Raw Steels MMI®: Low Oil Prices Continue to Drag Down Steel

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Coiled steel for import

Back in 2011, Northeast Ohio was abuzz about the rebirth of its steel industry, Crain’s Cleveland Business reported. France’s Vallourec was investing close to $1 billion in a new steel mill in Youngstown, TimkenSteel was investing $225 million in its Stark County mills and, in Lorain, Republic and U.S. Steel were investing, respectively, $85 million and $95 million in their operations.

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All of those mills make what is known as “oil country tubular goods” (OTCG) — basically, the steel tubing needed to drill for gas and oil, along with the fittings and components used with the tubing itself. With each new shale well using more than 3 miles of pipe to go down and then laterally into the nation’s shale plays, all of the companies were rushing to serve this rapidly growing market.

Today, though, the region is reeling from news last week that U.S. Steel plans to idle its Lorain mill, putting more than 600 steel workers out of work.

After falling 1.8%, the spot price of the US HRC futures contract landed at $594.00 per short ton, making it the week’s biggest mover on the weekly Raw Steels MMI®. The 3-month price of the US HRC futures contract declined to $597.00 per short ton after drifting 0.8% since last week. US shredded scrap saw its price rise 0.6% over the past week to $336.00 per short ton.

The week’s biggest mover on the weekly Raw Steels MMI® was Korean pig iron, which saw a 16.5% decline to KRW 530,000 ($491.38) per metric ton. Following a steady week, prices for Korean steel scrap closed flat at KRW 169,000 ($156.68) per metric ton.

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Chinese steel prices were mixed for the week. The price of iron ore 58% fines from India hit a high price of CNY 840.00 ($135.61) and a low price of CNY 840.00 ($135.61) per dry metric ton. Chinese HRC finished the week at CNY 2,890 ($466.57) per metric ton after falling 4.9%. Following a 1.0% increase in the week prior, the price of Chinese slab fell 11.1% last week to CNY 2,650 ($427.82) per metric ton. Chinese coking coal remained essentially flat from the previous week at CNY 1,080 ($174.36) per metric ton.

Closing at $480.00 per metric ton, the steel billet 3-month price remained unchanged on the LME for the week. Also on the LME, the cash price of steel billet remained steady from the previous week at $500.00 per metric ton.

The spot price of the US HRC futures contract closed last week at $594.00 per short ton, after a 1.8% drop. Following a 0.8% drop, the US HRC futures contract 3-month price finished the week at $597.00 per short ton. US shredded scrap rose 0.6% over the past week to $336.00 per short 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. 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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