Monthly Raw Steels MMI® Falls to a New All-Time Low
Effective 12/1/14, MetalMiner updated some of the source data from China used to calculate this index. Therefore the December index reading appears a little more volatile when compared to the November reading. Any movements thereafter once again reflect only market price changes as opposed to market and source data prices changes.
The monthly Raw Steels MMI® registered a value of 68 in February, a decrease of 8.1% from 74 in January, an all-time low.
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Last month we pointed out that the stock prices of steel-related companies were falling dramatically. This usually comes along with declining steel prices as investors know well that earnings for steel producers shrink as steel prices drop.
Well, investors were right. US steel prices kept falling in January and they did it at a fast pace.
Growth in the US automobile and constructions sectors in 2014 didn’t help push prices higher. Steel imports surged to high levels and that played a big negative role for the industry. On top of that, the drop in oil prices is surely having a negative impact on steel prices as well since 10% of steel demand comes from the energy sector. Steel demand will likely go down as energy companies reduce their capital expenditure budgets.
What This Means For Metal Buyers
With falling oil prices driving commodities down, the dollar skyrocketing and the current weakness in foreign markets, it’s hard to imagine steel prices going higher this year. Fundamentals within the steel industry are far from strong and likely won’t push prices higher in this bearish commodity environment.
Chinese slab prices fell 19.0% to $381.70 per metric ton. The price of Korean pig iron closed the month at $481.98 per metric ton after dropping 16.5%. Following a 11.8% decline in price, Korean steel scrap finished the month at $135.50 per metric ton. The spot price of the US HRC futures contract fell 9.5% to $550.00 per short ton. After falling 7.4%, the 3-month price of the US HRC futures contract finished the month at $560.00 per short ton. After rising the previous month, US shredded scrap prices dropped 4.8% to $318.00 per short ton.
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Prices for the 3-month price of steel billet on the LME remained constant this past month, holding at around $480.00 per metric ton. On the LME, the cash price of steel billet held pat last month at $500.00 per metric ton. Chinese billet traded sideways last month, staying around $367.33 per metric ton. Chinese coking coal experienced a flat month, staying around $172.49 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 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.