Raw Steels MMI: Steel Prices Sit at More Than Seven-Year High
The Raw Steels Monthly Metals Index (MMI) fell two points this month, dropping to 90 from the previous 92 reading.
Domestic steel price momentum continued, as domestic steel prices increased again. Chinese steel prices also increased in June, adding support to domestic steel prices.
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Domestic steel prices remain at a more than seven-year high.
Steel prices also increased at the beginning of July (except for HDG, which dropped slightly). The pace of the increases seems to have slowed, but prices remain in an uptrend. Therefore, buying organizations can expect high steel prices.
However, the historical cyclicality may move prices lower at some point.
Domestic steel prices have stayed in a sharp uptrend since January 2018. Current prices have started to trade more sideways. Despite the increase in prices, prices may begin to come off slightly at some point this year. Buying organizations may want to identify that moment to commit to purchases and reduce risks.
The Spread
The CRC-HRC domestic spread appears to be back at its historical level.
The domestic spread should be around $100/st. However, in 2016 the spread started to increase, reaching more than $200/st. The spread currently stands at $111/st.
Chinese Steel Prices
Chinese steel prices recovered from a previous downtrend and increased again in June.
Early July price indications show slightly lower prices. However, Chinese steel prices appear to be in a recovery uptrend.
All Chinese forms of steel have dropped slightly so far in July (except HDG prices, which inched higher).
Chinese steel output increased again in May, despite steel product exports dropping around 20% during the first four months of the year. Strong Chinese domestic demand has kept mills running at full capacity.
However, Chinese steelmakers are currently seeking alternative markets, such as Africa and South America.
What This Means for Industrial Buyers
Since 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.
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Actual Raw Steel Prices and Trends
The U.S. Midwest HRC 3-month futures price fell this month by 5.86%, falling to $852/st.
Chinese steel billet prices decreased again this month by 0.17%, while Chinese slab prices fell further by 3.72%, moving to $640/mt.
The U.S. shredded scrap price closed the month at $371/st, trading flat from last month’s reading.
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