The monthly Raw Steels MMI® registered a value of 85 in August, a modest 1.2 percent increase from July.
The steel market remains well supplied at this point. However, producers have been trying to reduce the overcapacity and demand seems to be picking up. US demand remains positive but that, alone, is unlikely to tighten the market significantly. The key driver is still China, which appears to be experiencing momentum.
While global tensions (especially in Europe) have caused developed-market struggles, emerging markets had a very good month. Chinese stocks rose 10% in July, breaking out to the highest level in three years. The good news for China is very good for industrial metals as China is the biggest user of these commodities.
A good benchmark for steel prices is the Dow Jones US Steel Index, which tracks major steel producers around the globe. We can see in the chart above that the index has been consolidating over the past 5 months and it might be ready to move up sometime this year.
What This Means For Metal Buyers
We have already seen some industrial metals turning upward in 2014. If these developments continue and the metal sector keeps moving up, steel prices will follow. Keep an eye on China and the rest of industrial metals as they will give us clues for steel. We’ll probably see a more exciting rest of the year.
The cash price of steel billet closed the month at $420.00 per metric ton after gaining 6.3 percent on the LME. The steel billet 3-month price reached $425.00 per metric ton after a 6.2 percent increase on the LME. After dropping the previous month, the price of US shredded scrap prices rose 2.4 percent to $379.00 per short ton. The spot price of the US HRC futures contract rose 2.0 percent to $665.00 per short ton after falling the previous month. The 3-month price of the US HRC futures contract rose 1.7 percent over the past month to $646.00 per short ton.
A 3.8 percent decline for Korean steel scrap left the price at KRW 250,000 ($243.96) per metric ton.
Chinese billet traded sideways last month, staying around $503.75 per metric ton. Last month was consistent for Chinese coking coal, which did not move from $225.15 per metric ton. Korean pig iron held pat last month at $614.82 per metric ton. The price of Chinese slab held steady around $563.69 per metric ton last 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.