Raw Steels MMI: As steel price gains slow, could a peak be near?

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The Raw Steels Monthly Metals Index (MMI) ticked up 2.0% for this month’s index reading, as the pace of steel price rises has started to slow.

The MetalMiner team will be presenting a commodity forecast for copper, aluminum, stainless and carbon steel on Wednesday, March 24, at 10 a.m. CDT: https://zoom.us/webinar/register/WN_6J8wAyYySfihVk3ZUH9yMA.

Steel price gains appear to slow

Steel price rises have continued, much to the chagrin of buyers battling for hard-to-get supply.

However, the pace of the price gains has started to slow.

“The percentage of increase week over week seems to be getting smaller,” said Don Hauser, MetalMiner vice president of business solutions. “This may be a sign the peak is near. Short term, it is likely going to continue to rise, just at a slower pace. Steel prices may remain supported unless/until new production capacity comes back onstream, and some will get added this year.” 

Overall, it’s a difficult time for buyers.

“Unforecasted material is still nearly impossible to find unless it’s by chance,” Hauser added. “Even forecasted material can be difficult to receive on time.”

Capacity utilization hits 77.4%

Speaking of supply and the steel price, steel capacity utilization reached 77.4% for the week ending March 6, the American Iron and Steel Institute reported.

The US steel sector churned out 1.76 million net tons of steel during the week, up 0.3% from the previous week but down 0.3% year over year.

Production for the year to date totaled 16.11 million net tons, or down 7.6% compared with the same time frame the year before. (Notably, this period in 2020 does not yet cover the beginning of lockdown restrictions related to the pandemic.)

Section 232 before the US CIT again

As mentioned, buyers continue to face steel price rises and challenges in even securing any supply at all.

Last month, we noted that the US Court of International Trade (USCIT) dismissed a challenge of the Section 232 steel tariff.

The plaintiffs in the case argued procedural deficiency behind the Section 232 implementation process. In addition, they claimed former President Donald Trump and then-Secretary of Commerce Wilbur Ross did not identify an “impending threat” when imposing the tariffs. They also claimed Trump violated provisions of Section 232 by not setting a duration for the action.

The USCIT judges dismissed the plaintiffs’ motion.

This month, the USCIT issued another ruling related to Section 232. This time, a US importer argued the Section 232 exclusion process is inequitable.

Thyssenkrupp Materials NA, Inc. argued the exclusion process results in exclusions granted to “specific requestors and not automatically to all importers of a particular article” and, as such, violates the Uniformity Clause of the Constitution.

As we explained last week, the Michigan-based firm asked for two forms of relief.

First, it asked for refunds on duties already paid, plus interest, with respect to any good for which any requestor has received an exclusion. Furthermore, the importer also requested an injunction that would prevent Customs and Border Protection from collecting duties on any product for which any requestor has received an exclusion.

In the end, however, the three-judge panel of the USCIT opted to side with the government in the case, arguing that the exclusion process does not violate the Uniformity Clause.

ArcelorMittal in the US; Nucor to build tube mill

In steel company news, MetalMiner contributor Christopher Rivituso delved into the state of ArcelorMittal’s remaining North American operations after the sale of most of its assets on the continent to Cleveland-Cliffs.

One source told Rivituso that the steelmaker kept its top assets. ArcelorMittal held onto the AM/NS Calvert plant in Alabama, in addition to operations in Canada and Mexico.

Among other challenges, the steelmaker will hope for the continued recovery of the automotive sector.

“The COVID-19 global pandemic has resulted in automakers around the world curtailing production and even some bankruptcies,” Rivituso explained.

“Light vehicle sales in the United States are likely to total 15.6 million units in 2021, Fitch Ratings forecast in December. That volume may reflect a 10% increase from the agency’s forecast of 14.2 million units for 2020. However, it is 8% below 2019 levels, Fitch reported.

“Estimated sales in 2019 were over 16.8 million units.”

Elsewhere, Nucor Corporation announced plans to invest $164 million in a new tube mill in the Midwest.

When it comes onstream, the plant will have capacity to produce approximately 250,000 tons of hollow structural section (HSS) tubing, mechanical steel tubing and galvanized solar torque tube, the steelmaker said. The new mill will “increase Nucor’s product offerings for construction, infrastructure and renewable energy in the expanding solar market in the United States.”

Actual metals prices and trends

Buyers are desperately hoping new supply will come onstream. That, or they’re hoping to take advantage of chance supply that comes available, leveraging strong supplier relations to get what they can.

It’s not an ideal situation. But in market of steel price rises, buyers are facing significant challenges.

The Chinese steel slab price rose 6.5% month over month to $726 per metric ton to start the month. In addition, Chinese steel billet fell 0.7% to $545 per metric ton.

Meanwhile, Korean pig iron dipped 0.8% to $373 per metric ton.

US three-month HRC jumped 17.4% to $1,067 per short ton. US shredded scrap retraced 10.2% down to $412 per short ton.

Chinese coking coal, meanwhile, dipped 1.3% to $395 per metric ton.

Volatility is the name of the game. Do you have a steel buying strategy that can handle the ups and downs?

Comment (1)

  1. Dominic Scafetta says:

    If capacity utilization is at 77%, why is there a shortage of steel? It makes no sense.

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