US Steel Industry Holds Its Own, But Latest Price Index Worries Us

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MetalMiner’s monthly Raw Steels MMI® registered a value of 85 in May, on par with April’s value.

Our steel price index has been trending quite flat since last year. Steel demand looks optimistic for some, but not that bright for others. The US steel industry had better-than-expected performance during the second half of 2013, but a brighter future is still not certain.

Raw-Steels_Chart_May-2014_FNL

Europe’s economic recovery will still be constrained by unemployment and large national debt. Unstable political situations in many emerging economies will remain unresolved for some time. Finally, issues surrounding China’s debt and a slowdown in its real estate market put uncertainty into steel’s future.

Many would argue that global steel demand is recovering, but not at a fast-enough pace and the environment still looks challenging.

In short, fundamentally nothing indicates an important surge in steel prices in 2014. Moreover, in the industrial metal sector, metal prices are not showing signs of recovery yet. We would expect some volatility in steel prices in the next months.

Although we wouldn’t expect prices to climb drastically this year, steel buyers might want to take some risk off the table in this period of uncertainty.

Key Price Drivers of the Steel Index

After rising 3.9 percent, the US HRC futures contract spot price finished the month at $664.00 per short ton. The 3-month price of the US HRC futures contract increased 1.6 percent to $645.00 per short ton. The price of US shredded scrap rose 1.3 percent to $396.00 per short ton after falling the previous month.

The price of Korean steel scrap fell 8.5 percent to $261.27 per metric ton.

Last month was consistent for the steel billet 3-month price on the LME, which did not move from $400.00 per metric ton. Hovering around $390.00 per metric ton on the LME for the month, the steel billet cash price remained unchanged. At a price of $496.88 per metric ton, Chinese billet did not budge the entire month. Chinese coking coal experienced a flat month, staying around $222.08 per metric ton. Hovering around $614.48 per metric ton for the month, Korean pig iron remained unchanged. Prices for Chinese slab remained constant this past month, holding at around $556.00 per metric ton.

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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