Raw Steels MMI: Global Steel Prices Continue to Falter

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The Raw Steels Monthly Metals Index (MMI) took another hit this month, dropping three points to 67. The index has now dropped for seven consecutive months — following an early 2019 high of 82 in March — on the back of falling steel prices.

U.S. steel prices dropped in September, with plate prices recording the greatest loss. However, historically, plate prices tend to track lower than CRC.

Based on technical analysis, prices for plate could still demonstrate more downside momentum compared to other forms of steel (HRC, CRC and HDG).

Source: MetalMiner data from MetalMiner IndX(™)

U.S. capacity utilization for the year to date remains above the critical 80% mark at 80.4%. During the period, production totaled 74.3 million tons, a 3% increase compared to the same period last year, according to the American Iron and Steel Institute (AISI).

However, weekly data for the week ending Oct. 5 indicated capacity utilization of 78%, with 1.8 million tons produced, a 3.9% decrease compared to the same period last year.

Chinese Prices Weaken

China CRC and plate prices nudged down recently, while HRC prices dropped to a greater extent.

Meanwhile, HDG prices took a clear downward turn in September.

Source: MetalMiner data from MetalMiner IndX(™)

During the course of 2019, Chinese steel prices looked fairly flat overall, with prices now lower than at the start of the year.

HRC, CRC and plate prices looked just slightly weaker compared to January prices. HDG prices dropped more noticeably, priced at CNY 5,690/mt in early October compared to the January price of around CNY 6,040/mt.

China’s Share of Total Global Production Continues to Increase

Based on data from the World Steel Association (WSA), global production of steel during the first eight months of 2019 totaled 1,239 million tons, up 4.6% percent compared to the first eight months of 2018.

China’s total share of global production totaled 53.6%, based on WSA data through August. Based on an estimated 664.04 million tons through August, production increased by 9.4% compared to the same period of 2018.

Additionally, in terms of monthly data, China’s steel production increased once again. China’s August production reached 87.25 million tons in August after dropping during the two months prior from June’s peak 2019 production of 89.09 million tons.

Meanwhile, production in Japan, the world’s third-largest steel-producing country, fell by 3.7% during the eight-month period, down to 67.589 million tons. The country’s share of global production dropped to 5.5%, compared to 5.9% during the first eight months of 2018.

U.S. production totaled 59.23 million tons through August, an increase of 4% compared to the same period of 2018, according to WSA numbers. Share of global production remained static at 4.8%. Likewise, production in India, the world’s second largest producing country, also remained flat at 6.1%, in terms of total global share of production.

Ongoing GM Strike Continues to Hurt Steel Demand

Given that demand from GM represents around 5-9% of annual steel demand in the U.S. (by various estimates), the ongoing strike continues to place a drag on U.S. steel prices.

As of Oct. 10, the strike had reached its 25th day.

What This Means for Industrial Buyers

Global growth in the production of steel appears to remain in excess of growth in steel demand, exerting downward pressure on prices.

Therefore, industrial buying organizations may benefit from understanding exactly when and how much to buy in this falling market.

Buying organizations interested in tracking industrial metals prices with ease should request a demo of the all new MetalMiner Insights platform.

Buying organizations seeking more insight into longer-term steel price trends may want to read MetalMiner’s Annual Metal Buying Outlook.

Free Partial Sample Report: 2020 MetalMiner Annual Metals Outlook

Actual Raw Steel Prices and Trends

Steel prices weakened further in September.

Korean scrap prices registered a 16.9% decrease, falling to $116/st. Korean pig iron dropped 0.2% to $358/mt.

U.S. shredded scrap prices dropped 13.6% to $254/st. The U.S. Midwest HRC futures spot price dropped 10.9%, while the Midwest HRC futures three-month price fell by 3.6% to $522/st and $530/st, respectively.

LME billet three-month prices dropped 12% to $234/st.

Chinese prices in the index showed mixed, mild movement. Chinese billet prices increased the most, rising 2.1% to $488/mt. HRC prices decreased the most, dropping 1% to $505/mt.

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