Raw Steels MMI: Drop in US steel prices could hit roadblocks; European steel prices rise

The Raw Steels Monthly Metals Index (MMI) rose by 4.9% month over month, even as U.S. steel prices continue to fall (at least for now).

March 2022 Raw Steels MMI chart
Source: MetalMiner Insights

U.S. steel prices, with the exception of plate, continue their descent in spite of curtailments and capacity delays instituted by steelmakers. Hot-rolled coil prices have closed in on the $1,000/st price mark. Prices now sit almost 47% beneath last October’s peak.
Buyers should make sure to take advantage of falling steel prices and follow best practices to buy strategically. 

Steelmakers announce price increases

Eager to stem the drop, both Nucor and Cleveland-Cliffs announced increases for steel prices in late February. Both steelmakers increased prices for HRC, CRC, and HDG by $50/st.
The increases follow a number of outages and delays from various steelmakers. Cleveland-Cliffs will shut several lines from March 19 through June 11 for maintenance. The outage will cut output by as much as 411,000 short tons.
Cliffs will also idle its Indiana Harbor blast furnace. The outage will extend through April and could remove up to 1.4 million short tons from the market. U.S. Steel’s Granite City mill will likewise take a 25-day outage. The outages come alongside the delayed restart and start of Nucor’s Gallatin mill and expansion.
Between the delays and outages, estimates for total U.S. production lost extends to more than 30,000 short tons per day.

Domestic market exposure to Russia, Ukraine

As with other metals, the U.S. steel market remains vulnerable to the Russian war in Ukraine.

The conflict could add further upward pressure, in addition to domestic curtailments and price increases from U.S. steelmakers.
U.S. supply of basic pig iron, in particular, remains at risk.
Basic pig iron feeds electric arc furnaces, which account for more than 70% of U.S. steel production. Russia and Ukraine account for more than 60% of U.S. pig iron supply, Argus reported.
The conflict will also impact iron ore prices. Prices show continued rises since November. Annual iron ore exports from Russia and Ukraine total nearly 70 million metric tons. Disruption to global supply would add further upward pressure. Russian iron ore reserves total roughly 25 billion metric tons and represent the third-largest in the world. Supply disruptions already forced some European buyers to source iron ore from other countries.
Steel scrap prices are likewise poised to rise.
Ferrous scrap exports from Russia totaled 4.29 million tons in 2021, Argus reported. Turkey, in particular, received 40% of Russia’s total scrap exports. As a result, the global scrap market will likely experience inflated prices as supply disruptions force markets like Turkey to seek alternate sources.
The MetalMiner team will break down the the Russian invasion of Ukraine and its impact on metals markets during this month’s webinar, scheduled for Wednesday, March 30. 

European markets already impacted

European steel markets led the way for price jumps. Supply disruptions added to market tightness.
Russia accounts for 4% of global steel production. Meanwhile, Ukraine accounts for 1%.
With respect to steel exports, supply disruption will have an outsized impact. Both countries are net exporters with a cumulative annual total of over 40 million tons, according to Global Steel Trade Monitor data. Russia and Ukraine represent 7% and 4% of global steel exports, respectively. Europe is leading recipient of those exports.
Production from Ukraine has been impacted. Steelmakers, including ArcelorMittal SA and Metinvest Holding LLC, shuttered facilities due to the ongoing conflict.
The war, likewise, stymied exports from Russia. Following sanctions that target its owner, Alexei Mordashov, Severstal PJSC halted sales to Europe. As a result, benchmark E.U. steel prices surged by 22% during the first week of March.
Those steel prices could rise even further. Rising energy prices continue to add to input costs and increase the likelihood of production curtailments.
Amid geopolitical turmoil, make sure to know what to do when the market shifts. It is vital to adapt to rapidly changing market and understand the art of timing your metals buys

Actual metals prices and trends

Chinese slab prices fell by 1.36% month over month to $796.84 per metric ton as of March 1. Meanwhile, the Chinese billet price declined by 0.3% to $720.80 per metric ton.
Chinese coking coal prices rose by 8.75% to $514.22 metric ton.
U.S. three-month HRC futures rose by 26.29% to $1,201 per short ton. However, the spot price dropped by 19.17% to $1,126 from $1,393 per short ton. U.S. shredded scrap steel prices rose by 0.63% to $482 per short ton.

One Comment

  • Pig iron supply.
    Raw material may be up to 100% scrap or various mixes of hot metal, pig iron, DRI (hot and/or cold) and HBI. Worldwide, scrap covers around 75% of the raw materials for EAF, while DRI and HBI covers around 15% and the balance (10%) is covered by pig iron and hot metal.
    If the USA manufacturing is predominantly BOF, then shame on them and our environment.
    Let’s not make matters worse by sensationalizing the situation overseas.

    Reply

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