Steel Prices Plummet in March as Cheap Russian Exports Take Hold

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Coiled steel for import

The steel prices plummet continued this month in the the monthly Raw Steels MMI® and registered a value of 60, a decrease of 11.8% from 68 in February.

Raw-Steels_Chart_March-2015_FNL

*Note: Effective 12/1/14, MetalMiner updated some of the source data from China used to calculate this index. Therefore the December index reading appeared a little more volatile when compared to the November reading. However, any movements thereafter reflect only market price changes as opposed to market and source data prices changes.

In February steel prices fell sharply, not only for semifinished products but scrap prices hit the wall as well. Steel billet fell more than 50% this month for both the spot and 3-month contracts on the London Metal Exchange.

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In January, the global scrap to billet price spread fell to less than $100 a metric ton. This level was unsustainable since melting scrap to make billet is already more expensive than that. For that spread to look more stable scrap prices needed to drop and boy, did they ever.

No Relief For Finished Steel Products

Meanwhile, steel products can’t catch a break. According to recent figures released by the American Iron and Steel Institute (AISI), US steel imports rose 33% in January compared with the year before, reaching 3.85 million tons, compared with 2.9 million tons a year earlier. As a result, US producers keep cutting prices to compete with imports.

In February, the four steel products we track in our forecast reports (CRC, HRC, HDG and plate) dove to record lows. The lowest prices seen since 2009.

The Russian Bear Market

The flood of cheap Chinese exports that domestic industries in the US, Europe and India have long blamed for lowering domestic prices received real undercutting competition in the last two months from Ruble-deflated Russia. India first sounded the alarm on the cheap Russian imports, then US steelmakers noted how much Severstal and others were undercutting HRC prices here and then, finally, the Russian Federation, itself, considered export taxes on its own companies who are reaping a windfall of exports paid in dollars against production costs paid in rubles.

With economic sanctions battering an already shaky economy it’s unlikely that Russian steelmakers’ costs will go up unless its Moscow taking its share from them. This low export price situation will likely continue.

Exact Metal Price Movements: Raw Steels MMI®

Yes, we know, the prices seem very cheap, but who says they can’t go lower? While commodities keep falling and crude oil is just hanging around at low levels, our analysis shows little certainty for both a recovery and a longer tailspin for oil, it wouldn’t be such a surprise to see steel prices fall lower and lower throughout 2015.

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A 39.0% drop on the LME left the steel billet cash price at $305.00 per metric ton. On the LME, the steel billet 3-month price fell 36.5% over the past month to $305.00 per metric ton. Following a 22.6% decline in price, US shredded scrap finished the month at $246.00 per short ton. After falling 8.5%, the US HRC futures contract spot price finished the month at $503.00 per short ton. The US HRC futures contract 3-month price declined 8.0% over the month to $515.00 per short ton. Korean steel scrap prices fell 3.4% to $131.00 per metric ton.

After dropping the previous month, the price of Chinese slab prices rose 2.9% to $393.07 per metric ton.

Prices for Chinese billet remained constant this past month, holding at around $367.51 per metric ton. The price of Chinese coking coal held steady around $172.57 per metric ton last month. Last month was consistent for Korean pig iron, which did not move from $482.17 per metric 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 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.

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