U.S. domestic prices of grain-oriented electrical steel (GOES) fell this past month, continuing the roller coaster ride of price increases and decreases in the GOES M3 index since the start of this year.
GOES prices do not tend to follow general steel price trends, nor does simple fundamental (supply and demand) analysis help explain price trends.
Globally, for example, GOES prices are on the rise, on the back of several developments.
Demand for electric cars
An increased demand for electric cars that use high-quality non-oriented electrical steel (NOES), is one such development. MetalMiner has reviewed market growth data supplied by an automotive manufacturer indicating that demand for electric vehicles is anticipated to take about 8% market share away from internal combustion engine (ICE) automobiles by 2020, with battery electric vehicles (BEV) taking up the largest share of electric vehicle (EV) growth.
NOES is required to get the power from the battery to the motor. How does this impact GOES prices? High-quality NOES often needs to run on GOES product lines, thereby limiting GOES capacity.
In theory, this should cause prices to rise.
According to a recent TEX Report, that is indeed what is happening for Japanese GOES exports – prices have increased by $400-500/metric ton from the first half of the year.
GOES producers secure price increases
A second development involves the large tender that was issued by Bharat Heavy Electricals this past spring.
According to the TEX Report, multiple GOES producers from Korea, Japan and the U.S. secured tonnage at a $400-500/mt increase over previously contracted prices.
Moreover, producers in China raised prices for GOES for June shipments, as inventories have been depleted.
Let’s Not Forget Section 232
On top of these somewhat bullish developments, here in the U.S., the Department of Commerce (DoC) conducted a public hearing on the Section 232 steel investigation, of which both NOES and GOES materials are included. Interested parties can access the entire three-plus-hour testimony on the Department of Commerce website.
The sole GOES producer, AK Steel CEO Roger Newport, addressed the Department of Commerce panelists. As evidence that the materials provided by AK Steel should receive protective action, he told the panelists (at 59:50), “The Department of Energy has identified electrical transmission systems and infrastructure as critical to our national security and requires urgent attention.”
Perhaps of greater significance to GOES market participants, Newport identified not only GOES, but also cores and transformers, as materials and products to be included in any Section 232 remedy.
If the Department of Commerce accepts this broader definition of products and makes recommendations to curb imports of these products (assuming President Donald Trump implements the department’s recommendations), the market could change drastically quite quickly.
What This Means For Industrial Buyers
It’s hard to see any outcome not resulting in rising U.S. GOES prices for the second half of the year.
This is particularly true if the Department of Commerce releases recommendations for action to the president within the June-July time frame, the rumored report release date.
In a subsequent post, MetalMiner will examine possible policy outcomes from the Department of Commerce Section 232 investigation.
Exact GOES Coil Price This Month
The U.S. grain-oriented electrical steel (GOES) coil price fell to to $2602/mt from $2776/mt last month.
The GOES MMI® collects and weights 1 global grain-oriented electrical steel price point to provide a unique view into price trends over a 30-day period. For more information on the GOES MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.