Steel Price Predictions 2010

by on

One question everyone likes to ask us is this: how accurate were your previous predictions? Since we don’t exactly self-score, we’ll give the stock answer we give all of our prospects, “go back and judge for yourself. To save you the trouble, here are two of the most popular posts we have ever written on the subject of steel price predictions: 2009 Steel Price Predictions Part One and 2009 Steel Price Predictions Part Two. Steel prices for 2010 already have their own set of dynamics making the business of forecasting tricky indeed. If one asked us to identify the key themes for steel prices in 2010, we would suggest several and the bigger ones include: higher raw material or input costs, China growth, sluggish Western demand and “little supply/demand changes make for big price changes.

We have already witnessed substantial flat rolled price increases with rebar showing the greatest price weakness. The question becomes, will the mills’ price increases stick? In one word, yes but the road will look a little bumpy. The other big variable in steel prices involves the global trade of steel. Last year, we witnessed several of the largest anti-dumping cases ever brought forward including one involving OCTG and the other for line pipe. We have also spent some time looking at the nature of our global trade deficit and sought greater clarity on the subject of currency pegs particularly as they relate to trade with China. On February 19, the American Institute for International Steel released a press release entitled: December Steel Exports Rise Year on Year Exports Contribute $10.5 billion Positive to Trade Balance. To better understand the context of those numbers, we decided to do some of our own digging to analyze the volume and value of imports against the volume and value of exports.

The results appear as follows:

The US runs a $6.3b steel trade deficit with the rest of the world. Last year, the US produced 82.3m metric tons of steel according to the World Steel Association at approximately 65% capacity utilization. This analysis probably raises more questions then it answers. For example, what should US trade policy look like given the size of the 2009 trade deficit? If the US steel industry operated at 65% capacity and yet the US ran a steel trade deficit of $6.3b how will trade policy change? Will it change? Perhaps more important to metals buyers, how will trade and anti-dumping cases impact steel pricing in 2010?

The MetalMiner Steel Price Perspectives 2010 contain detailed EAF and BOF production cost models updated with the latest raw material costs, a quarterly price forecast as well as a detailed global analysis of steel pricing leveraging historical data from our proprietary MetalMiner IndX(SM). Single reports are available through the above link for $347 and $1257 for a quarterly subscription. Discounts are also available.

–Lisa Reisman

Comment (1)

Leave a Comment

Your email address will not be published. Required fields are marked *