Raw Steels MMI: Index drops after a 14-month climb
The Raw Steels Monthly Metals Index (MMI) dropped by 1.4%, as Chinese steel and U.S. scrap prices declined.
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Chinese steel merger to form third-largest steel producer
On Aug. 20, Chinese steelmakers Ansteel Group and Ben Gang formally began the process of merging their operations. If the process is completed, this will create the world’s third-largest steelmaker, behind China Baowu Group and ArcelorMittal.
Since both companies are state-owned, there will be no money changed in the transaction. Instead, the merger will be a government-backed restructuring in an effort to consolidate production in China’s bloated steel sector. Ansteel will be taking a 51% stake in Ben Gang.
The merged entity will keep the Ansteel name. Its annual production capacity will reach 63 million metric tons of crude steel.
US imports rise
Preliminary reports from the U.S. Census Bureau indicate steel imports rose for a second consecutive month.
Steel imports advanced by 3.9% in July from 2.6 million metric tons in June to 2.7 million metric tons in July.
Imports of blooms, billets and slabs rose by 8.2% month over month. Meanwhile, hot rolled sheets, line pipe and reinforcing bars all reflected decreases.
By country, imports from Brazil increased by 34.8%. Meanwhile, imports from Turkey and Japan declined by 42.5% and 52.0%, respectively.
Automobile steel demand
Despite high U.S. steel demand, automotive steel demand is expected to remain muted. Light vehicles sales and inventories remain low. The automotive industry continues to feel the impact of the ongoing global shortage of semiconductors that is damaging the production side and, potentially, deterring buyers.
U.S. light vehicle sales fell by 14.6% to 1.09 million units in August compared to July, according to Federal Reserve Economic Data figures. Sales fell by 17.3% from 1.32 million units in August 2020.
Meanwhile, U.S. light vehicle inventory totaled 1.07 million units at the end of August, a 5.2% month over month decline, Majestic Steel reported. Inventory fell by 58.6% from 2.58 million units at the end of August 2020. Current inventory is at 24 days of supply, well below normal levels of 65 days.
As a consequence, several automakers have reduced production. Nissan delayed the restart of its Tennessee automotive plant for another two weeks to Sept. 12. Ford reduced production of its top- selling and steel- and aluminum-intensive F-150 full-size pickup truck at its Missouri and Michigan plants, Argus reported.
In Canada, Ford shuttered its SUV plant in Oakville, Ontario, during the last week of August. During the same week, Stellantis closed its Sterling Heights, Michigan, full-size truck plant and its sedan plant in Brampton, Ontario, Argus reported.
Furthermore, Unifor Local 444 tweeted Stellantis informed it of the shutdown of the Windsor assembly plant for the weeks of Aug. 30 and Sept. 6.
Actual metals prices and trends
Chinese slab prices declined 1.9% month over month to $856 per metric ton as of Sept. 1. Meanwhile, the Chinese billet price decreased 5.1% to $774 per metric ton.
After a substantial increase last month, Chinese coking coal increased 7.7% to $488 per metric ton.
U.S. three-month HRC dropped 0.3% to $1,742 per short ton. However, the spot price went up by 2.9% to $1,943 per short ton. Meanwhile, U.S. shredded scrap steel declined by 4.4% to $483 per short ton.
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