Understanding Why Today's Steel Market Is So Volatile

Originally published by: Steel Market UpdateJanuary 5, 2021

The following article was produced and published by the source linked to above, who is solely responsible for its content. SBC Magazine is publishing this story to raise awareness of information publicly available online and does not verify the accuracy of the author’s claims. As a consequence, SBC cannot vouch for the validity of any facts, claims or opinions made in the article.

Editor’s Note: The following article provides context for current steel market conditions.  Two significant forces have contributed to today’s market: 1) China has gone from a net-exporter to a net-importer and are buying up the global supply of steel.  This has coincided with the COVID-19 outbreak in the U.S., which has had a significant impact on domestic steel production. The chart below illustrates domestic steel production, with the green lines showing 2019 production levels and the blue lines showing the significant dip and slow recovery of production.

Flat rolled steel prices have started the new year strong, jumping by another $25-55 per ton and taking the benchmark hot rolled price above $1,000, within sight of the record high of $1,070 per ton seen in 2008. With steel still in tight supply and ferrous scrap prices likely to increase again in January, Steel Market Update’s Price Momentum Indicators continue to point toward higher prices in the next 30 days.

Here is how we see prices this week:

Hot Rolled Coil: SMU price range is $990-$1,030 per net ton ($49.50-$51.50/cwt) with an average of $1,010 per ton ($50.50/cwt) FOB mill, east of the Rockies. The lower end of our range increased $40 per ton compared to one week ago, while the upper end increased $10. Our overall average is up $25 from last week. Our price momentum on hot rolled steel is Higher, meaning prices are expected to rise in the next 30 days.

Hot Rolled Lead Times: 6-10 weeks

Cold Rolled Coil: SMU price range is $1,080-$1,160 per net ton ($54.00-$58.00/cwt) with an average of $1,120 per ton ($56.00/cwt) FOB mill, east of the Rockies. The lower end of our range increased $40 per ton compared to last week, while the upper end increased $60. Our overall average is up $50 per ton from one week ago. Our price momentum on cold rolled steel is Higher, meaning prices are expected to rise in the next 30 days.

Cold Rolled Lead Times: 7-12 weeks

Galvanized Coil: SMU price range is $1,100-$1,180 per net ton ($55.00-$59.00/cwt) with an average of $1,140 per ton ($57.00/cwt) FOB mill, east of the Rockies. The lower end of our range increased $50 per ton compared to one week ago, while the upper end increased $60. Our overall average is up $55 from last week. Our price momentum on galvanized steel is Higher, meaning prices are expected to rise in the next 30 days.

Galvanized .060” G90 Benchmark: SMU price range is $1,169-$1,249 per ton with an average of $1,209 per ton FOB mill, east of the Rockies.

Galvanized Lead Times: 8-13 weeks

Galvalume Coil: SMU price range is $1,120-$1,200 per net ton ($56.00-$60.00/cwt) with an average of $1,160 per ton ($58.00/cwt) FOB mill, east of the Rockies. The lower end of our range increased $20 per ton compared to last week, while the upper end increased $50. Our overall average is up $35 per ton from one week ago. Our price momentum on Galvalume steel is Higher, meaning prices are expected to rise in the next 30 days.

Galvalume .0142” AZ50, Grade 80 Benchmark: SMU price range is $1,411-$1,491 per ton with an average of $1,451 per ton FOB mill, east of the Rockies.

Galvalume Lead Times: 8-12 weeks

Plate: SMU price range is $850-$910 per net ton ($42.50-$45.50/cwt) with an average of $880 per ton ($44.00/cwt) FOB delivered to the customer's facility. The lower end of our range increased $10 compared to one week ago, while the upper end remained unchanged. Our overall average is up $5 from last week. Our price momentum on plate steel is Higher, meaning prices are expected to rise in the next 30 days.

Plate Lead Times: 6-9 weeks

SMU Note: Below is a graphic showing our hot rolled, cold rolled, galvanized, Galvalume and plate price history. 

Steel market update graph

Nucor and SSAB Americas have raised plate prices sharply higher to ring in the New Year.

Effective immediately, Nucor’s new ex-works base price for cut-to-length grade A36 plate is $940 per ton ($47/cwt), up $140 per ton from $800 per ton on Dec. 14, according to letters to customers dated Tuesday, Jan. 5.

The new base price for quenched-and-tempered A514 Grade is $1,190 per ton, up from $1,050 per ton in December. And Nucor’s new base price for normalized A516-70 material is $1,070 per ton, up from $940 per ton last month.

“All published adders/extras will be applied,” Nucor said in the letter. The steelmaker also said that it was not yet accepting orders for March.

SSAB, meanwhile, aims to increase plate prices by at least $100 per ton ($5/cwt) on all new non-contract orders.

The move is effective immediately and applies equally to as-rolled mill plate, to cut-to-length plate more than 72 inches wide, to hot-rolled coils more than 72 inches wide, as well as to normalized and quenchedand-tempered material, the company said in its letter to customers Tuesday.

The price hike also coincides with SSAB opening its February orderbook for spot orders. March is still closed for non-contract business, the company said.

“As always, SSAB Americas remains committed to providing a superior product offering at a competitive market prices,” the letter said.

The increases mark the second time in less than a month that SSAB and Nucor have increased plate prices. SSAB, for example, on Dec. 15 announced a plate price hike of $100 per ton.

The sharp plate price increases come on the heels of steep gains in hot-rolled coil prices, a significantly higher December scrap settlement, and amid expectations that scrap will settle higher in January as well.

 

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