The Raw Steel MMI jumped up four points this month to 75, increasing by 5.6% and returning to 2015 levels, along with copper.
Increasing Chinese steel prices have driven domestic steel prices this month. Both Chinese hot-rolled coil (HRC) and cold-rolled coil (CRC) prices have experienced an uptrend since the end of 2015. Chinese HRC prices increased 10.7% this month.
Even though the degree of movement in U.S. steel prices as great as those seen in China, U.S. prices have continued to increase. While Chinese steel prices continue to increase, domestic prices may continue the same uptrend.
Considering both U.S. domestic and Chinese HRC prices, the spread has continued to decrease this month. We would expect a drop in imports if the spread continues to decline. This would lend support to U.S. domestic HRC prices.
Meanwhile, U.S. shredded scrap prices declined 2.4% this month.
Falling scrap prices could push domestic buyers toward scrap instead of other raw materials, and domestic steel prices could face downward price pressure.
However, the long-term trend in scrap signals rising, not falling, prices.
Both iron ore and coking coal prices have rallied during July.
Increasing raw material prices may create upward pressure in steel prices as production costs increase.
What This Means for Industrial Buyers
Steel momentum appears to have shifted upwards.
Buying organizations should watch commodities to analyze the signals for both the short- and long-term trends.
Actual Raw Steel Prices and Trends