Raw Steels MMI: Steel demand on the rise

The Raw Steels Monthly Metals Index (MMI) rose by 7.8% as U.S. and Chinese steel prices continued their rally.
August 2021 Raw Steels MMI chart
Volatility is the name of the game. Do you have a steel buying strategy that can handle the ups and downs?

Executive order on zero emissions, electric vehicles

On Thursday, Aug. 5, President Joe Biden’s office announced its intention to sign an executive order that sets a “new target to make half of all new vehicles sold in 2030 zero-emissions vehicles, including battery electric, plug-in hybrid electric or fuel cell electric vehicles.”
The announcement was well-received by the American Iron and Steel Institute (AISI), as this executive order will boost domestic demand for steel. AISI CEO Kevin Dempsey said “the use of American-made steel, which is the cleanest in the world, will be key in the transition to EVs.”
As for the bipartisan infrastructure deal, the Senate voted 69-30 on Tuesday to pass a $1 trillion infrastructure package.

Tariff dispute

The U.S. and the E.U. plan to come to an agreement about Section 232 of the Trade Expansion Act relating to steel and aluminum tariffs sooner than expected.
They expect to reach a resolution by Nov. 1, almost two months ahead of the original agreement deadline.
The agreement could lead to a limitation on the volume of E.U. steel entering the U.S. market. However, it is unlikely that it will lead to a wide-scale removal of duties on imported steel.
The tariffs benefited American steel manufacturers. However, they have been difficult for manufacturers because U.S. steel prices are at an all-time high.

Chinese steel output

In their latest planning meeting of July 30, Chinese leaders reinforced their intention to keep steel output for 2021 on par with 2020 levels.
S&P Global Platts estimated that in order to keep that target, China’s crude steel production would have to be 502 million metric tons from July to December. This means that compared to 2020 levels, production will have decreased by 59 million metric tons, or 11%.
Market sources told S&P that the removal of China’s steel export rebates would not slow down exports in the short term — and could drive global prices even higher. Under this circumstance, it is estimated there could be a shortage of 20 million to 30 million metric tons in the domestic market for the second half of the year if China successfully keeps to its output target.

Actual metals prices and trends

Chinese slab prices went up 9.0% month over month to $873 per metric ton as of Aug. 1. Meanwhile, the Chinese billet price increased 49.2% to $816 per metric ton.
After a substantial increase last month, Chinese coking coal increased 11.2% to $453 per metric ton.
U.S. three-month HRC dropped 4.9% to $1,736 per short ton. However, the spot price went up by 13.5% to $1,888 per short ton. Meanwhile, U.S. shredded scrap steel picked up by 0.4% to $505 per short ton.
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