While domestic prices remained stable in June, Chinese steel prices plunged with its stock market. Also, the non-liquid London Metal Exchange steel billet contract fell sharply, weighing on our index.
The monthly Raw Steels MMI® registered a value of 56 in July, a decrease of 5.1% from 59 in June.
Chinese Market Reeling
Chinese steel prices are at their lowest level in more than 20 years. Chinese demand seems to be getting worse and industry analysts point out that the fall might not even be close to an end. This threatens the survival of smaller Chinese steelmakers, who are still reluctant to cut production in order to maintain cash flow and bank credit, while other small mills have already shut down.
Construction data shows that demand from the sector has slowed during this first half. Moreover, China’s demand for steel could take a further hit as construction eases over the summer.
Finally, China’s recent stock market turmoil is adding more doubts about its economy. This is definitely not good for steel prices and other industrial metals which we’ve seen falling sharply this month.
What This Means For Metal Buyers
Domestic prices have sort of stabilized over the past couple of months. However, the sharp decline of Chinese steel prices could keep putting pressure on US prices, especially under the bearish commodity environment we are in.
On the LME, the 3-month price of steel billet fell 60.3% over the past month to $115.00 per metric ton. On the LME, the cash price of steel billet fell 47.4% to $150.00 per metric ton. At $320.46 per metric ton, Chinese slab was down 13.9% for the month. The 3-month price of the US HRC futures contract decreased by 2.5% this month, ending at $503.00 per short ton.
At $280.00 per short ton, the price of US shredded scrap finished the month 10.2% higher. This was the second straight month of declines. After rising 3.7%, Korean steel scrap finished the month at $123.99 per metric ton. The price of Chinese billet rose 2.5% to $325.29 per metric ton after falling the previous month. Finishing at $465.00 per short ton the spot price of the US HRC futures contract saw a 0.2% shift lower for the month.
Last month was consistent for Chinese coking coal, which did not move from $173.92 per metric ton. Korean pig iron held pat last month at $472.77 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.