Possible Peak for Sheet Steel Prices

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Ferrous Metals

In an earlier series on steel pricing trends, we predicted that steel prices would ease this winter. In recent months, the market has seen a dwindling demand for sheet steel, surprisingly lower than expected, and prices should follow a steady path downwards. Purchasing.com recently announced that the global “steel-price surge” has likely hit a peak.

Although Purchasing.com shares that most “mill executives believe the fundamentals remain in place for transaction sheet steel prices to remain at high levels and for the third-quarter price increase to be absorbed by the market,” domestic demand hasn’t fared well this year, dropping 4% mid-year.

“Domestic shipments actually began slipping in May and midyear imports of 15.92 million tons are on pace for a 4.2% slide this year-after a 26.6% collapse in 2007,” writer Tom Stundza explained earlier this week. Hot-rolled sheet imports in coils jumped a few percentage points to 1.48 million tons, but this serves as an obvious contrast to cold-rolled sheet imports and hot-dipped galvanized sheet imports, which dropped more than 24%.

The third quarter is rarely the most profitable for the steel industry, with European shut-downs and a “summer vacation” in Japan, but market data suggests this year could see a larger drop than most. CIBC Capital Markets analyst Mike Willemse told Purchasing.com that the market “may see a declining price environment due to reduced end-market demand, greater raw material availability and higher inventories throughout the supply chain.”

–Amy Edwards

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