This month’s GOES M3 index, the GOES MMI®, jumped by nearly 11%, moving up from 195 to 216. Two trends may drive 2015 price discussions – additional pricing power on behalf of the domestic producers as a result of their partial win in the GOES anti-dumping case (only materials coming from Germany, Japan and Poland did not receive duties) and lower volume as domestic buyers implemented alternative arrangements as a response to the filing of the trade case.
Although we speculated last month that the domestic producers may struggle to raise prices, it appears they have achieved some success; but we will continue to watch GOES prices closely to see if price increases “stick.”
Meanwhile, the anti-dumping case for NOES (non-oriented electrical steel) turned out more favorably for domestic mill AK Steel, as we previously reported.
The trade cases for NOES and GOES share some similarities (same petitioner, AK Steel – though Allegheny Technologies joined AK in the GOES case) but the market fundamentals appear quite different. AK Steel has the domestic monopoly on NOES that trades at a substantial discount to GOES. Imports for NOES flooded the market during the period covered by the decision: July 1, 2012–June 30, 2013.
Several manufacturers testified on Oct. 9 at the International Trade Commission’s final hearing against AK Steel.
The primary argument hinged upon a debate between the two sets of parties – on the one hand, AK Steel argued that materials such as NOES have no product substitutes, whereas the manufacturers argued the opposite. Indeed, all of these products have a broad range of characteristics and are produced in many different grades, and design engineers can fluidly make product substitutions based on the current prices of the various options including GOES, NOES, amorphous steel and cold rolled motor lamination (CRML). By arguing that no product substitutes exist, AK Steel believes the imports caused prices to plunge.
Why GOES Is Like Golf…and What It Means for Buyers
One could almost liken this to a golf analogy – if the ball lies a few yards off the green, the golfer can take a whole range of clubs out to chip the ball onto the green. The notion that the pitching wedge is the only club that can be used is a fallacy. The golfer will take a range of factors into consideration when selecting his club – how far he is from the hole, the slope of the green, where the ball lies (flat or on a slope), etc. The sum of the factors will guide club selection.
The same is true for many of these electrical steels. And though AK Steel may find itself on the winning side for NOES, the reality is that buyers have many options.
And we all know that having options increases buyer leverage and purchasing power.
MetalMiner’s GOES M3 Coil Price:
After dropping the previous month, US grain-oriented electrical steel (GOES) coil prices rose 10.6% to $2,978 per metric ton.
The GOES MMI® collects and weights 1 global grain-oriented electrical steel price point to provide a unique view into price trends over a 30-day period. For more information on the GOES MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.