Monthly Raw Steels Index Flat as a Pancake

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The monthly Raw Steels MMI® held steady at 82, remaining flat for the fourth month in a row.

Raw-Steels_Chart_November-2013_FNL3

Most economic trends have held fairly steady since the previous month. Manufacturing data didn’t show negative trends. Construction indicators remain tepid, and China continues producing large volumes of steel, leading to global oversupply.

This overhang has limited steel price upside.

For the past four years, steel prices have shown similar patterns. Prices fell during Q3 and through October, with the trend reversing at the end of October/November through Q1 of the following year. This year, the pattern looks a little different. Prices held fairly flat during Q3, showing less of an upward trend like prior years.

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We heard many people calling for rising prices in this last quarter but the raw material market does not reflect that. US steel price indices have moved up slightly in the past three weeks, but it appears to be more of a dead cat bounce.

black tan white cat

For those of you without a Master’s degree in business who therefore don’t understand obscure finance terms, a dead cat bounce is not what this photo illustrates.

We wouldn’t draw any hard and fast conclusions on upward steel price trends. With the raw steel index remaining flat and many of the steel market fundamentals still weak, we don’t expect steel prices to destroy a buyer’s budget through the end of the year.

Key Drivers of the Steel Price Index

Generally speaking, none of the prices included in this index experienced big movements, with the exception of Korean pig iron, which decreased by 19.5%.

On the other hand, the 3-month price of the US HRC futures contract closed the month up 4 percent at $655.00. In the same manner, steel LME Billet 3M closed up 6.5 percent at $245.00.

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At $240.00 per metric ton, the cash price of steel billet increased 14.6 percent on the LME. For the second month in a row, the steel billet 3-month price increased, rising 6.5 percent on the LME over the past month to $245.00 per metric ton. The US HRC futures contract 3-month price closed the month up 4.0 percent at $655.00 per short ton. The spot price of the US HRC futures contract rose 3.3 percent over the past month to $651.00 per short ton, the second straight month of gains. After dropping the previous month, the price of US shredded scrap prices rose 0.6 percent.

Korean steel scrap prices dropped by 9.0 percent this month. Chinese slab fell 0.9 percent.

Chinese billet experienced a flat month. Korean pig iron did not budge the entire month.

Don’t forget to read the October 2013 MMI analysis before November’s full report comes out next week!

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.