Raw Steels MMI®: China Still Producing Surplus Steel, Layoffs Ensue

This week in steel, prices continued to fall and layoffs at producers of oil pipes and tubes increased.

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Steel prices in China continue to fall in the face of plunging raw material cost inputs and a depressed construction sector. Even though China closed 31.1 million tons of steel production capacity last year, higher than the 27 million tons expected, the sector is still suffering from chronic overcapacity.

Lower oil prices produced a steady stream of layoffs from producers that invested heavily in oil country tubular goods (OCTG) and other pipe and tube products.

The week’s biggest mover on the weekly Raw Steels MMI® was the price of Chinese HRC, which saw a 6.8% decline to CNY 2,610 ($418.18) per metric ton. This week marked the third in a row of declining prices for the metal. For the third week in a row, the price of Chinese slab dropped, falling 4.8% to CNY 2,360 ($378.12) per metric ton. Chinese billet prices held steady from the previous week at CNY 2,300 ($368.51) per metric ton. Closing at CNY 1,080 ($173.04) per metric ton, Chinese coking coal remained unchanged for the week. The price of iron ore 58% fines from India hit a high price of CNY 840.00 ($134.59) and a low price of CNY 840.00 ($134.59) per dry metric ton.

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Closing at $480.00 per metric ton, the 3-month price of steel billet remained unchanged on the LME for the week. At $500.00 per metric ton, the steel billet cash price remained essentially flat on the LME.

Following a 0.6% increase in the week prior, the price of US shredded scrap fell 0.6% last week to $336.00 per short ton. The US HRC futures contract 3-month price dropped 0.5% this week, closing out the third consecutive week of falling prices at $572.00 per short ton. The US HRC futures contract spot price fell 0.3% over the past week to $583.00 per short ton. This was the third week in a row of declining prices.

Korean steel prices were flat for the week. Korean steel scrap traded sideways last week, hovering around KRW 169,000 ($156.83) per metric ton. Prices for Korean pig iron remained constant, closing the week at KRW 530,000 ($491.84) per metric ton.

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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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