A nascent recovery in steel prices for US producers is being undermined by a flood of cheap exports from China, where output keeps rising even as local demand weakens, according to MEPS International Ltd.
Bloomberg News reported the premium for US hot-rolled coil, a benchmark product, over Chinese exports is approaching a two-year high, with a spread near $100 a metric ton. The gap encourages Chinese producers to ship surplus metal overseas, helping to cap gains in prices abroad including in this country.
“The Chinese are taking advantage of an opportunity,” Peter Fish, a MEPS analyst, told Bloomberg. “The arbitrage should narrow. The amount of imports into the U.S has increased significantly; they will become a factor in future pricing.”
Chinese steel prices closed flat for the day. The price of iron ore 58% fines from India hit a high price of CNY 840.00 ($136.51) and a low price of CNY 830.00 ($134.89) per dry metric ton. The price of Chinese HRC was unchanged at CNY 3,380 ($549.30) per metric ton. The price of Chinese coking coal saw essentially no change for the fifth day in a row, remaining around CNY 1,390 ($225.89) per metric ton.
The cash price of steel billet showed little movement on Tuesday on the LME at $420.00 per metric ton. The 3-month price of steel billet remained essentially flat at $425.00 per metric ton on the LME.
The 3-month price of the US HRC futures contract held steady around $645.00 per short ton. For the fifth consecutive day, the US HRC futures contract spot price held flat at $675.00 per short ton.