Raw Steels MMI: Prices slide while capacity grows 

The Raw Steels Monthly Metals Index (MMI) fell by 4.6% month over month.
Raw Steels Chart February 2022 png

U.S. steel prices continue to fall, led by HRC. Plate prices moved sideways. Nonetheless, they remain beneath their peak.

U.S., Japan reach Section 232 tariff agreement

The U.S. and Japan reached an agreement regarding steel imports from Section 232 tariffs. Announced Feb. 7, the new deal will follow a similar tariff rate quota (TRQ) structure to the one established between the EU and U.S. Unlike the EU TRQ, however, aluminum will remain excluded. The quota remains well below the 3.3 million tons of steel annually permitted for the EU to the U.S.

Beginning April 1, as much as 1.25 million metric tons of steel can come tariff-free from Japan annually. The U.S. and Japan will continue to combat excess global steel capacity, namely from China. According to a joint statement, Japan will implement “appropriate domestic measures, such as antidumping, countervailing duty, and safeguard measures or other measures of at least equivalent effect” as part of the agreement. According to preliminary data, U.S steel imports of Japanese material reached roughly 989,000 metric tons in 2021. 

Meanwhile, negotiations between the U.S. and the U.K. continue. Unlike Japan, the U.K. imposed retaliatory tariffs on U.S. goods including whiskey, motorcycles, and jeans. South Korea also requested revisions to the tariffs. However, official negotiations have yet to begin. 

SDI Sinton comes online, Nucor to expand

Following numerous delays, Steel Dynamics’ Sinton, Texas flat-rolled mill melted its first coil. The mill, originally slated to begin operations in September of 2021, will continue to ramp up production to reach full capacity by Q4. At full capacity, the mill can produce 3 million short tons per year (250,000 short tons per month). The mill will produce hot rolled coil, cold rolled coil and hot-dipped galvanized. Current estimates place the mill’s 2022 output at roughly 2 million short tons.  

Meanwhile, Nucor plans to expand production at its Crawfordsville, Indiana sheet mill. Nucor will fund the expansion with a $290 million investment. Once started, construction will take around two years to complete. Nucor will expand “existing galvanizing and prepaint capabilities.” At completion, the construction grade continuous galvanizing line will boast an annual capacity of 300,000 tons. The prepaint line will reach 250,000 tons per year. The start of construction pends regulatory and permit approvals. Nucor’s announcement follows the gradual restart of its Gallatin County, Kentucky plant. The mill went offline late last year to integrate a new electric arc furnace. The mill will reach its full annual capacity of 3 million short tons in 2023. 

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China leans toward scrap, boosts iron ore production

A joint statement from China’s state planner and the Ministry of Industry and Information Technology (MIIT) announced China’s intentions to “significantly increase” iron ore output from mines. The statement also indicated increased usage of steel scrap. China’s moves are part of its larger ambitions to consolidate its steel sector and reduce overall carbon emissions.

By 2025, China expects more than 80% of national steel capacity to meet low-emissions targets. In addition, the country expects to collect more than 300 million tons of steel scrap per year. The advancement to scrap demand will feed increased production from electric arc furnaces (EAFs), projected to account for more than 15% of crude steel output by 2025. In 2020, EAFs represented roughly 10% of total steel production.

Actual metals prices and trends

Chinese slab prices rose by a mere 0.83% month-over-month to $782.26 per metric ton as of Feb. 1. Meanwhile, the Chinese billet price increased by 3.71% to $696.92 per metric ton.

Chinese coking coal prices rose by 2.52% to $469.01 metric ton.

U.S. three-month HRC futures declined 20.08% to $951 per short ton. While the spot price declined by 12.22% to $1,393 from $1,587 per short ton. U.S. shredded scrap steel prices fell by 4.76% to $480 per short ton.

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