topics, but they are viewed through a different lens here.

Scrap/EAF as a long-term viable option for decarb?

Butterworth and I discussed his presentation at the conference. It included a portion on EAFs and decarbonization on a global level, which might prove a bit controversial to a US audience.

“If you melt scrap, it is much lower emissions. That’s a fact,” Butterworth said. “But the thing is, the availability of scrap is a function of past development.”

He noted the US has been developing for “many, many years; many decades,” and it has consumed a lot of steel in that development.

Butterworth pointed out that much of that steel was made through the integrated route and is now available as scrap.

“So the scrap is available simply as a function of the US’ history,” he said.

He added that places like India or Southeast Asia don’t have that same past development: “They don’t have the scrap. It just doesn’t exist.”

Butterworth remarked that there is only so much scrap in the world and that scrap will always be recycled because it is easy and economical to do so.

“That is, effectively, a known quantity. Whether we are going to decarbonize or not, whether decarbonization is an issue to the world or not, that scrap would be there,” Butterworth said.

“So decarbonization and wanting to decarbonize makes no difference to that. It’s irrelevant,” he stated.

He declared that defining decarbonizing performance by how much scrap you use is not helpful, as “It’s not going to push us forward on decarbonization.”

So the US can make low-emissions steel through EAFs, “But someone, somewhere else, is going to have to produce hot metal because the world wants a certain amount of steel.”

“So you take the scrap away from someone else, and they will have to make hot metal,” Butterworth said. “The path forward for decarbonization has to be low-emissions iron-making. That has to be the focus. The scrap will sort itself out.”

Hydrogen, carbon capture

He said hydrogen appears to be one of the significant elements of that future. Meanwhile, carbon capture at traditional steel plants might form part of the transition as well, he commented.

“But carbon capture is never going to be a zero-emissions technology…. That doesn’t mean to say it can’t have a role to reduce emissions today,” Butterworth said.

“So you’ve got plants today, if you could put carbon capture on them today and reduce emissions by 60%, that’s really beneficial…. But carbon capture is not an end solution because it’s never going to be zero,” he added. “It’s a bridge.”

CBAM

Our conversation touched on another controversial topic. What could a possible solution to the stalemate between the EU and the US on the Global Arrangement for Sustainable Steel and Aluminum look like? (Negotiations have been extended until March 31, 2025.) Recall that the Carbon Border Adjustment Mechanism (CBAM) adopted by the EU is a major sticking point. While it’s often viewed as a non-starter in the US, it’s officially starting in Europe on Jan. 1, 2026.

“Well, does there have to be a solution?” Butterworth asked.

He pointed out that it’s unlikely the US would start exporting steel to Europe. “Do they see it as a potential outlet for their steel? I can’t, particularly if the US starts charging for carbon at its border.”

However, he said Europe exports some steel to the US, and it would be around this material where it might be useful to have some negotiation.

“I presume the sort of steel that moves from Europe to the US is very particular grades and qualities,” Butterworth said. “And I would have thought it might even be in the US’ interest to say, ‘Well, OK, those steels we need. So why not have a system that doesn’t cause too much friction.'”

Green premium/looking ahead

Regarding whether customers in Europe are willing to pay a premium for green steel, Butterworth said it depends on the market.

It’s already happening in Europe in automotive, he said, but less so in construction.

In construction they might look and say, “Well, we’ve always bought rebar from these scrap-based EAFs.”

Then the EAFs say, “Oh, look, we’re low carbon.”

But the customers will respond: “Well, what’s different today from what it was before, you were always scrap-based?”

Essentially, why should they pay a premium for what is basically the same thing?

What he sees happening is that as time goes on, more of the steel market in Europe will be prepared to pay a premium. That will expand from automotive to domestic appliance manufacturers to construction because there will be European Union building codes and regulations that will drive it.

While Europe and the US may be pushing forward, Butterworth notes for the rest of the world, “We’re on different tracks, different speeds. There’s different start points, different political requirements.”

Additionally, climate change is not static. As the situation develops, new needs could arise.

“So, I think the decisions that are going to get taken in five years’ time or 10 years’ time could be very different from the sort of decisions that have been taken today,” Butterworth said.

“That might force more closer alignment, more cooperation, because governments of the world might begin to realize that the more we can coordinate on this, the faster we can move,” he added.

The HR coil base price for Nucor subsidiary CSI also increased $20 from last week to $800/st. It was at $780/st for the two weeks prior and $790/st one month ago.

Lead times of 3-5 weeks will continue to be offered. Published extras will apply to all spot transactions, the Charlotte, N.C.-based steelmaker said.

SMU’s Oct. 22 check of the market had HR coil spot prices ranging from $650-720/st, averaging $685/st and down $5/st from the week prior.

Looking for a consensus? There really isn’t one to be found. We have responses varying from:

“It’s the newest excuse and an easy stall for many of our conversations.”

That’s compared to:

“I know it’s cliché, but it’s very impactful as all seems on hold.”

Of the many, many comments to this question (there were a lot), we even had that rarest of variant: the all-caps response. Trigger warning: All-caps responses seldom signal mild viewpoints. Hence:

“EVERYONE IN THE METAL INDUSTRY IS SCARED TO DEATH KAMALA WILL WIN.”

I did not find a counterpoint among the comments to that sentiment. But our sample set might be a little less left-leaning than, say, the entertainment industry.

Without further ado, I present to you more election commentary; business forecasts (worsening from last survey); views on a hot rolled price inflection point (40% say peaking in January or later); and a November scrap tag forecast (sideways).

Still, I can’t help myself. One final election comment before I let them speak for themselves.

“Interest rates, tariffs, pending wars.”

To me that statement wasn’t so much about the election. Rather, just a commentary on life as we muddle towards the middle of the 21st century.

Is uncertainty around the presidential election impacting your business?

“Because policies are very different from one candidate to the other. Depending on the winner, the result in industry and economy perspectives could be very different.”

“New construction projects seem to be waiting for the election results, which may impact the type and amount of projects that begin. Internally, our expectation is that post-election there will be greater demand regardless of the election results.”

“Psychologically, yes, but in all actuality the election pause is more of a myth than reality over the past 20-30 years.”

“Inflation Reduction Act uncertainty.“

“Typical industry behavior prior to an election.”

“Buyers are hesitating to understand what the rules will be.”

“UNCERTAINTY kills everything.”

How will your company perform this month compared to your forecast?

“Demand is weak and bookings are down.”

“Down 25% to 30%.”

“Our customers are projecting slower than normal activity through year end.”

When do you think steel prices will peak?

“They have peaked – we are in a new cycle.”

“After trade case preliminary decisions are announced and election is completed.”

“Has been a very slow or no reaction to the coated trade cases. All 10 countries will stay involved, which is surprising. Should begin to have an effect by end of November, and then again in early February when we will see actual subsidy and dumping numbers. This is when it becomes serious.”

“I feel optimistic for things to improve in 2025 to create a more ‘normal’ year with prices peaking in the summer.”

“There’s too much capacity, too little demand, and too little certainty in buyers’ minds to support higher prices.”

“If scrap moves up and demand picks up, we could see the mills push another round of increases.”

“Price will deteriorate from here.”

“Offshore pricing has moved up, and capacity has dropped due to maintenance shutdowns.”

Prime scrap prices in November will be:

“Up slightly.”

“There have been decreases all year. If pricing is going to increase on coil, scrap will have to start that.”

“Tighter supply and increased demand.”

“Scrap prices may get a dead-cat bounce in December or January. The increases will be minor and short-lived.”

“I don’t have any confidence in what folks are telling us about the scrap market. All guessing right now.”

“I think prices are up in the next two months, but most likely December when people look to restock.”

By the time you read our next survey results…

Well, that’s the view for now. The next time our survey results are released, the election will have taken place. As we’ve said previously, that doesn’t necessarily mean a winner will have been declared. But… I’m sure we’ll all be glad that the “October Surprises” are behind us. Until then, we’ll just be grabbing our popcorn and watching the wheels go by.

Thank you for your continued support!

Nippon Steel is one of the largest steel companies in the world. And the company earned record high business profits in 2023, reaching JPY 935 billion (more than US$6 billion) – a 27% increase from 2022. The company has also bid US$14.9 billion in an all-cash proposal to acquire U.S. Steel. Clearly, Nippon Steel has the cash-on-hand and credit facilities needed to make significant capital investments. Yet, the company is seeking subsidies from the Japanese government to fund converting its blast furnaces to electric furnaces.

Nippon Steel does not need this aid. Electric furnaces are a widely adopted and proven technology. And Nippon Steel’s continued efforts to shift toward greater electric furnace-based steelmaking highlight that electric furnaces can make all types and grades of steel, as we have commented previously. American producers like Nucor and Steel Dynamics have been developing and employing electric furnaces for decades. Further, Nippon Steel is already planning to make these and other green steel investments. This is because the company’s largest customers (e.g., global auto manufacturers) and anticipated regulatory requirements demand that they invest in decarbonization. In fact, Nippon Steel built a new electric furnace in 2022 at its Hirohata Works, which it now seeks to expand under this government program.

Electric furnaces are also cheaper to build than the blast furnaces they replace due to their far lower initial capital expenditures and greater operational flexibility. Similarly, direct-reduced iron (DRI) plants have been constructed with private funding, and it is much less expensive to build combined electric furnace and DRI operations than a greenfield integrated mill. Indeed, over the last 40 years, many electric furnaces have been built across the North America and Europe. But no greenfield integrated facilities have been built on either continent.

Still, rather than pledging to invest in green technology in the United States, as part of its bid for U.S. Steel, Nippon Steel has committed $2.7 billion more to support blast furnace production in the United States. That includes a promise to reline a blast furnace at U.S. Steel’s Gary Works, which would extend that furnace’s life by at least another two decades.

For this reason, many steel and environmental groups have criticized Nippon Steel’s proposed takeover of U.S. Steel. For instance, Mighty Earth has chastised the proposal. The group finds that it “completely contradicts the urgent call of the climate crisis and misses opportunities for immediate action.” Similarly, SteelWatch has described Nippon Steel’s commitment to expand coal-based production at U.S. Steel’s Gary and Mon Valley Works as “planning to lock in high-emission steel production for decades.” It has also said the plans are “unfit to meet the task of bring both Japanese and American steelmaking into the 21^st century.”

Importantly, as the countervailing duty laws establish as a basic tenant – money is fungible. That is, if a company is given a $1-billion subsidy for one aspect of its business, that frees up $1 billion for it to spend on other projects. This is especially so for a sophisticated, multinational corporation like Nippon Steel. By seeking a government hand-out to pay for its blast furnace conversion in Japan, Nippon Steel is effectively taking free money from the Japanese government. It can then use that money to pay for its other business endeavors, such as paying off the debt related to its acquisition of U.S. Steel.

Nippon Steel appears to be taking advantage of nominally green subsidies in Japan to offset the costs of its acquisition of steel production in the United States. And it may try to double-dip. Not only will Nippon Steel take Japanese subsidies, but when it is left with high emissions hot-end production in the United States, we would not be surprised if Nippon Steel turns to the US government with its hands out for more subsidies by threatening to stop production at these facilities altogether. That is not good for the American steelworker or taxpayer.

Editor’s note

This is an opinion column. The views in this article are those of experienced trade attorneys 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.

Third quarter ended Sept. 30	2024	2023	Change
Net sales	$3,420.3	$3,623.0	-5.6%
Net income (loss)	$199.2	$295.0	-32.5%
Per diluted share	$3.61	$4.99	-27.7%
Nine months ended Sept. 30
Net sales	$10,708.4	$11,468.6	-6.6%
Net income (loss)	$769.9	$1,063.2	-27.6%
Per diluted share	$13.55	$17.92	-24.4%

While Reliance’s Q3 sales of $3.42 billion were down 5.6% from last year, net income dropped by nearly a third to $199.2 million.

The Scottsdale, Ariz.-based company said tough pricing conditions, with marked declines in carbon steel and aluminum prices, drove the earnings decline.

“Although metals pricing declined more than anticipated, the inherent resilience of our business model servicing diverse end markets with expansive value-added processing capabilities and quick-turn orders, as well as increased volume, helped mitigate the impact of lower pricing levels,” commented President and CEO Karla Lewis in a statement released with the Q3 earnings report on Thursday, Oct. 24.

“Despite the difficult pricing environment,” SVP and CFO Arthur Ajemyan said on a conference call that same day, “our tons sold surpassed our expectations, leading us to outperform industry shipment levels once again across nearly all products.”

The service center group’s Q3 carbon steel shipments of 1,246,900 short tons (st) grew 8.4% over the year-ago quarter, accounting for 82% of total tons sold across all product lines.

Looking ahead

Following Q3’s strong shipment growth, Reliance expects a modest 6-8% decline in total Q4 shipments due to normal seasonality and temporary macroeconomic headwinds.

Reliance’s leadership cited the upcoming US presidential election as a significant factor contributing to near-term uncertainty among customers.

With the precarious state of the nation’s affairs, the company anticipates further demand weakening across its various end-use markets this quarter. Additionally, it forecasts continued pressure on carbon steel prices to drive a 1.5% to 3.5% sequential decline in average Q4 selling prices.

Lewis mentioned that some customers are planning extended shutdowns for the end-of-year holiday season, contributing to Reliance’s cautious outlook for Q4.

The executive said that once the election is over and we move into the new year, manufacturing activity and demand, bolstered by lower interest rates, will recover as 2025 progresses. Strong tailwinds from unspent dollars from various government initiatives will set the industry up well for 2025, she added.

Lewis told analysts on the call that, regardless of who is elected as the new commander-in-chief, “We’re confident long-term because either administration seems to be supporting manufacturing and trade policy.”

On Thursday, SSAB Americas said it was increasing plate prices by at least $60/st, according to a letter to customers. While SSAB didn’t specify their base prices, it’s their first price increase in nearly a year.

Here’s the latest

SMU’s plate price currently stands at $910/st on average based on our Tuesday, Oct. 23, check of the market (see Figure 1, left-side chart). While some very small spot orders have been reported higher, plate transactions have been in the mid-to-low $800s.

What might be more significant is that smaller volumes are drawing competition amongst mills and sellers. And $1,000/st is far from a competitive number. According to sources, tags have easily been transacting roughly $200/st below Nucor’s published plate price, even for product from the Charlotte, N.C.-based steelmaker itself.

By comparison, our HR price is $685/st. HR tags, while up from July’s lows, are down $360/st since reaching a recent high of $1,045/st at the start of the year.

And even though plate prices have seen fewer volatile swings vs. HR, plate tags have been largely trending down since peaking more than two years ago, especially of late (see Figure 1, right-side chart). Now, they’re at their lowest level since nearly December 2020.

Market reaction

The general sentiment among domestic buyers is that mills are trying to stop the bleeding and set a floor. Some speculate that the move might also help Nucor hold its pricing again when it opens its December order book in a week or so.

“I would have no idea why they would be attempting this increase now,” said a large OEM executive. “Unless they are trying to push Nucor to get their pricing up as well.”

“With Nucor selling well below their published price and having lost their pricing management, it’s like the Wild West,” another source said.

Others note that prices declined even as SSAB took a month-long planned outage at its Montpelier, Iowa, mill in September. Many wonder what might be pushing prices up, especially with distribution centers hurting for demand.

“I don’t see us having any success with customers running it back and letting them know prices are going up,” a plate buyer told SMU. “It’s hard right now to get projects started and off the ground.”

More familiar spreads

The average spread, or premium, plate had over HR between 2017-20 was $132/st. Volatility took hold in the aftermath of Covid-19, and the spread was all over the place. It reached as high as $970/st in the summer of 2022, but currently sits at almost a three-year low of $225 per ton – closer to a more historical level (see Figure 2, left-side chart).

On a percentage basis, plate’s premium over HRC ballooned to 126% in late September 2023 (Figure 2, right-side chart), reaching a 10-month high. It was also not far from the all-time high of 152% in November 2022. However, with HR prices near recent lows and plate tags declining, the premium is down to just 33%, one of the lowest in recent years.

What’s currently at play

The US plate market has been largely quiet, with demand trending down. The trickle, or even lack thereof, of infrastructure spending and the cancellation of wind farm projects have really cut back on demand for much of the year. Some projects are coming online, and greater demand could be on the horizon. For example, there have been recent reports of plate sales for rebuilding the collapsed Francis Scott Key Bridge in Baltimore.

Also, keep an eye on discrete plate lead times. They have been averaging four weeks, but in many cases, sources note that a three- or even two-week turnaround is possible.

What to watch for

The market is working to find the bottom, and SSAB’s recent pricing notice could indicate a bottom is in sight. The timing, in some ways, makes sense. There’s only about five-to-seven weeks’ worth of business left in 2024. So, there might not be enough time to really gauge if the increase takes hold or has legs.

But also keep an eye on service center inventories. Plate inventories were a bit bloated in July, but they have mostly been worked off through September’s report. We’ve seen shipping days of supply come down steadily, coinciding with daily shipping rates creeping up and material on order leveling off. It might not take much of a demand boost to push prices back up.

We’ll be closely monitoring October’s report due next month. Our flash report should be out in the first week of November, and the final report will be available to SMU premium subscribers on Nov. 15.

Editor’s note: If you’d like to become a data provider for our service center inventory report, please contact David Schollaert at david.schollaert@crugroup.com. If you would like to upgrade your executive account to premium, please contact Luis Corona at luis.corona@crugroup.com.

Across 2024, global steel output has averaged 154.5 million mt per month. This is 2% or 2.9 million mt lower than the first nine months of last year. September production was 5% below last year.

On a three-month moving average (3MMA) basis, world production in September declined 4% month on month (m/m) to 146.7 million mt in September, the lowest rate in eight months.

September’s production of 151.8 million mt on a 12-month moving average (12MMA) basis (Figure 1) was just 1% lower than September 2023’s 153.6 million mt.

On a daily basis, September production averaged 4.79 million mt (Figure 2). This is 3% higher than the August daily rate of 4.67 million mt. August’s rate was the lowest measure recorded since December 2023. Daily production in September was 5% lower y/y.

Regional breakdown

China, the world’s top steel producer, produced 77.1 million mt of crude steel last month (Figure 3). This is down 1% m/m and 6% y/y. Note that earlier this year, Chinese production climbed to a 14-month high of 92.9 million mt in May. Year-to-date, production has averaged 85.0 million mt per month, down from a rate of 88.0 million mt in the same time frame last year.

Chinese production accounted for 54% of the world’s total steel output in September. This is in line with August and the same month last year.

Steel output from the rest of the world (ROW) remained flat from August to September. Production in these regions totaled 66.5 million mt, down 3% from levels one year prior. ROW production has averaged 69.5 million mt per month so far this year, a slight rise from 69.4 million mt last year.

Production by country

Looking at production levels by country, Indian mills retained the number two spot last month, producing 11.7 million mt of steel in September. Next up was the United States at 6.7 million mt, followed by Japan at 6.6 million mt, Russia at an estimated 5.6 million mt, and South Korea at 5.5 million mt.

US CR coil prices averaged $925 per short ton (st) in our check of the market on Tuesday, Oct. 23, $15/st lower vs. the prior week. Despite a quick snapback after reaching a recent bottom in late July, recent declines place US tags just $25/st away from the market’s lowest level year to date. Prices are now roughly $400/st from a high of $1,325/st in January.

Domestic CR prices are, theoretically, 19% more expensive than imports. That’s down from 21% last week and still well removed from a 31.5% spread in early January.

In dollar-per-ton terms, US CR is now, on average, $142/st more expensive than offshore products (see Figure 1). That’s down $18/st from last week but is still well below a recent peak of $311/st in mid-January.

The charts below compare CR coil prices in the US, Germany, Italy, South Korea, and Japan. The left-hand side shows prices over the last two years. The right-hand side zooms in to highlight more recent trends.

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, Oct. 24, the CRU Asian CR price was $544/st, unchanged w/w but ~$45/st higher than a month ago. Adding a 71% antidumping duty (Japan, theoretical) and $90/st in estimated import costs, the delivered price to the US is $1,021/st. The theoretical price of South Korean CR exports to the US is $634/st.

As noted above, the latest SMU CR price is $925/st on average, which puts US-produced CR theoretically $96/st below CR product imported from Japan but $291/st above CR imported from South Korea.

Italian CR coil

Italian CR prices were $646/st, flat this week. After adding import costs, the price of Italian CR delivered to the US is, in theory, $736/st.

That means domestic CR is theoretically $189/st more expensive than CR coil imported from Italy. The spread is down $15/st from last week and still nearly ~$270/st below a recent high of $453/st mid-December.

German CR coil

CRU’s German CR price was up $13/st vs. the previous week. After adding import costs, the delivered price of German CR is, in theory, $740/st.

The result: Domestic CR is theoretically $185/st more expensive than CR imported from Germany. The spread is $28/st lower w/w but still well below a recent high of $428/st in the first week of 2024.

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

The projection excludes any impact from the planned acquisition of a casting and hot rolling mill in Shandong province, eastern China, from long-term partner, the Shandong Innovation Group. Closure is anticipated to occur soon. As for market challenges, President and CEO Jorgen Rosengren said: “We aim to continue to offset price pressure and wage inflation with cost reduction and productivity improvement, but expect currency exchange rates to be unfavorable compared to the fourth quarter last year.”

Looking back on Q3, he commented: “We saw good demand in HVAC [heating, ventilation and air conditioning], specialty packaging, and other niche markets, which last year were affected by excess inventory. On the other hand, demand from automotive customers weakened noticeably after the [Northern Hemisphere] summer.”

Overall, shipments were 122,700 mt – an increase of 6.7% compared to last year’s Q3. Sales revenue was 3.1% higher at SEK5.75 billion ($545 million) but net profit fell 14.4% to SEK285 million. Among other achievements, Rosengren highlighted its record-high recycling – the share of sourced recycled aluminum increased to 47.4% in Q3 from 44.4% observed last year.

Strong upstream results for Hydro in Q3 partly offset by weak downstream business

Norsk Hydro released its Q3’24 results. The Norwegian producer posted an adjusted EBITDA of NOK7.367 billion ($673 million), up 88% year over year (y/y) and up 26% quarter over quarter (q/q). As for the unadjusted EBITDA, it came in lower at NOK5.934 billion amid impairment charges of NOK581 million for Hydro Energy and a total of NOK913 million in unrealized losses related to LME contracts for the group.  The adjusted EBITDA was positively impacted by higher aluminum and alumina prices, lower raw material costs, and positive currency effects. This was partly offset by lower recycling margins, extrusions volumes, and energy prices.

The adjusted EBITDA for its primary metal division was at NOK3.234 billion – up 134% y/y and up 28% q/q. Results were driven by higher all-in metal prices and reduced carbon costs, partly offset by higher alumina costs, and inflation on fixed cost.

Primary production was 511,000 mt, up from 507,000 mt in the previous quarter; while sales of 531,000 mt were lower by 53,000 mt from Q2. The all-in price, including the premium, was up $109/mt from the last quarter at $2,851/mt and up $273/mt from last year. The implied all-in primary cost was itself down $100/mt from last quarter at $2,200/mt and stable from last year.

Hydro said that for Q4 it expected higher raw material costs and seasonally higher fixed costs. It also said it had around 71% of its primary production for Q4 priced at $2,445/mt and 42% of premiums booked at $507/mt. 

Hydro’s results for its extrusions segment continued to be lower both y/y and q/q. The adjusted EBITDA of NOK879 billion was down 33% y/y and down 34% q/q. Hydro also said its results were down on lower sales volumes, lower recycling margins, and higher costs, partly offset by higher sales margins and strict cost measures.

As for its end-use markets, sales in automotive were down 14% y/y and sales to transport were down as much as 24% y/y. Meanwhile, sales to building and construction (32% of total sales) recovered to a 2% y/y growth. As for its outlook for Q4, Hydro pointed to higher sales margins offset by lower sales volumes and recycling margins, higher variable costs, and continued soft extrusions markets.

The adjusted EBITDA for Hydro’s Metal Markets segment – which includes the recycling activities – came in at NOK277 million, down 51% y/y and down 10% q/q. Meanwhile, recycling production was down 32,000 mt q/q to 170,000 mt amid a drop of 52,000 mt in sales. The company expects lower volumes and continued margin pressure for recyclers in the current quarter.

Commenting on the results, President and CEO, Eivind Kallevik said: “The positive development in our upstream revenue drivers continued in the third quarter, supporting strong results in our upstream business, countering the overall effects of the challenging downstream market.”

He added: “The downstream aluminum market continued to be challenged by weak demand and recycling margins in Europe and North America.”

He also noted that automotive extrusion demand remains weak due to low electrical vehicle sales in Europe, especially in Germany.

“Building and construction, and industrial demand continues to be moderate with potential 2025 support from lower interest rates. Low activity in these markets limits aluminium scrap supply, squeezing recycling margins and reducing remelt production in both Hydro Extrusions and Metal Markets,” he concluded.

Editor’s note: This article was first published by CRU. To learn more about CRU’s services, click here.

US counts

Through Oct. 25, there were 585 drilling rigs operating in the US, in line with the prior weekly count. The number of oil rigs fell by two week over week (w/w) to 480, gas rigs rose by two to 101, and miscellaneous rigs were unchanged at four.

There were 40 fewer active US rigs last week compared to the same week one year prior, with 24 fewer oil rigs and 16 fewer gas rigs.

Canadian counts

There were 216 active Canadian drilling rigs as of last week, one less than the prior week. Oil rigs fell by three w/w to 150, gas rigs rose by two to 66, and miscellaneous rigs were unchanged at zero.

There are currently 20 more Canadian rigs in operation than levels one year ago, with 28 more oil rigs and eight fewer gas rigs.

International rig count

The international rig count is a monthly figure updated at the beginning of each month. The total number of active rigs for the month of September rose to 947, up 16 from the August count and seven more than levels one year prior.

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

Key takeaways

SMU’s Current Sentiment Index suggests buyers are still optimistic about their businesses’ ability to succeed in today’s market, though their confidence has significantly declined compared to recent months. In contrast, our Future Sentiment Index indicates buyers are optimistic about favorable business conditions in the new year.

Current Sentiment

SMU’s Current Buyers’ Sentiment Index declined nine points to +30 this week (Figure 1). This marks the lowest level recorded since May 2020, surpassing the lows we saw earlier this year in July (+34). This time last year Current Sentiment was significantly stronger at +64.

Year to date (YTD), Current Sentiment has averaged +50 over the first 10 months of 2024. This is considerably lower than the same time frame of 2023 when it had averaged +67.

Future Sentiment

SMU’s Future Buyers’ Sentiment Index rose one point to +71 this week, the second-highest reading this year (Figure 2). Recall that in early August, Future Sentiment dipped to +55, its lowest level in over a year, before quickly recovering to a nine-month high of +72 just two weeks later.

Since the beginning of this year, Future Sentiment has averaged +65. This is down two points from the same period last year. This time one year ago, Future Sentiment stood at +74.

What SMU survey respondents had to say:

“When the election is in the rearview mirror, we believe most industries will return to business as normal in 2025.”

“We have new products in the pipeline that will be fully launched by year-end.”

“Falling interest rates and rising steel prices should help our industry improve.”

“The election will open up more work.”

“We are working to position ourselves for the future.”

“Restrictions on trade, specifically on CORE, will make 2025 a more challenging year for imports.”

Moving averages

When analyzed as a three-month moving average, Steel Buyers’ Sentiment also moved in alternate directions this week, as shown in Figure 3.

As of Oct. 23, the Current Sentiment 3MMA eased to +40.32, just above the four-year low of +39.20 recorded in mid-September. Over the past nine months, the Current Buyers’ Sentiment 3MMA has generally trended downward. The Future Sentiment 3MMA rose to a five-month high of +66.15 this week, recovering from the one-year low observed in early September.

About the SMU Steel Buyers’ Sentiment Index

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

We discuss the climate policy implications of the election in a separate Insight, “Harris or Trump: What does it mean for US climate policies?“

Competing visions for America’s economic future

Below, we summarize Trump and Harris’s agendas, which are likely to have direct implications for the commodity markets.

The economic impact of Trump’s 2024 proposals

Trump’s proposed policies are likely to be highly inflationary. However, lower taxes and deregulation can support growth in the short run.

Trump’s proposal for mass deportations could substantially shrink the workforce, challenging businesses’ ability to meet current demand levels. Research from the Peterson Institute for International Economics suggests that deportation of even 7.5 million undocumented workers – less than Trump’s proposal – would drive inflation higher and reduce GDP. Combined with large tariff increases, a reduced labor force could reinvigorate inflation, making planned interest rate cuts less probable.

Trump’s proposed universal tariff aims to protect American companies from foreign competition by making US-produced goods more affordable relative to imports, while also increasing government revenue. However, a recent Goldman Sachs report underscores the inflationary risks tied to Trump’s tariff plan, estimating that a one percentage point increase in tariff rates could raise core inflation by 0.1 percentage points. Similarly, a study from the US International Trade Commission found that Trump’s 2018 tariffs on Chinese goods led to a 0.2% rise in domestic prices. While businesses previously absorbed many of these costs, the broader tariffs now proposed could place a heavier burden on consumers.

The universal tariff proposal is also likely to provoke retaliatory measures from other nations as they seek to protect their own economies. Such responses could intensify global economic strains, as seen with China’s actions during Trump’s first term. Our scenario analysis suggests that a multilateral trade war could reduce global GDP by approximately 2.5% and decrease industrial production by 4% (Figure 1).

Such a sweeping tariff could lead to a stronger US dollar if trading partners respond with more lenient monetary policies to offset weaker exports. A stronger dollar could, in turn, diminish some of the intended price increases on imports, reduce US export competitiveness, and put downward pressure on commodity prices.

However, Trump’s plan to extend the 2017 Tax Cuts and Jobs Act would maintain the corporate tax rate at 21% (down from the previous 35%) and continue to lower personal income tax rates. This continuation would spur US investment, raise wages, and increase disposable income.

The economic impact of Harris’s 2024 proposals

Kamala Harris’s agenda might translate into economic growth headwinds in the short run but lead to more sustainable growth in the medium to long term.

While Harris’s proposed policies are expected to be less inflationary than Trump’s proposals, some of them can still contribute to upward price pressures. The increase in disposable income for many Americans could spur demand and push prices higher. However, Goldman Sachs contends that these inflationary impacts would likely be tempered by Harris’s other policy measures.

To increase government revenue, Harris proposes raising corporate and individual tax rates, particularly targeting high-income earners. Her plan includes raising the federal corporate tax rate from 21% to 28% and increasing the federal income tax rate for individuals earning over $400 K from 37% to 39.6%. Higher corporate taxes and increased capital gains taxes may reduce investment in capital markets and elevate corporate costs.

Harris is also likely to advocate for more stringent regulations on corporations, which could further increase operating costs, slow performance, and decrease profit margins. Goldman Sachs analysts estimate that these measures would reduce S&P 500 earnings by approximately 5%, with additional tax burdens potentially leading to further economic headwinds.

To support small businesses and families, Harris proposes a series of tax breaks, including up to $50,000 in relief for small businesses, an expansion of the child tax credit to $6,000 for the first year, and a $25,000 tax credit for first-time homebuyers.

Kamala Harris’s trade policy is expected to align closely with the Biden administration’s approach, focusing on multilateral cooperation and fair trade while encouraging domestic production through tax incentives. Her agenda will support a transition to green energy, building on the foundations of the Inflation Reduction Act (IRA). Since its implementation under Biden, the IRA has driven over $250 billion in investments into US energy projects and has contributed to the creation of over 100,000 jobs in the energy sector. However, it is also the most expensive energy policy in US history, raising concerns about long-term fiscal impacts.

Overall, however, the analysis suggests that Harris’s economic policies could result in a modest GDP growth boost between 2025–2026, with a limited effect on inflation. Nevertheless, the precise impact of her policies remains uncertain, as the magnitude of these effects can vary.

How would Trump and Harris shape the nation’s budget?

In 2023, the US recorded a fiscal deficit of 8% of GDP; similar figures are expected for this year. This level of deficit is unusually high, particularly given the current state of full employment. Both the International Monetary Fund (IMF) and key government officials in Washington have voiced serious concerns about the rapidly growing deficit, urging policymakers to take swift action.

As the 2024 election approaches, the fiscal impact of the candidates’ economic proposals has become a central issue. Trump and Harris offer distinct approaches, each with significant implications for the national budget. According to projections from the Tax Foundation, a Trump presidency could lead to a net worsening of the federal deficit over the next decade. Harris’s policies would also have substantial effects on the budget due to her proposed tax increases and spending initiatives. The effects of each candidate’s policies are outlined below (Figure 2).

It is important to emphasize that if the Senate and House of Representatives end up being split between Democrats and Republicans, pushing through further fiscal stimulus could be a challenge, raising the risk of a recession in 2025.

In conclusion, the two candidates’ policies present very distinct potential economic implications. Trump’s tax cuts and supply-side policies might spur high inflation growth, increasing the likelihood of interest rates getting pushed higher. Harris’s proposed policies, including higher taxes and more regulation, could lead to slower economic growth, mild inflation pressures, and a modest decline in interest rates in the short term. However, her focus on green initiatives and infrastructure spending could boost growth in the coming years. At this point, the presidential race remains too close to call, with uncertainty around the outcome of the election weighing on growth in Q4.

With additional contribution from Maria Garcia, economist.

For what it’s worth, the last USS price hikes we have on SMU’s price announcement calendar – and it’s possible we missed one along the way – are two up $100/st from October 2023. (Two in one week at that.) This year has been mostly a story of Nucor and Cleveland-Cliffs as far as price announcements goes.

The next question: Do other steelmakers follow USS? And what does Nucor do when it next updates its published spot HR prices on Monday? Nucor is at $720/st now. Does it go to $750/st?

Let the speculation begin!

Let’s start with some fresh data and news from today’s newsletter.

November scrap shows early indications of a “strong sideways” move. That might help put a floor under things.

But it’s hard to square a big move upward with some of our other data. Case in point: 93% of respondents to our steel market survey this week said that domestic mills were willing to negotiate lower prices.

We haven’t seen a reading like that since early July. Why does that matter? We started July with HR at $665/st on average. By the end of the month, the low end of our range had dropped to $600/st.

Where does up $30/st put U.S. Steel’s HR price? Depending on where you started, I’m going to guess roughly $750-770/st. We haven’t seen prices that high since April.

Then there is the matter of lead times. They’re down across the board. HR, CR, and coated lead times – while not terrible – are all back to the lowest levels we’ve seen since the July price swoon.

You could make the case that our survey data, which we collected Mon.-Weds., is backward looking. Maybe we picked up on some last-minute deal-making ahead of price hikes (assuming other mills follow). We’ve certainly seen that before.

Here come the tons

But, turning back to what we know now, it’s probably not surprising that lead times are down. Look at SMU’s fall maintenance outage calendar.

Many of those outages have concluded or will be wrapping up soon. And, speaking of U.S. Steel, as we get toward the end of the year, there will probably be more production from Big River Steel 2 (BRS2), the big capacity expansion the steelmaker is undertaking in Osceola, Ark.

It’s not like BRS2 flips a switch and another 3 million tons per year (tpy) comes into the market all at once. There will probably be trials and qualifications toward year end. And perhaps not a more significant ramp-up until Q1’25. Even so, those tons are coming.

Meanwhile, other newer mills – SDI Sinton in Texas, for example – continue to work the kinks out. The Fort Wayne, Ind.-based steelmaker said Sinton, which also has capacity of 3 million tpy, should be operating at 75% this quarter, up from 72% in Q3. And it should hit full capacity in 2025.

North Star BlueScope in Delta, Ohio, meanwhile, is settling into a similar run rate (~3 million tpy), following the addition of a third EAF and second caster.

It’s a similar story on coated, where there is also a lot of new capacity coming online. Maybe that’s why coated prices have been slow to respond to a massive trade case.

Then there is just the matter of the calendar. Lead times for hot rolled are around Thanksgiving. Those for cold-rolled and coated products are into roughly mid-December. In other words, when prices often cycle down along with industrial activity during the holiday season.

I’m not saying the increase is doomed

We saw a round of price increases in late July stabilize sheet prices and then spark a mini-rally that got HR back to roughly $700/st by late August. HR prices then held there for most of September and October before declining modestly in recent weeks. Maybe a fresh round of price hikes keeps tags from sliding again.

And as SSAB noted in its earnings call, US buyers tend to stay in “wait-and-see” mode ahead of an election. As for elections, remember the “Trump bump” in 2016? HR prices went from $480/st just before election day in early November 2016 to $630/st shortly after inauguration day in late January 2017.

Could we see TB2 this year? Or maybe a Harris High? (Give me a break. It’s late, and I’m struggling with alliteration and rhymes.)

Heck, you could probably make a case that we’ve been in a demand funk for the last couple of years (despite all the price volatility). Maybe that’s due to change in 2025? And what might drive that?

Whatever happens, I’m guessing the days of two $100/st increases within the span of a week are gone, especially with Nucor posting more incremental ups and downs on a weekly basis.

Tampa Steel Conference

Speaking of the new year (yes, that was a shameless segue), get ahead of the crowds and book your spot for the Tampa Steel Conference on Feb. 2-4, 2025. It’s peak season for tourism in Florida, and our room blocks (and rooms in general) tend to go fast.

Whatever the supply-demand situation is, we’ll have no shortage of things to talk about – a new president, potentially sweeping new trade policies, and whatever unexpected events might happen between now and then.

One thing is sure, if you’re in the Midwest like me, it’ll be a nice excuse to get out of the cold and spend a few days in the Florida sun with a few hundred of your best friends in steel.

You can register here. We’ll be providing more updates on speakers and the agenda soon. In the meantime, thanks to all of you from all of us at SMU for your continued support. We appreciate you.