Although MetalMiner’s “crystal ball” may be going through a few tweaks and changes – and you, the readers, will be first to know when it goes down – we still want to give you a preview of our steel and stainless steel price forecasts before our free live webinar tomorrow, Friday April 24, where you’ll get our Q2/Q3 price forecasts for aluminum, copper, steel and stainless up to 6 months out.
Without further ado, here’s where we have most recently seen these markets going.
Bueller? (Ferrous) Bueller? Our Steel Price Forecast
Steel prices fell sharply during the first quarter and our steel index got a much-needed breather. Raw steels lack momentum on the upside and it seems that we will continue to see price weakness, for the following reasons:
- Lower production costs: as iron ore and oil prices continue to fall, steelmakers are under pressure from customers to cut prices. Both input costs are likely to remain depressed, weighing on overall steel prices.
- A strong dollar continues to widen the spread between domestic and oversees prices. China and Russia have been very active in exporting. Russia strongly benefited from a slump in the its currency while China has the advantage of receiving cheap iron ore. The increase in exports will continue to drive domestic prices down at least until US mills begin anti-dumping procedures against Chinese CRC and galvanized coil, which could add a boost of sentiment.
- The bearish commodity environment will continue to weigh on steel prices. Moreover, the performance of other base metals is suggesting anything but a turn around situation.
And what about scrap steel prices?
According to guest contributor and managing director of Steel-Insight, James May, “until a bigger supply response is seen (and there will have to be one at some point), the scrap price will move inexorably downwards. Despite the downward adjustment of scrap prices seen so far this year, it is still more cost-effective on a global basis to make steel using iron ore than scrap. That will mean further weakness for scrap-based electric arc furnaces around the world as they switch to either pig iron or billet as their primary raw material. If global scrap prices fall again, US exporters will sell more to the domestic market and hence our concern that $250 per ton is not the floor for US scrap prices.”
FORECAST: MetalMiner’s most recent short-term (2-month) HRC steel price forecast, for example, pointed to a downward trend, with resistance and support levels at $550 and $440 per short ton, respectively. (Learn more about what that means with a free trial to our monthly forecasts.)
For the latest 3-month and 6-month price targets and strategies, register now for our upcoming webinar, Q2 and Q3 Metal Market Forecast (And How Bearish Markets Create Opportunities for Global Trade Cost Reduction).
Stainless Steel/Nickel Price Forecast
During 2013-2014 nickel prices found support several times at $13,300 per metric ton, as traders found that level to be a good entry point to buy the metal. A couple weeks ago, prices fell as low as $12,310 per mt. Those traders that supported the metal price from declining further have now changed their minds. This simply means that the market sentiment has changed. Selling pressure has overcome buying power and, without making any predictions, nickel is now more vulnerable to further declines.
Two factors helped to change the market sentiment:
- The expected deficit that Indonesia’s export ban would create has failed that to materialize. Indonesian supply was replaced by increased supply from the Philippines, up 23% in 2014 from a year before. Moreover, as my colleague Stuart Burns pointed out, Chinese demand dropped from 909,000 mt in 2013 to 761,000 mt in 2014, despite a 9% increase in output of stainless steel.
- A bearish commodity environment, a strong dollar and low oil prices are punishing nickel prices. Not just nickel but by looking at the performance of other base metals, it was clear that a bear looms.
For context, since January, the 304 flat-rolled surcharge has decreased 21%, which far outweighs the domestic base price increase. The rise in imports has caused prices to decline for stainless flat-rolled products. US cold-rolled imports increased 40% in 2014 compared to 2013. Imports in the first two months of 2015 are 70% higher than for the same period in 2014.
FORECAST: For the latest 3-month and 6-month price targets and strategies, register now for our upcoming webinar, Q2 and Q3 Metal Market Forecast (And How Bearish Markets Create Opportunities for Global Trade Cost Reduction).