The Raw Steels Monthly Metals Index (MMI) increased one point this month, moving up to 89. Domestic steel price momentum seems slower than at the beginning of 2018, as domestic steel prices traded more sideways.
Domestic steel prices remain at a more than seven-year high.
May 1 served as the most recent steel and aluminum tariff exemption deadline. The government announced that the country-specific exemptions would continue to remain in effect for another 30 days (until June 1). The exemptions will likely turn into quotas for several countries, following a similar trade agreement as the one reached with South Korea.
Quotas will weaken the impact of Section 232. The details of the trade agreements could come during May.
Meanwhile, Section 301 seems to have gone unnoticed by buying organizations, despite its potentially bigger effect. If applied, Section 301 contains a proposal for 25% tariffs on a list of products from China. These products include not only steel or aluminum, but also secondary products used in many industrial sectors.
The Section 301 Committee will convene a public hearing May 15. May 22 will serve as the due date for submission of post-hearing comments.
Domestic steel prices have found support. Although price momentum has slowed, steel prices have not yet fallen.
Chinese Steel Pricing
Chinese prices have fallen since the beginning of 2018. In May, Chinese prices increased slightly. It is still too soon to see this slight increase as a change of trend. The latest price movement may have more to do with increased Chinese steel exports in April.
Despite U.S. tariffs, customs data shows higher Chinese steel imports arriving to U.S. ports. The 25% steel tariff on Chinese imports went into effect on March 23. Higher Chinese exports (and incoming imports in U.S. ports) come as a result of the divergence in U.S. and Chinese steel prices. U.S. steel prices skyrocketed, while Chinese prices fell.
What This Means for Industrial Buyers
As steel prices remain high, buying organizations may want to closely follow price movements to decide when to commit to mid- and long-term purchases.
Buying organizations looking for more clarity on when to buy and how much to buy may want to take a free trial now to our Monthly Metal Buying Outlook.