steel price

The U.S. Department of Commerce. qingwa/Adobe Stock

Last week, the U.S. Department of Commerce announced it had launched anti-dumping (AD) and countervailing duty investigations of steel rack imports from China.

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The alleged dumping margins in the AD case are 130.0-144.5%, according to a DOC release.

The DOC added there 28 alleged subsidy programs for steel racks, “including five preferential loan and interest rate programs, one debt-to-equity swap program, six income tax and other direct subsidy programs, two indirect tax programs, seven less than adequate remuneration (LTAR) programs, as well as seven grant programs.”

The petition in the case was filed by the Coalition for Fair Rack Imports, which estimates that imports of steel racks in 2017 were valued at approximately $200 million.

Products covered in the investigation includes “steel racks and parts thereof, assembled, to any extent, or unassembled, including but not limited to, vertical components (e.g., uprights, posts, or columns), horizontal or diagonal components (e.g., arms or beams), braces, frames, locking devices (i.e., end plates and beam connectors), and accessories (including, but not limited to, rails, skid channels, skid rails, drum/coil beds, fork clearance bars, pallet supports, column and post protectors, end row and end aisle protectors, corner guards, row spacers, and wall ties).”

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The U.S. International Trade Commission is scheduled to make a preliminary ruling by Aug. 6, with the DOC following suit Sept. 13.

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The U.S. and India are scheduled to sit across the table this week in Geneva to discuss the case filed by India with the World Trade Organization’s (WTO) dispute settlement mechanism over the U.S.’s imposition of import duties on steel and aluminum.

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The talks will be held under the aegis of WTO’s dispute settlement mechanism, according to a news report by the Press Trust of India.

India is part of the group of nations — which includes China, Russia and Norway, among others — to have filed separate dispute claims on the topic with the WTO. The meeting is part of the consultations the U.S. will be holding with all such countries on July 19-20.

It may be recalled that the U.S. had imposed a 25% tariff on steel and a 10% tariff on aluminum imports from India. India’s exports of the two commodities to the U.S. stands at about U.S. $1.5 billion per annum. India had initially tried to raise the issue with the U.S., and then informally with the WTO, calling the move an “abuse of global trade provisions that could spiral into a trade war,” — sentiments similar to the one expressed by India’s neighbor, China.

In May, India dragged the U.S. to the WTO dispute settlement mechanism over the imposition of import duties.

Consultation is the first step of the dispute settlement process. Incidentally, both the countries are already involved in disputes at the global trade body in the areas of poultry, solar, and export subsidies, to name a few.

According to another news report, senior trade officials of India and the U.S. will meet later this month in Washington to conclude negotiations on a “mutually-acceptable trade package.” Quoting an unnamed official source, it said the meeting comes amid an escalation of the global trade war.

Since India’s proposed additional tariff worth U.S. $235 million on 29 U.S. goods — including almonds and apples — are retaliatory in nature, any rollback of the additional duty on Indian steel and aluminum by the U.S. will lead to a withdrawal of corresponding taxes by the Indian Government on U.S. goods, too.

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The U.S. sees good prospects for its companies in the Indian civil aviation, oil and gas, education service, and agriculture segments.

It was another busy month in the world of metals.

Then again, these days quiet months in metals or in trade, generally, are few and far between.

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Trade tensions continued to rise, as $34 billion in tariffs on Chinese goods went into effect (China responded in kind), and an additional $16 billion in tariffs are under review. This week, President Donald Trump announced the intention to impose an additional $200 billion in tariffs on China, ratcheting up the stakes even further.

Meanwhile, a Section 232 investigation focusing on imports of automobiles and automotive components is unfolding. More than 2,300 public comments were submitted as part of the U.S. Department of Commerce’s review process, and public hearings are scheduled for next week.

Meanwhile, in metals markets, most base metals were down last month, with steel being the exception.

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A few highlights from this month’s round of Monthly Metal Index (MMI) reports:

  • Since peaking at $7,316/mt in June, the LME copper price dropped 12%.
  • The subindex for grain-oriented electrical steel was the only MMI to post an increase on the month.
  • The U.S. silver price hit its lowest level since January 2017, while U.S. gold bullion dropped to a one-year low.
  • Aluminum prices were also part of the general downtrend, as prices continued to move away from this year’s April peak (after Russian companies and their owners, including aluminum giant Rusal, were slapped with sanctions by the U.S.).

Read about all of the above and much more by downloading the July MMI report below.

The Raw Steels Monthly Metals Index (MMI) fell two points this month, dropping to 90 from the previous 92 reading.

Domestic steel price momentum continued, as domestic steel prices increased again. Chinese steel prices also increased in June, adding support to domestic steel prices.

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Domestic steel prices remain at a more than seven-year high.

Source: MetalMiner data from MetalMiner IndX(™)

Steel prices also increased at the beginning of July (except for HDG, which dropped slightly). The pace of the increases seems to have slowed, but prices remain in an uptrend. Therefore, buying organizations can expect high steel prices.

However, the historical cyclicality may move prices lower at some point.

Domestic steel prices have stayed in a sharp uptrend since January 2018. Current prices have started to trade more sideways. Despite the increase in prices, prices may begin to come off slightly at some point this year. Buying organizations may want to identify that moment to commit to purchases and reduce risks.

The Spread

The CRC-HRC domestic spread appears to be back at its historical level.

The domestic spread should be around $100/st. However, in 2016 the spread started to increase, reaching more than $200/st. The spread currently stands at $111/st.

Source: MetalMiner data from MetalMiner IndX(™)

Chinese Steel Prices

Chinese steel prices recovered from a previous downtrend and increased again in June.

Early July price indications show slightly lower prices. However, Chinese steel prices appear to be in a recovery uptrend.

All Chinese forms of steel have dropped slightly so far in July (except HDG prices, which inched higher).

Source: MetalMiner data from MetalMiner IndX(™)

Chinese steel output increased again in May, despite steel product exports dropping around 20% during the first four months of the year. Strong Chinese domestic demand has kept mills running at full capacity.

However, Chinese steelmakers are currently seeking alternative markets, such as Africa and South America.

What This Means for Industrial Buyers

Since steel prices remain high, buying organizations may want to closely follow price movements to decide when to commit to mid- and long-term purchases.

Buying organizations looking for more clarity on when to buy and how much to buy may want to take a free trial now to our Monthly Metal Buying Outlook.

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

Actual Raw Steel Prices and Trends

The U.S. Midwest HRC 3-month futures price fell this month by 5.86%, falling to $852/st.

Chinese steel billet prices decreased again this month by 0.17%, while Chinese slab prices fell further by 3.72%, moving to $640/mt.

The U.S. shredded scrap price closed the month at $371/st, trading flat from last month’s reading.

The Raw Steels Monthly Metals Index (MMI) increased three points this month, moving up for a June reading of 92.

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Domestic steel price momentum seems to keep going, with domestic steel prices increasing again. Chinese steel prices also increased in May, adding support to higher domestic steel prices.

Domestic steel prices remain at more than seven-year highs.

Source: MetalMiner data from MetalMiner IndX(™)

Steel prices also increased at the beginning of June. The pace of the increases seems to have slowed down, but prices remain in an uptrend.

Tariffs

June 1 served as the latest steel and aluminum tariff exemption deadline. However, on May 31 President Trump announced that no country exemptions will continue. Therefore, Canada, Mexico and the E.U. became subject to the steel and aluminum tariffs of 25% and 10%, respectively.

MetalMiner considered different policy scenarios with regard to tariffs. All of them — except a continued exemption of the steel tariffs — supported the U.S. domestic steel price increase. The current situation will support steel prices further.

Mexico has already hit back with trade tariffs on some other products (such as pork and bourbon) from the U.S.

Chinese Steel Prices

Chinese steel prices recovered from a  previous downtrend and increased again in May. Early June price indications also show higher prices and a recovery in Chinese steel prices.

Source: MetalMiner data from MetalMiner IndX(™)

Chinese steel prices fell in conjunction with their historical seasonal cycle, which appeared stronger due to the overcapacity closures and higher-than-expected production during the winter season in China. However, prices usually start to increase again around April-May, signaling the start of the construction season, when steel demand is high.

Despite recent price increases, Chinese steel remains cheaper than U.S. domestic steel (even with a  25% steel tariff). This comes down to the price run-up of U.S. domestic steel prices, which have moved toward 2012 highs.

Scrap Steel

Contrary to domestic steel price movements, domestic shredded scrap traded more sideways at the beginning of June. Price increases have slowed down, as shredded scrap prices moved toward 2014 levels.

Source: MetalMiner data from MetalMiner IndX(™)

However, given the current domestic steel price movements, buying organizations can expect higher shredded scrap prices in the coming months.

What This Means for Industrial Buyers

As steel prices remain high, buying organizations may want to follow price movements closely to decide when to commit to mid- and long-term purchases.

Buying organizations looking for more clarity on when to buy and how much to buy may want to take a free trial now to our Monthly Metal Buying Outlook.

Actual Raw Steel Prices and Trends

The U.S. Midwest HRC 3-month futures price increased this month by 12.4%, going up to $905/st.

Chinese steel billet prices decreased by 0.2%, while Chinese slab prices rose by 1.2%, moving to $665/mt.

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The U.S. shredded scrap price closed the month at $370/st, trading flat from last month’s reading.

The Stainless Steel Monthly Metals Index (MMI) skyrocketed this month, increasing by seven points. The current reading stands at 84.

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The index inched higher driven by the increase in stainless steel surcharges and a sharp increase in LME nickel prices in May. Other related metals in the stainless steel basket also increased.

LME Nickel

Nickel price momentum seems to have recovered again.

LME nickel prices increased at a quicker pace in May. The increases continued through the beginning of June, driving prices to 2014 highs. 

Source: MetalMiner analysis of FastMarkets

LME nickel prices keep moving away from 2017 lows.

MetalMiner previously recommended buying some volume forward. Given the current uncertainty in the steel and stainless industries, nickel prices remain supported for the short term.

In addition, a fundamental tightness in the nickel market has added support to the latest nickel price increases.

Domestic Stainless Steel Market

Following the recovery in stainless steel momentum, domestic stainless steel surcharges increased again this month. The 316/316L-coil NAS surcharge reached $1.02/pound.

Source: MetalMiner data from MetalMiner IndX(™)

The pace of stainless steel surcharge increases, however, appears to have slowed again this month. Yet stainless steel surcharges remain in a clear uptrend and rest well above 2015-2017 lows.

What This Means for Industrial Buyers

Stainless steel momentum appears stronger this month, as steel prices are skyrocketing. As both steel and nickel remain in a bull market, buying organizations may want to follow the market closely for opportunities to buy on the dips.

To understand how to adapt buying strategies to your specific needs on a monthly basis, take a free trial of our Monthly Outlook now.

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Actual Stainless Steel Prices and Trends

Chinese 304 stainless steel coil prices increased again this month by 2.02%, while Chinese 316 stainless steel coil prices rose further by 6.61%. Chinese Ferrochrome prices increased this month by 2.9%, to $1,990/mt.

Nickel prices increased by 10.5% to $15,210/mt.

After the instability in the industrial metals complex in April, May closed with an overall increase in metal prices.

However, the increases are, in general, less sharp and less volatile than last month.

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Aluminum, Copper and Nickel

The three main metals have seen slight increases in prices.

The LME aluminum price pace seems to have slowed down after the deadline for U.S. sanctions on  Russian aluminum companies moved to Oct. 23. However, aluminum prices could remain supported given the current turmoil.

Source: MetalMiner analysis of FastMarkets

Zinc and Lead

Meanwhile, the close brothers zinc and lead seem to have gotten into a little disagreement.

Zinc prices fell slightly in May. However, lead prices increased at the beginning of the month. The increase comes after lead prices fell to support levels, the buying dip MetalMiner recommended buying organizations take advantage of. Buying organizations following the Monthly Metal Outlook had the opportunity to lock in lower prices then.

Source: MetalMiner analysis of FastMarkets

The lead price’s upward trend seems strong, as buying volume supports the increase. Therefore, buying organizations can expect lead prices to move higher.

Zinc buyers may want to follow zinc movements closely this month, too.

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

Steel Prices Continue to Rise

Steel prices remain at more than seven-year highs. Steel prices continued the slight increase in May.

Buying organizations who want to read more about steel price trends and the tariff exemption analysis should take a free trial of our Monthly Outlook now.

Domestic steel momentum seems appears to have finally started to slow down.

So far this month, hot-rolled coil, cold-rolled coil, hot-dip galvanized and plate prices have begun to  trade sideways.

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Source: MetalMiner data from MetalMiner IndX(™)

The slower pace of the increases should come as no surprise, as domestic steel prices have skyrocketed for the past five months. Also, the trade tensions around steel tariffs weakened a bit as a result of the one-month extension for the exempted countries (Canada, Mexico and the E.U.).

Raw Steel Production

According to the American Iron and Steel Institute (AISI), domestic year-to-date raw steel production increased by 1.7% from the same period last year.

Current capability utilization stands at 75.5%, while capacity utilization in 2017 ran at 74.3%.

The Spread

Tracking the spread between domestic HRC and CRC prices closely gives a sense of how prices could move in one direction or another.

HRC and CRC prices trade in the same direction, despite the price differential ($100-$200/st). The spread has returned to historical levels, and currently stands at $116/st. The spread fell from 2016 highs over $200/st.

Source: MetalMiner data from MetalMiner IndX(™)

Chinese Steel

Chinese steel prices have shown a slight recovery this month.

Historically speaking, April and May sees higher demand in China. Therefore, steel prices tend to increase, driven by this stronger demand.

Source: MetalMiner data from MetalMiner IndX(™)

Meanwhile, investigations around Chinese steel continue in the U.S. The U.S. International Trade Commission recently made a preliminary finding that U.S. producers were harmed by imports of steel automotive wheels from China. The investigation will determine if certain Chinese steel wheels were dumped in the U.S.

What This Means for Industrial Buyers

Since steel prices remain high, buying organizations may want to closely follow price movements to decide when to commit to mid- and long-term purchases. The latest upward movements in Chinese steel prices may also add some support to domestic steel prices.

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

Buying organizations looking for more clarity on when to buy and how much to buy may want to take a free trial now to our Monthly Metal Buying Outlook.

The Raw Steels Monthly Metals Index (MMI) increased one point this month, moving up to 89. Domestic steel price momentum seems slower than at the beginning of 2018, as domestic steel prices traded more sideways.

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Domestic steel prices remain at a more than seven-year high.

May 1 served as the most recent steel and aluminum tariff exemption deadline. The government announced that the country-specific exemptions would continue to remain in effect for another 30 days (until June 1). The exemptions will likely turn into quotas for several countries, following a similar trade agreement as the one reached with South Korea.

Quotas will weaken the impact of Section 232. The details of the trade agreements could come during May.

Source: MetalMiner data from MetalMiner IndX(™)

Meanwhile, Section 301 seems to have gone unnoticed by buying organizations, despite its potentially bigger effect. If applied, Section 301 contains a proposal for 25% tariffs on a list of products from China. These products include not only steel or aluminum, but also secondary products used in many industrial sectors.

The Section 301 Committee will convene a public hearing May 15. May 22 will serve as the due date for submission of post-hearing comments.

Domestic steel prices have found support. Although price momentum has slowed, steel prices have  not yet fallen.

Chinese Steel Pricing

Chinese prices have fallen since the beginning of 2018. In May, Chinese prices increased slightly. It is still too soon to see this slight increase as a change of trend. The latest price movement may have more to do with increased Chinese steel exports in April.

Source: MetalMiner data from MetalMiner IndX(™)

Despite U.S. tariffs, customs data shows higher Chinese steel imports arriving to U.S. ports. The 25% steel tariff on Chinese imports went into effect on March 23. Higher Chinese exports (and incoming imports in U.S. ports) come as a result of the divergence in U.S. and Chinese steel prices. U.S. steel prices skyrocketed, while Chinese prices fell.

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

What This Means for Industrial Buyers

As steel prices remain high, buying organizations may want to closely follow price movements to decide when to commit to mid- and long-term purchases.

Buying organizations looking for more clarity on when to buy and how much to buy may want to take a free trial now to our Monthly Metal Buying Outlook.

U.S. domestic steel prices steadily increased after the release of the Section 232 report and President Donald Trump’s formal proclamation. However, the pace of the increases has started to slow down, signaling a possible top.

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After what now looks like sluggish steel momentum in 2017, the current steel price rally appears to have no end. Prices climbed to more than seven-year highs. However, MetalMiner previously reported on a possible top for steel prices.

U.S. HRC and CRC prices. Source: MetalMiner data from MetalMiner IndX(™)

So far, steel prices have not dropped. In fact, HRC and CRC prices have moved closer toward the $900/st and $1,000/st, respectively. Also, the approaching date of May 1, when several countries’ tariff exemptions expire, could still add support to domestic steel prices. This expiration date involves the Section 232 country exemptions for the EU, Argentina, Brazil and Australia.

The only exception is South Korea, which is exempted from steel imports under the bilateral trade deal, KORUS. The agreement with South Korea removes steel tariffs permanently but replaces that with a quota. The steel quota is equivalent to 70% of South Korea’s average exports to the U.S. from 2015-2017. In return, South Korea has agreed to improve access for U.S. automakers, who can now export up to 50,000 vehicles per OEM per year. South Korean aluminum tariffs however will go into effect after May 1, similar to the other countries listed above.

Whether the countries remain exempted or not may affect U.S. domestic steel prices. The country exemption could create downward price pressure on steel. However, steel prices could stay well supported if the country exemptions go away.

Global Steel Demand

According to the World Steel Association, global steel demand is forecasted to grow by 1.8% in 2018 and 0.7% in 2019. Despite the steel markets’ risks from current trade tensions (Section 232 tariffs, Section 301), the world’s favorable economic momentum may drive actual demand growth. Global steel demand in 2018 is forecasted to reach 1.616 billion tons, increasing to 1.627 billion tons next year. Read more