Raw Steels MMI: US steel prices keep rising but pace of gains begins to slow

The Raw Steels Monthly Metals Index (MMI) rose by 7.8% for this month’s reading, as steel prices continued to rise.

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Steel price gains slow

As we’ve chronicled in this monthly column, steel prices have been rising consistently since last summer.
Buyers have struggled to find supply in what eventually became an allocation market.
Steel prices have posted double-digit percentage gains on a month-over-month basis. However, that ascent appears to be slowing somewhat.
The US hot rolled coil price, for example, continued to increase. The US HRC three-month price rose 20% month over month to $1,280 per short ton. However, the price has flattened out thus far in April.
Are steel prices finally reaching a peak? That is not yet clear, but price gains have certainly started to slow.

Supply developments

Speaking of allocation markets and tight supply, buyers will take some solace in the fact that some new supply will be coming on stream, both in the short and medium terms.
Work continues on Steel Dynamics’ new Sinton, Texas facility, which is scheduled to open by mid-year.
Excluding costs associated with investment in the Sinton flat rolled steel mill ($18 million), the company said it expected its first quarter earnings to be in the range of between $1.94 and $1.98 per diluted share, which it said could represent a record earnings quarter for the company.

The first quarter proved to be a strong one, with performance buoyed by elevated steel prices.
“First quarter 2021 profitability from the company’s steel operations is expected to be significantly higher than sequential fourth quarter results, driven by flat roll metal spread expansion, as strong demand continues to support flat roll steel prices,” the company said. “Average realized quarterly flat roll steel product pricing is expected to increase substantially during the quarter more than offsetting higher scrap costs.”
In longer-term news, last month, Nucor announced plans to build a new tube mill near its Gallatin, Kentucky sheet plant.
Nucor will invest approximately $164 million toward the new mill, which it said will be operational by 2023.

China steel price gains; output remains strong despite cuts

The Chinese city of Tangshan, a steelmaking hub, has taken steps to curb steel production in an effort to limit pollution.
However, steel production in China remains robust, the South China Morning Post noted, reaching a capacity utilization rate of 87%.
Chinese steel prices, meanwhile, appeared stronger this past month than their US counterparts.
After falling to around $750 per metric ton in mid-March, the China HRC price surged to $820 by April 1.
From mid-March to mid-April, China HDG, CRC and plate prices increased by double-digit percentages.

USCIT rules Section 232 expansion invalid

A number of domestic groups have contested former President Donald Trump’s Section 232 steel and aluminum tariffs in the court system.
To date, those challenges have been largely unsuccessful.
However, a recent challenge of Trump’s expansion of the tariffs — covering steel and aluminum derivatives — proved successful for the domestic petitioner.
PrimeSource Building Products Inc. contested Trump’s Proclamation 9980, which he issued Jan. 24, 2020. The proclamation expanded the Section 232 tariffs to cover steel and aluminum derivatives.
The United States Court of International Trade ruled in favor of the PrimeSource on one count.
“To declare Proclamation 9980 invalid, we must find ‘a clear misconstruction of the governing statute, a significant procedural violation, or action outside delegated authority,’” the USCIT explained. “Because the President issued Proclamation 9980 after the congressionally-delegated authority to adjust imports of the  products addressed in that proclamation had expired, Proclamation 9980 was action outside of delegated authority.”
As such, the court declared the proclamation “invalid as contrary to law.” It also calls for refunds for duties paid associated with the proclamation.

Actual metals prices and trends

The Chinese slab steel price rose by 10.1% month over month to $799 per metric ton as of April 1. Chinese coking coal fell 11.9% to $348 per metric ton. Meanwhile, Chinese steel billet fell by 1.3% to $538 per metric ton.
US shredded scrap steel price rose 7.5% to $443 per short ton.
The US three-month HRC price rose 20.0% to $1,280 per short ton.
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