Raw Steels MMI: Q4 Steel Prices Trending Lower (But Watch For Trend Reversal)

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steel mill production line
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The Raw Steels MMI decreased again this month, falling two points down to 77. Steel prices seem to have lost momentum and fell this month both domestically and internationally. However, mills have announced price hikes for November.

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Prices in October fell for all forms of steel, although HRC and plate prices increased slightly at the end of the month.

Source: MetalMiner data from MetalMiner IndX(™)

However, historical Q4 price trends generally suggest rising  prices and increasing demand. In addition, industrial metals remain solidly in a bull market.

Will steel prices see a bump too? Let’s take a look at the market indicators.

Domestic Steel Market

Domestic steel prices fell this month after trading flat (sideways) for the last few months. Steel price momentum has declined but Q4 increases often come in November and later. Service centers still report steady demand, despite significant steel price drops in October.

Lead times increased for all forms of steel. Increasing lead times generally support rising steel prices.

Let’s Not Forget About China

Curtailed Chinese capacity has supported steel prices during most of the year (particularly during Q3).

However, no real shortage exists, as China increased production in the summer to meet heavier winter demand.

In October, the  Chinese Steel PMI fell to a 6-month low, though it remains above 50, which still signals growth.

Source: MetalMiner data from MetalMiner IndX(™)

During the first few days of November, Chinese CRC prices held steady while HRC prices fell slightly. As HRC and CRC prices commonly move in tandem, prices will likely adjust during the month. Buying organizations should watch Chinese prices for signals of a price rebound.

Raw Materials and Scrap

Scrap prices fell together with steel prices this month. Scrap prices held somewhat steady during 2017 (as have steel prices).

Source: MetalMiner data from MetalMiner IndX(™)

Raw material price dynamics tend to correlate with steel prices. Steel prices decreased in October, following iron ore’s September price falls. Coal prices traded sideways in October, despite the short-term uptrend that began in April. Early November iron ore prices appear flat, while coal prices increased to the $100 level. Increasing raw material prices may create some upward movement for steel prices.

What This Means for Industrial Buyers

Steel price dynamics continued to lose momentum this month.

However, buying organizations will want to pay close attention to Chinese price trends, lead times and whether domestic mill price hikes stick.

To read more about our longer term steel price trends download our free Annual Outlook.

To understand how to adapt your buying strategy this season, take a free trial now or subscribe to  the Monthly Outlook for a short-term analysis.

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Actual Raw Steel Prices and Trends

The U.S. Midwest HRC futures 3-month price increased this month by 1%, reaching $605/st. Chinese steel billet increased by 0.9%, while Chinese slab prices increased by 2.4% reaching $603/mt. The U.S. shredded scrap price decreased by 6.33%, falling to $281/st.

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