The monthly Raw Steels MMI® jumped 3 points from last month, moving up 3.4 percent from 88 to 91.
So could one now consider steel a stable commodity?
Despite the three-point jump, our steel and raw material input price index has fluctuated within a four-point band since July of last year. What does the steadier state of the MMI suggest?
It suggests to us that demand appears largely steady, with some momentum behind the automotive sector and parts of the construction market. But the steel industry still remains well under its “healthy” capacity utilization rate of +/-85%.
In fact, this week’s capacity utilization rate only reached 75.2% – almost 3% lower than the same week one year ago. The year-to-date comparison numbers show a 6.2% decline in capacity utilization. And though US Steel recently reported that the company expects raw material costs to drop this year, the mills have tightly managed utilization rates to keep prices supported.
In essence, unless we see a drop in any major end-use sector, prices will likely hold somewhat steady. What happens during the second half of 2012 we can’t necessarily predict, but steel buyers – for now – can enjoy a little stability.
Primary Price Drivers of the Raw Steels Index
Chinese coking coal ended higher after a 8.7 percent increase for the month of January.
Following a 7.1 percent spike in price, Chinese billet closed the month up. Chinese slab finished the month up too after gaining 6.4 percent. The Chinese high price of 58% India iron ore fines ticked up slightly, by 0.3 percent.
After rising 1.6 percent the previous month, US HRC futures contract 3 month prices dropped 1.5 percent to $645.00 per short ton. US shredded scrap prices fell 0.5 percent after rising 1 percent the previous month.
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 over a 30-day period. 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.
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