The Raw Steels Monthly Metals Index (MMI) moved sideways, with a
2.83% decline from August to September as steel prices dropped almost across
the board.
Indeed, flat-rolled steel prices continued their downtrends
throughout August. Amid uninterrupted week-over-week declines, HRC prices saw
the largest drop, falling 10.3% throughout the month. By mid-September, prices
reached their lowest level since January 2023. This pushes them closer to their
last major low in December 2022 in the mid-$600 per short ton range.
UAW Strike Begins with Big Potential Loss to Auto Supply, Steel
Demand
The much-anticipated UAW strike began on Sept. 14 after
negotiations failed between the union and the Big Three automakers, Ford, GM,
and Stellantis. On Wednesday, negotiations entered their sixth day, yet the
parties failed to reach an agreement.
While the strike began with roughly 13,000 members and the
potential end date remains only speculative, the UAW reportedly boasts a large
enough war chest to back a 3-month walkout of its roughly 150,000 members. By
conservative estimates, a strike by all members could translate to a minimum
400,000 short-ton-per-month loss in domestic flat-rolled steel demand.
Accompanying this would be a more than 550,000 unit-per-month cut to vehicle
supply.
U.S. Sees First Steel Blast Furnace Casualty, More Could Follow
U.S. Steel’s Granite City Works blast furnace B became the first
casualty of the strike. The company will temporarily idle the 1.4
million-short-ton-per-year furnace amid the ongoing drop-off in steel demand.
More cuts could follow depending on how long the strike lasts.
Data from the American Iron and Steel Institute indicates that
during the week the strike began, the capacity utilization rate remained above
the 75% mark at 76.2%. Meanwhile, weekly raw steel production remained steady
at 1,733,000 tons. .
That said, mill lead times for flat-rolled steel already sat
toward the short end of their historical range. By mid-September, mill lead
times for HRC averaged around 4.5 weeks, comparable to their over 5-week
average since 2019. CRC and HDG lead times both sat at seven weeks, or slightly
beneath their respective historical averages of 7.3 and 7.6 weeks.
Lead times appear likely to contract further absent more
substantial capacity cuts. Mills reportedly offered significant discounts on
larger volumes ahead of the strike. This was to minimize the impact of a sharp
loss in domestic steel demand in a seemingly already oversupplied market.