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Domestic steel prices have been in a downtrend since August, when prices started to show the first signs of weakness.

All forms of steel, except plate, have showed downward price momentum.

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Source: MetalMiner data from MetalMiner IndX(™)

Historically, steel prices move lower during Q3 and part of Q4. When the budgeting season starts, mills begin to raise steel prices.

For the past three years, steel prices have increased at the end of Q1, just a little delayed from the general Q4 increase.

However, this year the price increase remains in hibernation.

Steel prices continue to move lower and lead times have not increased. In fact, lead times remain the shortest in a year.

Therefore, steel price increases do not seem justified for HRC, CRC and HDG.

Plate Prices — Why Are They Moving Differently?

Meanwhile, plate prices have followed their own trend.

Plate prices have remained well-supported so far. While other forms of steel have seen price declines since August, plate prices continue to trade sideways.

In fact, plate prices have increased during this time.

Source: MetalMiner data from MetalMiner IndX(™)

Plate prices in general have less volatility than other forms of steel. Plate prices often trade sideways in one direction for a long time, then suddenly shift and move into a different trend.

Lead times combined with strong demand have supported plate prices. Most steel producers see lower automotive numbers, but demand from plate-consuming industries remains stronger.

While all the other steel forms have had shorter lead times during the year, with increasing domestic capacity utilization, plate lead times continue to lengthen.

Chinese Steel Prices

The 800-pound gorilla, China, offers a window into what may happen to domestic prices.

Chinese steel prices have fallen since September 2018. Steel prices have been softer in China this year, driven by signals of weaker demand and a slower manufacturing index.

Source: MetalMiner data from MetalMiner IndX(™)

What This Means for Industrial Buyers

Current domestic steel prices appear to be in a downtrend.

Adapting the right buying strategy becomes crucial to reducing risks. Only the MetalMiner monthly outlooks provides a continually updated snapshot of the market from which buying organizations can determine when and how much of the underlying metal to buy.

MetalMiner’s Annual Outlook provides 2019 buying strategies for carbon steel

For more information on how to mitigate price risk year-round, request a free trial to our Monthly Metal Buying Outlook.

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Last week, E.U. member states voted to go ahead with new quotas on steel imports extending until July 2021.

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Last July, the E.U. voted to impose provisional steel safeguards, which were allowed to remain in place for a maximum of 200 days (that is, until Feb. 4).

On the heels of last week’s vote, Axel Eggert, director general of the European Steel Association (EUROFER), offered a mixed reaction.

“EU steel imports rose by an unprecedented 12% in 2018. For every three tonnes of steel blocked by the US’ section 232 tariffs, two tonnes have been shipped to the open EU market,” Eggert said.

“It was important that final safeguard measures be approved by the member states; these will now be implemented by 4 February 2019. While we welcome this endorsement, we are nevertheless worried that the form of the final measures may undermine their intended safeguarding function. It is therefore vital that the Commission closely monitors EU steel demand development and adjusts the generous increase of the tariff-free import quota accordingly in July 2019, if necessary.”

The quotas were put into place in response to the Trump administration’s Section 232 tariffs on steel and aluminum — amid concerns regarding the potential for diverted steel flooding the European market — and aimed to “preserve traditional trade flows.”

Eggert was critical of the scheduled increase of the quota — by 5%, an additional 5% in 2019 and an additional 5% in 2020 — and pointed to what might be unintended negative consequences of the move.

“This means that the rise in the quota may be multiple times larger than the increase in the size of the market, leaving EU producers to fight over a shrinking market share,” Eggert said. “Imports already account for around a quarter of the market, up from less than a fifth historically.”

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Eggert also said exemptions for developing countries eventually need to be eliminated.

“So, while we reiterate our welcome for the final measures, and the overwhelming backing they have received from member states, we caution that steel demand must be monitored closely in the coming periods if this mechanism is to prove effective in the long run,” Eggert added.