The monthly Raw Steels MMI® registered a value of 52 in September, a decrease of 5.4% from 55 in August.
In July, it seemed like steel prices were stabilizing for awhile, but prices fell again last month. The decline wasn’t as bad as it could have been, considering that last month China’s stock market sell-off continued and some industrial metals took serious hits.
The bearish commodity environment makes it hard to pick a bottom, proving once again that buying on weakness hasn’t been the best strategy for metal buyers during this market cycle.
Fundamentally, the steel story is similar to other base metals and can be summarized as: a glut of raw materials everywhere and weak demand unable to keep the market in balance, with China being the main driver on both sides of the equation. Read more
The monthly Raw Steels MMI® registered a value of 55 in August, a decrease of 1.8% from 56 in July.
After Chinese steel prices slumped in July, they fell again in August but were at least more stable. Domestic prices remain low but seem to be stabilizing as well, resulting in our raw steels index dropping by less than 2%. That’s a moral victory for steel these days.
Apart from this macro commodity weakness, the fundamentals within the steel industry don’t look much better. Chinese demand seems to be getting worse. Construction data shows that demand from the sector has slowed during this first half. Also, the automotive sector is weakening with vehicle sales falling year-on-year for several months. Read more
The monthly Raw Steels MMI® registered a value of 56 in July, a decrease of 5.1% from 59 in June.
Chinese Market Reeling
Chinese steel prices are at their lowest level in more than 20 years. Chinese demand seems to be getting worse and industry analysts point out that the fall might not even be close to an end. This threatens the survival of smaller Chinese steelmakers, who are still reluctant to cut production in order to maintain cash flow and bank credit, while other small mills have already shut down.
Construction data shows that demand from the sector has slowed during this first half. Moreover, China’s demand for steel could take a further hit as construction eases over the summer.
The price forecast for US steel markets, much like me after contracting salmonella poisoning last week, has been quite lethargic lately.
An imminent pullout from the doldrums doesn’t look all too likely due to several major factors, which we’ll dive into shortly, and is supported by MetalMiner’s monthly Raw Steels MMI® clocking in with a value of 59 in June, a 1.7% drop from 60 in May.
The monthly Raw Steels MMI® – a price sub-index tracking a basket of finished steel and raw material prices from all corners of the globe – has been unhealthy for quite a while, and (after undergoing a slight recalibration at the end of 2014) has hit a new all-time low this month. Why?
Steel prices remain at their lowest levels. Almost every industrial metal price rose in April as a weaker dollar gave a boost to commodity markets. However, steel prices remained quiet, hanging at record lows.
The monthly raw steels MMI® registered a value of 60 in May, on par with April’s value.
Raw Materials Undercutting Scrap
Scrap prices are at their lowest levels and we don’t really see anything that could give prices significant momentum on the upside, at least until a bigger supply response is seen.
Unless we start seeing the dollar depreciate against other currencies, European scrap exports will keep gaining market share, leaving a supply excess for US steelmakers.
Cheaper to Produce
Moreover, although prices seem low, it’s still cheaper to make steel still using iron ore than scrap. Pig iron or billet could substitute some scrap as primary raw material in which case, US exporters would sell more in the domestic market, causing US scrap prices to keep falling lower.
Either way, steel demand remains weak, particularly in oil and gas tubular markets while the market remains oversupplied. It doesn’t seem likely that steel prices will rise significantly higher this year.
May Steel Prices
Last month, the steel billet 3-month price rose 3.3% on the LME to $315.00 per metric ton. US shredded scrap saw its price rise 0.8% to $250.00 per short ton.
The spot price of the US HRC futures contract closed the month at $450.00 per short ton after dropping 5.3%. Korean steel scrap prices fell 3.6% to $124.29 per metric ton. After rising the previous month, Chinese slab prices dropped 2.8% to $388.47 per metric ton. The US HRC futures contract 3-month price fell a slight 2.5% over the past month to $512.00 per short ton. The steel billet cash price ended the month on the LME at $300.00 per metric ton, down from $300.00.
Prices for Chinese billet remained constant this past month, holding at around $333.66 per metric ton. Chinese coking coal held pat last month at $174.08 per metric ton. Hovering around $491.59 per metric ton for the month, Korean pig iron remained unchanged.
The Raw Steels MMI® collects and weights 13 global steel and raw material price points to provide a unique view into global steel price trends over a 30-day period. For more information on the Raw Steels MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.
U.S. Steel on Thursday announced more layoffs as it continues to fight lower-priced, surging imports and declining demand in the energy sector, saying it will temporarily idle one of its iron-ore operations in Minnesota, affecting 412 workers.
The idling of the plant in Keewatin, Minn., which ships to U.S. Steel mills, will take place on May 13 and affects six million tons of iron-ore production capacity, or 27% of U.S. Steel’s overall iron-ore output last year. U.S. Steel said the move is temporary in a statement.
The week’s biggest mover on the weekly Raw Steels MMI® was the 3-month price of the US HRC futures contract, which saw a 1.0% increase to $520.00 per short ton. This comes on the heels of a 0.8% decline the week prior. US shredded scrap traded sideways last week, hovering around $246.00 per short ton. The spot price of the US HRC futures contract stayed essentially flat at $500.00 per short ton.
After falling 3.5%, Korean steel scrap landed at KRW 139,000 ($123.34) per metric ton and making it the week’s biggest mover on the weekly Raw Steels MMI®. Prices for Korean pig iron remained constant, closing the week at KRW 530,000 ($470.27) per metric ton.
Chinese steel prices were mixed for the week. The price of iron ore 58% fines from India hit a high price of CNY 450.00 ($71.83) and a low price of CNY 445.00 ($71.03) per dry metric ton. Chinese slab finished the week at CNY 2,380 ($380.10) per metric ton after falling 3.3%. Following a 1.6% increase in the week prior, the price of Chinese HRC fell 0.8% last week to CNY 2,510 ($400.86) per metric ton. At CNY 1,080 ($172.40) per metric ton, the price of Chinese coking coal did not change since the previous week.
Following a steady week, prices for on the LME the steel billet 3-month price closed flat at $305.00 per metric ton. Also on the LME, the cash price of steel billet closed at $305.00 per metric ton after a flat week.
The US HRC futures contract 3-month price rose 1.0% to $520.00 per short ton after falling 0.8% during the previous week. US shredded scrap remained essentially flat from the previous week at $246.00 per short ton. At $500.00 per short ton, the spot price of the US HRC futures contract remained essentially flat.
The Raw Steels MMI® collects and weights 13 global steel and raw material price points to provide a unique view into global steel price trends. For more information on the Raw Steels MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.
The steel prices plummet continued this month in the the monthly Raw Steels MMI® and registered a value of 60, a decrease of 11.8% from 68 in February.
*Note: Effective 12/1/14, MetalMiner updated some of the source data from China used to calculate this index. Therefore the December index reading appeared a little more volatile when compared to the November reading. However, any movements thereafter reflect only market price changes as opposed to market and source data prices changes.
In January, the global scrap to billet price spread fell to less than $100 a metric ton. This level was unsustainable since melting scrap to make billet is already more expensive than that. For that spread to look more stable scrap prices needed to drop and boy, did they ever.
No Relief For Finished Steel Products
Meanwhile, steel products can’t catch a break. According to recent figures released by the American Iron and Steel Institute (AISI), US steel imports rose 33% in January compared with the year before, reaching 3.85 million tons, compared with 2.9 million tons a year earlier. As a result, US producers keep cutting prices to compete with imports.
Russian domestic steel prices jumped as domestic producers there continue to seek parity with more-than-healthy Russian steel exports. The government is considering imposing a levy on shipments overseas.
The price of domestic rebar rose 17% last month, the largest increase among steel products, according to data from Metall Expert Consulting, a research firm with offices in Ukraine and Moscow. Hot-rolled coil climbed as much as 15% in the Russian Federation this month, it said.
“There is a stable demand for Russian steel on the external markets, thus domestic prices are seeking to match export price,” Nikolay Filkevich, project head at Metall Expert, which analyzes the domestic steel market, told Bloomberg News.
Producers are trying to close a price gap that by January had widened to about 4,000 rubles ($58.4) per ton of flat steel after the ruble weakened 48 percent in the past 12 months, according to Metall Expert.
Chinese steel prices closed flat for the day. The price of iron ore 58% fines from India hit a high price of CNY 450.00 ($71.90) and a low price of CNY 445.00 ($71.10) per dry metric ton. The price of Chinese HRC held steady at CNY 2,530 ($403.30) per metric ton. For the fifth consecutive day, the price of Chinese coking coal held flat at CNY 1,080 ($172.57) per metric ton.
Also on the LME, the cash price of steel billet saw little movement on Thursday at $305.00 per metric ton. The 3-month price of steel billet saw little movement on Thursday on the LME, closing out around $305.00 per metric ton.
The US HRC futures contract 3-month price held steady on Thursday, remaining around $515.00 per short ton. The US HRC futures contract spot price showed little movement yesterday, hovering around $500.00 per short ton.
Soft sales have forced more Chinese steel mills to curb production after the Feb. 18-24 Lunar New Year break and hold
back on purchases of the steelmaking raw material, traders told Reuters.
Iron ore for immediate delivery to China’s Tianjin port dropped 0.3% to $62.80 a ton on Monday,
according to The Steel Index.
The benchmark price, down 12% this year after sliding 47% in 2014, touched $61.10 in early February, its lowest since May 2009.
Rising 1.0% to close at $515.00 per short ton, the 3-month price of the US HRC futures contract experienced the biggest change for Wednesday, March 4. After dropping for two days, the spot price of the US HRC futures contract flattened at $500.00.
Chinese steel prices closed flat for the day. The price of iron ore 58% fines from India hit a high price of CNY 450.00 ($71.90) and a low price of CNY 445.00 ($71.10) per dry metric ton. At CNY 2,530 ($403.23) per metric ton, the price of Chinese HRC was essentially unchanged. The price of Chinese coking coal continues hovering around CNY 1,080 ($172.57) per metric ton for the fifth day in a row.
The steel billet cash price showed little movement on Wednesday on the LME at $305.00 per metric ton. The 3-month price of steel billet saw little price change on Wednesday on the LME at $305.00 per metric ton.