SMU’s January At-a-Glance

Steel and scrap prices continued to climb throughout January, fueled by strong demand and tight supply. Hot rolled steel prices surpassed $1,000 per ton in the first week of the year, levels not seen in over a decade. Steel Market Update’s hot rolled price index reached $1,140 per ton by the end of January, up $130 per ton or 13 percent from the beginning of the month. The SMU Pricing Momentum Indicator has remained unchanged since the August 2020 adjustment to Higher, indicating prices are expected to rise further in the short term.

January scrap prices rose by $100 per ton or greater compared to December, similar to the jump seen from November to December. Zinc prices declined throughout the month, reaching $1.156 per pound on the last day of January. Aluminum prices declined in the first half of the month, rebounded a bit towards the end, then began falling again, reaching $0.896 per pound on Jan. 29.

The SMU Buyers Sentiment Index remained optimistic, ending the month at +64. The three-month moving average reached +64.33 as of Jan. 22, the second highest reading since October 2018.

Two new survey indicators have been added to the monthly review table–the average hot rolled lead time, and the percentage of buyers reporting that steel mills are negotiating on new hot rolled orders. Lead times continue to remain extended, and mill willingness to negotiate remains low. We will report on updated lead times and negotiations figures in the next SMU Executive newsletter on Thursday.

Key indicators of steel demand overall remained positive. The ISM Manufacturing Index continued to indicate further expansion in the economy, for the eighth consecutive month. Construction spending increased each month through December, while the AIA Billings Index and private employment growth both declined. Total U.S. steel imports and exports declined from October to November, while apparent steel supply increased.

See the chart below for other key metrics in the month of January:

By Brett Linton, Brett@SteelMarketUpdate.com