Dow Jones US Steel Index Pointing Down, As Is June MMI

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The monthly Raw Steels MMI® registered a value of 84 in June, a decrease of 1.2 percent from 85 in May.

FREE Download: Compare with last month’s MMI® Report – covering Steel/Iron Ore markets.

Our steel price index has remained remarkably flat since last year. Steel demand looks optimistic for some, but not so for others. The US steel industry had better-than-expected performance during the second half of 2013, but a bright future is far from certain.

June 2014 Raw Steels MMI

In periods when commodities surge, it is easy to foresee steel prices rising. That’s what happened during the commodities boom of the early 2000s (2003-2009). Rising demand from emerging markets and concern about supply availability inflated prices. The picture today is quite different. Since 2011, commodities and industrial metal prices, in particular, keep falling and until recently they haven’t been able to turn much. This environment doesn’t help push steel prices higher.

For this simple reason, until we see commodities and the metals sector overall turning up, we don’t really see real price risk for raw steel buyers.

Dow Jones US Steel Index one year out

Dow Jones US Steel Index one year out

A good benchmark for steel prices is the Dow Jones US Steel Index, which tracks major steel producers around the globe. This index already signaled a slowdown in steel prices in February and now it’s pointing to further weakness again.

What This Means For Metal Buyers

Steel prices seem to be flattening. With all base metals trending down or flat at best, we don’t expect steel prices to go much higher. Until we see more price weakness, we remain cautious.

* Get the complete prices every day on the MetalMiner IndX℠

The 3-month price of the US HRC futures contract closed the month at $623.00 per short ton after dropping 3.4 percent. Last month, US shredded scrap prices dropped by 2.8 percent to $385.00 per short ton. Korean steel scrap fell a slight 1.9 percent over the past month to $259.47 per metric ton.

The spot price of the US HRC futures contract closed the month up 0.9 percent at $670.00 per short ton.

On the LME, the steel billet 3-month price remained essentially flat for the month at $400.00 per metric ton. Over the past month, the steel billet cash price traded sideways on the LME, staying around $390.00 per metric ton. At a price of $497.50 per metric ton, Chinese billet did not budge the entire month. Prices for Chinese coking coal remained constant this past month, holding at around $222.35 per metric ton. Korean pig iron experienced a flat month, staying around $621.76 per metric ton. Last month was consistent for Chinese slab, which did not move from $556.68 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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