Got it! Distribution Manufacturing Engineering About Contact Us NEWS TEX-ISLE SUPPLY LATEST NEWS View important updates by Tex-Isle Supply, Inc. Categories Archives Calendar TEX-ISLE MAKES SHIFT TO ‘GREEN’ PIPE PRODUCER Marc Atnipp 06/08/2021 Tex-Isle Inc is shifting from distributing to manufacturing steel tube and pipe for the oil industry using renewable energy and steel produced from recycled materials at its new electric-resistance welded (ERW) pipe-making facility in Robstown, Texas Continue reading TEX-ISLE STEEL MARKET UPDATE, MAY 2021 05/28/2021 Marc Atnipp STEEL MARKET UPDATE No matter where you look in the steel markets it is tough to find any sign of sustained downward pressure for prices. We thought we might have seen a market peak earlier in the month with the announcement that the European Union and U.S. government were exploring avenues for removing the 232 tariffs for steel. This resulted in near-term monthly futures contracts limiting down on consecutive days, but it was short-lived. The July contract traded at $1,644 a ton on May 11th before dropping to $1,451 on May 18th, an 11.7% drop, only to reestablish at $1,660 as of May 27th. The lion’s share of the pricing increases we have seen since last August have been driven by the strong automotive market, much of which calls for premium, value-added products like galvanized or cold rolled, which has left little supply available to standard hot rolled buyers. Import lead times, three to four months, and high prices, $1,480 to $1,510 provide a risky relief valve for some processors but are not enticing enough for consumers to step out and bring in sufficient tons to restock low inventories. OCTG & LINE PIPE MARKET UPDATE Pipe prices are finally catching up to the drastic increases that have been seen in the coil markets. While the availability for consumers to purchase new seamless, existing inventory, or newer import material has somewhat shielded OCTG consumers from the high price of hot rolled coil, the domestic line pipe market now reflects the current price of coil. Although inventory on the ground still exists for both product markets, price increases should be expected on the OCTG side of the ledger. Seamless mills are currently enjoying a large spread between scrap, their primary input, and pipe, allowing them to take as much market share as they like. As the rig count continues moving higher, they are close to being in a position of having to justify additional shifts or overtime to meet the demand increases. April import licenses were down from their March level, but are expected to be higher in May. Domestic shipments for seamless products were around 100k tons in both March and April, while ERW shipments have been flat since January around 25k-30k. Unless imports surge over the next few months, which should be somewhat muted by delivery timeframes and 232 quotas, one has to expect pricing will start to reflect the higher substrate costs in the domestic market. Continue reading TEX-ISLE STEEL MARKET UPDATE, APRIL 2021 04/29/2021 Marc Atnipp STEEL MARKET UPDATE A question players in the steel space need to start asking themselves: Is this market different than previous bull runs? Since 2015 there have been six pricing cycles of varying lengths and amplitude. Before the current run-up, these cycles had average price increases of $199.48 per ton over a 229-day period. This current pricing run-up stands at an increase of $1,010/ton over a 266-day period. Granted, the supply chain disruptions that have had a major impact on both the trough and the peak are different than before, however market participants have also behaved differently. We still have yet to see US mill utilization crack the 80% mark. Surging imports have been unable to relieve pricing pressure, and will continue to fight trade restrictions in the near term. Although we can expect a pullback at some point, the question to ask is: Will domestic steel pricing fall back to its typical $600-$700 per ton range or establish a new higher range? We tend to believe the consolidation seen in the market over the past few years, a more disciplined approach to supply, a reduction of imports, and the looming infrastructure spend should land us at a higher range over the next few years. Continue reading TEX-ISLE STEEL MARKET UPDATE, MARCH 2021 03/25/2021 Marc Atnipp STEEL MARKET UPDATE Our latest monthly update is much the same as the previous months’. Spot availability is non-existent, contract tons are being pushed out 10-12 weeks, and prices are up. The supply chain disruption is providing little indication of when it will finally settle down, but we still think prices will start backing off at the tail end of Q2 and into Q3. Domestic mills’ utilization rates have stalled out in the high seventieth percentile, and it is unclear on when they will notch higher. In a potential sign of relief, we have seen some pull back in international scrap markets. Following the plunge in the Turkish lira, after President Erdogan canned the country’s top banker, Turkish buyers dried up for available cargoes freeing them up for other importing countries. In conjunction, supply chain issues around bulk seaborne shipping has led to a surplus of supply at key export points, forcing sellers to lower prices. It could be seen as one of the first steps in the process for a retreat in semi-finished steel pricing. Continue reading TEX-ISLE STEEL MARKET UPDATE, FEBRUARY 2021 03/01/2021 Marc Atnipp STEEL MARKET UPDATE The Wall Street Journal recently published an article on the “bullwhip effect” in supply chains and how it is manifesting itself through the economy as supply chains have attempted to re-start from the strong downturns of the COVID pandemic. The name “bullwhip” is used as an analogy to show how slight changes in demand, the whip handle, can have outward effects on supply, the end of the whip, like the waves seen when swinging a bullwhip. In the steel market this is being illustrated by the fact that increased demand has resulted in an almost parabolic increase in pricing. Continue reading TEX-ISLE STEEL MARKET UPDATE, JANUARY 2021 01/29/2021 Marc Atnipp STEEL MARKET UPDATE December and January saw little slowing down in the freight train that has been steel prices. Domestic Hot Rolled Coil has blown past the $1,000/ton level last seen in 2008 and is now $1,140/ton. The supply shortage due to low inventories and a slow re-start of fully integrated facilities in the U.S. is now also being supported by a tremendous increase in scrap pricing, up from around $300/ton in October to a current price of $497/ton. Continue reading TEX-ISLE STEEL MARKET UPDATE, DECEMBER 2020 12/17/2020 Marc Atnipp STEEL MARKET UPDATE In a continuation of last month’s update, the entire steel market has continued its torrential move higher. Across the globe there are similar stories, with the takeaway being that this is a supply shortage. In an effort to shore up balance sheets consumers of steel allowed month to month supply chains to collapse, while steel producers deferred maintenance and idled any production they could. Continue reading TEX-ISLE STEEL MARKET UPDATE, NOVEMBER 2020 11/19/2020 Marc Atnipp STEEL MARKET UPDATE To say that steel prices have been on a run the past few months is an understatement. Climbing from July lows around $440/ton, domestic hot rolled coil prices are now safely over $700/ton, with futures contracts for December over $750/ton. The 60% plus increase in the spot price can be attributed to mills struggling to meet a strong resurgence in demand as the economy has reopened. Continue reading TEX-ISLE STEEL MARKET UPDATE, SEPTEMBER 2020 09/18/2020 Marc Atnipp STEEL MARKET UPDATE The steel market’s delicate balancing act between increasing utilization and pricing has finally fallen apart. In the past few weeks, the cost of steel has seen sharp upticks around the globe on the back of rising raw materials costs and lengthening lead times. Further pricing pressure is being felt as mills have only tepidly brought back production capacity after the shutdowns earlier in the year as well as planned outages for some of the furnaces currently open. In the past week scrap prices have jumped around 10%, while domestic hot rolled coil has jumped 19% in the past month. A domestic price of $600 per ton for hot rolled coil is not out of the question, but market dynamics do not exist to hold prices much higher over the long term. Many of the domestic mills have announced immediate price increases, which may not even keep up with the current spot market’s upward trajectory. Continue reading TEX-ISLE STEEL MARKET UPDATE, AUGUST 2020 08/20/2020 Marc Atnipp STEEL MARKET UPDATE Domestic steel producers continue to play a chicken and egg game with pricing versus the industry utilization rate. With many industry participants thinking we have passed a bottom in domestic coil prices and lead times growing shorter, more mills have come back online. The most recent utilization rate for the week of August 17th was 61.5% or 1.377 million tons. Capacity utilization still lags the low 80% rate seen prior to the COVID shutdown but is above 60% for the first time since early April. The spread between scrap prices and coil is still not above the ideal $200 per ton level for EAF participants, but with automotive demand rising again there is optimism. Higher activity levels in the auto industry increase both the supply of scrap in the market as well as the demand for premium cold-rolled and galvanized steels putting extra wind into the sails of market producers. Finally, a look at Chinese steel activity. Chinese HRC is typically a bell cow for the global market. With high input costs, Chinese Iron Ore was trading most recently at $122.75 per ton, low inventories, and high priced coil for both their own domestic market and export market, Chinese production has surged to over 91,000 tons per month in the most recent reported month (June). Continue reading TEX-ISLE SERVICE CASE STUDY: HEAT TREATMENT 07/29/2020 Marc Atnipp INVESTING IN OUR CUSTOMER'S SUCCESS Tex-Isle developed proprietary steel grade to meet the performance requirements of horizontal drilling for 5.5” 20# production casing. EXECUTIVE SUMMARY: When tasked with delivering a high-performance product, our engineering team worked with our operations group to develop a reliable, cost-effective solution for our customers. By working with our steel providers on specific chemistries and dimensional tolerances, Tex-Isle was able to guarantee above API specifications for collapse, tension, and burst ratings. Our operations group’s tight production control during heat treatment ensures a “first time right” of ~98% on this grade. Continue reading TEX-ISLE STEEL MARKET UPDATE, JULY 2020 07/16/2020 Marc Atnipp STEEL MARKET UPDATE In a continuation of the back and forth we are seeing across the entire economy, the domestic steel industry is struggling to find its footing. Hot Rolled Coil prices have deteriorated from their COVID recovery high of $520 per ton reached on June 11th. Scrap prices have retreated as supply comes back online, although the price support it provided to sheet pricing has diminished. There was always an expected back and forth on prices as supply attempted to match demand, but the ~9% drop in coil prices has already claimed some as a victim. JSW Steel USA announced last week their plans to idle their Mingo Junction mill (1.5 million tons annually of HRC). The furnace was idled once earlier in the year, and had only been back online since mid-June. Several mills have restarted idled production in June and early July, which may lead to a further deterioration in sheet pricing if demand can not support the new capacity. Domestic mill utilization has continued to inch higher to 57.5%, but remains depressed compared to normal utilization rates. Continue reading TEX-ISLE STEEL MARKET UPDATE, JUNE 2020 06/16/2020 Marc Atnipp As the economy begins to open back up, the steel market as a whole is attempting to put a floor under prices. In May, many domestic Hot Rolled producers put through not one but two price increases totaling up to $100/ton. The first increase saw some success in bringing up prices, however the second hike has had less sticking power so far. As automotive plants have restarted for the last month or so, demand has started to pick up. Prices for domestic HRC have managed to stay close to, or above $500/ton since the beginning of the month and are on an upward trajectory. Capacity utilization in the U.S. has remained in the low to mid 50% range since May but appears to be moving up as well. USS announced recently their intent to restart production of one blast furnace at Mon Valley, JSW Steel will soon restart their Mingo Junction EAF, and there is talks from both Cleveland Cliffs and Arcelor Mittal of restarting some production to meet increasing demand from the automotive industry. This may result in short term pricing for steel as producers try to balance bringing capacity back on to meet uncertain demand. In addition to rising demand, steel prices should feel increased price pressure from continued high scrap prices in the U.S., and a recent run up in the price of iron ore. Scrap has eased from its recent high of nearly $340/ton, but still remains high enough to cause pain for domestic steel producers. Iron ore’s recent surge is primed to cause a ripple effect globally. Iron ore futures rose up over 7% last week after Vale S.A., one of the world’s largest miners, was ordered by a Brazilian judge to shut down production at one of its mining complexes due to the large number of Covid-19 cases in the area. This complex represents more than 10% of Vale’s total production. The company is also under government scrutiny after a tailings dam collapsed in early 2019 killing over 250 people. Although Vale has maintained its previous guidance on total iron ore production for the year, the Dalian Commodity Exchange (DCE), has been forced to take measures to strengthen market regulation due to large market swings. This news coupled with the Chinese/Australian trade spat has the potential to push Asian metal prices higher. TEX-ISLE STEEL MARKET UPDATE, MAY 2020 05/06/2020 Marc Atnipp Not surprisingly, the steel market has suffered along with the rest of the global economy. Domestic utilization of steel mills has fallen as demand from major industries has plummeted. Most of the supply reduction has come from Blast Furnace operators like U.S. Steel, Arcelor Mittal, and Cleveland Cliffs. Electric Arc Furnace mills like Steel Dynamics and Nucor usually have more control of their cost structure, but these are hardly usual times. The decrease in economic activity has resulted in a shortage in scrap available, placing a high floor under scrap prices. This higher scrap price has compacted the spread between Hot Rolled Coil and Scrap, decreasing the profitability of EAF mills. At this point, there is a question of if lower prices would result in more demand, or is it simply a dog chasing its tail? While a resurgence in demand from the energy sector should not be counted on any time soon, demand from the automotive sector should spring back as their supply chains restart. Although the big three automakers do not have a restart date planned as of yet, once they do restart the metals industry should see the double benefit of higher demand and an increase in the amount of scrap produced. TEX-ISLE STEEL MARKET UPDATE, FEBRUARY 2020 02/14/2020 Marc Atnipp Hot Rolled Coil prices have given up some of the gains achieved over the past few months, with one of the main reasons being the continued fallout of the corona virus in China. Domestic HRC reached a high of $618/ton back on January 15th, but has since retreated back below $600/ton. In December China accounted for over 55% of global steel production, over 84 million tons, and has often been a leading indicator of the metals industry as a whole. China has already extended its original Lunar New Year holiday, and will possibly continue it until February 17th. Many non-essential companies and factories have been closed since January 24th, with the impacts starting to ripple across global supply chains. As trade into and out of the “world’s factory” slows, inputs like iron ore and liquified natural gas have suffered price contractions. The effect has been somewhat muted so far in the United States, but should the outbreak continue, companies dependent on commodity pricing stand to suffer from the downward pressure on commodities TEX-ISLE STEEL MARKET UPDATE, JANUARY 2020 01/20/2020 Marc Atnipp Steel mills pushed through another round of price increases last week in a continued effort to push the price of Hot Rolled Coil above $600 per ton. Mills have announced ~$150 per ton worth of price increases since October, and have been able to bring the price up over $600 per ton from a sub $500 per ton price reached at the time of initial price increases. After the steep price drop in the fourth quarter, most of the fully integrated mills were operating in the red, while the mini mills were being hurt by the HRC to Scrap spread narrowing. Pricing was also pushed up by seasonal outages, increased demand from a restocking cycle in the first quarter, and a lack of imports into the U.S. market. Moving forward, there is the potential for some softening in the steel market. At this time most of the normal market factors that would push pricing up have been played out in the near term. Short of sudden demand increases or interruptions to supply, a price ceiling has most likely been reached. Of note, as of Tuesday the CME Hot Rolled Coil futures curve is downward facing for the remainder of the year. Continue reading TEX-ISLE, INC. LAUNCHES NEW WEBSITE 08/30/2019 FDI Creative Services Tex-Isle, Inc. is proud to announce the launch of our new company website. Within the new site, users can browse our Distribution, Manufacturing, and Engineering divisions, get in touch with us, and also stay up to date with the latest company news and offers. Please visit the new website at http://www.texisle.com/. 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