We’ve certainly seen ferrous markets plummet lately, with steel prices and steel scrap prices taking hits the past couple weeks.
The week’s biggest mover on the Raw Steels MMI® was the steel billet 3-month price, which saw a 21.1 percent decline on the LME to $315 per metric ton. Last week marked the fourth in a row of declining prices for the metal. The cash price of steel billet fell 19.4 percent on the LME over the past week to $314 per metric ton. This was the third week in a row of declining prices. Meanwhile, the price of US shredded scrap finished the week down 9.5 percent.
So what does this price fall mean for steel and scrap buyers?
Drivers of Steel Scrap Price Drops
On the one hand, falling scrap prices for domestic producers represent a positive trend in that raw material input costs place less pressure on producers in terms of COGS (cost of goods sold). But falling prices, though always welcome news for buying organizations, tend to signal one of a couple of things — the first relates to demand.
Weak pricing often means demand has slipped. Alternatively, too much material may have flooded the market or too much capacity has created price weakness. In this case, we’d suggest the European debt crisis has caused companies to pull back, which has created a waterfall effect throughout many industrial (and consumer) supply chains.
Our monthly Raw Steels MMI® began to slip in February of this year and continues to fall. July numbers will help tell whether this scrap price decline looks like a blip or a longer-term trend.
More Steel Price Trends from the MetalMiner IndX℠
The 3-month price of US HRC futures contract fell 3.4 percent over the past week to $620 per short ton. This was the third week in a row of declining prices. Following a 0.8 percent drop, the US HRC futures contract spot price finished the week at $625 per short ton.
Chinese steel prices were flat for the week. The high and low prices of iron ore 58% fines from India ranged between $125 and $130 per dry metric ton. Chinese HRC prices held steady from the previous week, and the price of Chinese coking coal did not change either. Prices for Chinese slab remained constant, closing the week at between $600 and $650 per metric ton.
Korean steel prices were down for the week. Korean pig iron fell 6.3 percent. Korean steel scrap prices were off slightly as well.
The Raw Steels MMI® collects and weights 13 global steel and raw material price points to provide a unique view into global steel price trends. For more information on the Raw Steels MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.