Prices for Grain-Oriented Electrical Steel (GOES) rose slightly from the previous month, moving the index back up to 253 from June’s 250 reading. May’s GOES index reading came in at 253 as well.
A number of factors have likely driven the GOES increase. First, HRC, the largest raw material element in GOES came up off its 2012 trough (during the weeks of July 9 and July 16) last week, moving over $600 per short ton this past week. In addition, total US monthly power spending also increased from $7.5 billion in April to $7.7 billion in May.
To boot, according to Reed Construction Data after updating their construction spending forecast: “Assuming no recession, the Reed Construction Data forecast is for total construction spending to increase 7.3% in 2012, up from last month’s 5.2% largely due to the benchmark revisions, and 6.2% in 2013.”
The average world price for GOES has also increased, lending support to the index.
GOES MMI® and US Total Power Construction Spending
Source: MetalMiner IndX℠ and US Census Bureau
An upbeat power-spending forecast will continue to provide support for GOES.
Supply Factors Good for Buyers
Last month, MetalMiner indicated that the forward price curve for hot rolled coil “suggests rising, not falling prices, but we haven’t seen steel prices plateau as of yet; that bottom may start to form during the next couple of weeks,” and that indeed happened the week of July 16. The forward price curve for HRC continues to show rising prices.
Come back during the third week of August when we report on next month’s GOES MMI®.
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