The steel prices plummet continued this month in the the monthly Raw Steels MMI® and registered a value of 60, a decrease of 11.8% from 68 in February.
In February steel prices fell sharply, not only for semifinished products but scrap prices hit the wall as well. Steel billet fell more than 50% this month for both the spot and 3-month contracts on the London Metal Exchange.
In January, the global scrap to billet price spread fell to less than $100 a metric ton. This level was unsustainable since melting scrap to make billet is already more expensive than that. For that spread to look more stable scrap prices needed to drop and boy did they ever.
Meanwhile, steel products can’t catch a break. According to recent figures released by the American Iron and Steel Institute (AISI), US steel imports rose 33% in January compared with the year before, reaching 3.85 million tons, compared with 2.9 million tons a year earlier. As a result, US producers keep cutting prices to compete with imports.
In February, the four steel products we track in our forecast reports (CRC,HRC,HDG and plate) dove to record lows. The lowest prices seen since 2009.
The flood of cheap Chinese exports that domestic industries in the US, Europe and India have long blamed for lowering domestic prices received real undercutting competition in the last two months from Ruble-deflated Russia. India first sounded the alarm on the cheap Russian imports, then US steelmakers noted how much Severstal and others were undercutting HRC prices here and then, finally, the Russian Federation, itself, considered export taxes on its own companies who are reaping a windfall of exports paid in dollars against production costs paid in rubles.
With economic sanctions battering an already shaky economy it’s unlikely that Russian steelmakers’ costs will go up unless its Moscow taking its share from them. This low export price situation will likely continue.