steel price

The Raw Steels Monthly Metals Index (MMI) rose by 0.8% as U.S. steel prices continued to pick up but Chinese prices corrected.

June 2021 Raw Steels MMI chart

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Chinese steel prices drop

China steel plant

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Since April 2020, Chinese steel prices have traded up consistently with a short decline period around December 2020. Around mid-May, all forms of Chinese steel prices peaked, as demand continued to soar in China.

Steel demand in China increased in the past few months as the government implemented its economic recovery plan, which includes infrastructure spending. Increasing steel prices continue to bring up infrastructure costs.

On May 26, steel prices saw a price drop of approximately 20% for all forms of steel. The sudden price decline in China could have been triggered by the severe punishment the Chinese government threatened to impose on any excessive speculation and fake news that might inflate critical raw material prices, such as steel.

After Chinese prices corrected, they continued to go up but at a slower rate, closing May at CNY 6,060/mt from CNY 6,100/mt at the end of April. Since, they continued to increase the first week of June but remain below the CNY 6,250/mt level.

However, volumes do not suggest speculation. Rather, the Chinese government wishes to control the rising price situation. After all, a lower domestic price can help boost the competitive advantage for Chinese firms exporting value-added products.

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China’s steel and aluminum market is undergoing a quiet revolution.

It’s not a revolution of investment or innovation.

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Peak aluminum, steel in China?

China aluminum

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According to Reuters, Beijing’s target of peak coal use by 2030 is asserting a dampening effect on new steel mill and aluminum smelter investment.

As such, the country could be at or near peak production. As Reuters’ Andy Home notes, the country’s rising output over the years as had a dampening effect on prices. That trend has led some Western producers to cease operations.

But a combination of harsher environmental legislation resulting in Beijing dissuading investment in new coal fired power projects, combined with Western markets’ meaningful action — after years of simply complaining — to block out Chinese exports of aluminum and steel products suggests the Chinese impetus to build capacity and the rest of the world’s willingness to buy product are both going through a transformational change.

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The Construction Monthly Metals Index (MMI) held flat for this month’s reading.

June 2021 Construction MMI chart

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US construction spending ticks up in April

housing starts

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U.S. construction spending reached a seasonally adjusted annual rate of $1,524.2 billion in April, the Census Bureau reported.

The estimated April rate marked a 0.2% increase from the previous month and a 9.8% increase on a year-over-year basis.

Construction spending amounted to $452.3 billion during the first four months of the year, or up 5.8% from the same period in 2020.

Meanwhile, private construction spending reached a seasonally adjusted annual rate of $1,180.7 billion, up 0.4% from March. Under the umbrella of private construction, residential construction increased by 1.0% to a rate of $729.2 billion in April. Nonresidential construction fell by 0.5% to $451.4 billion in April.

Public construction spending fell 0.6% to $343.5 billion. Educational construction spending fell 0.5% to $84.8 billion. Highway construction rose 0.6% to $99.8 billion.

Construction employment declines in May

On the labor side, employment in the construction sector fell by 20,000 in May, the Census Bureau reported. Employment in construction is down by 225,000 from February 2020.

The Associated General Contractors of America noted contractors continue to struggle with unpredictability with respect to securing materials.

“Steadily worsening production and delivery delays have exceeded even the record cost increases for numerous materials as the biggest headache for many nonresidential contractors,” said Ken Simonson, the association’s chief economist. “If they can’t get the materials, they can’t put employees to work.”

ABI posts growth for third consecutive month

For the third straight month, the Architecture Billings Index, released monthly by the American Institute of Architects, showed growth (meaning an index value greater than 50).

After the onset of the pandemic, the ABI had contracted each month for a year until the February 2021 reading.

For April, the ABI checked in at 57.9, up from 55.6 the previous month. The design contracts index reached 61.7, up from 55.7 the previous month.

The ABI marked its highest level since before the Great Recession.

“Interest in new projects remained extremely strong as well, with the Inquiries score rising to 70.8, and the value of new signed design contracts reaching 61.7, the highest score in that index since data collection started in late 2010,” the ABI report stated. “This means that not only are clients talking to architecture firms about starting new projects, but that they are also signing contracts to begin that work at a high rate.”

By region, the Midwest led the way with an ABI reading of 60.6. Trailing the Midwest were the South (58.3), Northeast (55.0) and West (52.4).

As we’ve noted in this space on a regular basis, shortages and delays in receiving materials have had a ripple effect. The sudden surge in demand throughout some sectors has produced a bullwhip effect.

The ABI report noted the 0.8% jump in the Consumer Price Index from March to April and the 4.2% jump from April 2020 to April 2021, which marked the largest increases since before the Great Recession.

“In addition, core inflation rose by 0.9% in April, the largest increase in that indicator since 1981,” the ABI report notes. “Rising consumer prices at this time are largely caused by supply constraints due to a shortage of key inputs subsequently leading to production delays, and by rising demands for services, particularly travel and hospitality.”

Pending home sales drop in April

Meanwhile, in the housing market, pending home sales fell by 4.4% in April, the National Association of Realtors (NAR) reported.

“Contract signings are approaching pre-pandemic levels after the big surge due to the lack of sufficient supply of affordable homes,” said Lawrence Yun, NAR’s chief economist. “The upper-end market is still moving sharply as inventory is more plentiful there.”

Actual metals prices and trends

The Chinese rebar price dipped 0.7% month over month to $802 per metric ton. Meanwhile, the Chinese H-beam steel price fell 2.3% to $815 per metric ton.

The U.S. shredded scrap steel price rose by 3.2% to $450 per short ton.

The European 1050 commercial aluminum sheet price rose by 0.4% to $3,577 per metric ton.

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This morning in metals news: as the U.S. economy reopened, job openings hit a record high in April; meanwhile, steel prices continue to rise; and, lastly, emissions from the electric power sector have declined as it has shifted from coal to natural gas.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Job openings hit record high in April

job openings

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U.S job openings reached a record high of 9.3 million on the last business day of April, the U.S. Census Bureau reported.

Hires, meanwhile, reached 6.1 million, little changed from the previous month.

“Total separations increased to 5.8 million,” the Census Bureau added. “Within separations, the quits rate reached a series high of 2.7 percent while the layoffs and discharges rate decreased to a series low of 1.0 percent.”

In durable goods manufacturing, separations increased by 7,000.

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Hot rolled coil prices in Western Europe have not slowed their upward trek over the past month. Demand continues to outstrip supply for the flat-rolled product, industry watchers said June 1.

“It has everything to do with high demand in Europe and the United States,” one trader told MetalMiner.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Rising hot rolled coil prices

hot-rolled coil steel

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Sources confirmed prices for hot rolled coil at €1,120-1,130 ($1,370-1,385) per metric ton exw for rolling and delivery into Q4. That compares with hot rolled coil prices of €1,000-1,020 ($1,225-1,250) in May.

Cold rolled coil is now carrying a premium of €125 ($150) per ton over HRC, sources indicated.

The auto and construction sectors are behind the high demand, one source said.

New registrations for passenger vehicles within the European Union rose by 218.6% year over year in April to approximately 862,226 units from 270,651 units, the European Automobile Manufacturers’ Association (ACEA) stated on May 19.

Restrictions from the COVID-19 pandemic in April 2020 were the main reason behind the increase, however, the association noted.

“Indeed, despite this big percentage increase, last month’s sales volume was almost 300,000 units lower than that recorded in April 2019,” ACEA added.

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Global crude steel production dipped to 169.5 million metric tons in April, down slightly from the previous month, the World Steel Association reported this month.

Production in March had reached 170.1 million metric tons. Meanwhile, April output increased 23.3% year over year, up from 137.5 million metric tons in April 2020.

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Chinese steel production rises

Steel production

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Although global steel production backtracked slightly in April from the previous month, Chinese steel production increased.

The Chinese steel sector churned out 97.9 million metric tons, up from 94 million metric tons in March. Meanwhile, April output increased by 13.4% year over year.

Steel producers in China — and around the world — have benefited from soaring prices. Furthermore, earlier this month, Chinese steelmakers bumped up prices to account for significant rises in iron ore prices.

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This morning in metals news: Chinese steel prices have plunged early this week following Beijing’s weekend warning to commodity speculators; MetalMiner is hosting its monthly webinar tomorrow, May 27, at 11:30 a.m. CDT; and the US Census Bureau released data on April steel imports.

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Chinese steel prices fall

China steel production

Zhao Jiankang/AdobeStock

As we noted earlier this week, the Chinese government over the weekend issued a warning to commodity speculators in an effort to restore “normal market order.”

Several Chinese steel prices have taken significant falls early this week. The Chinese steel slab price fell from 6,340 CNY ($992) per metric ton to 5,350 CNY ($837).

Meanwhile, Chinese steel plate dipped from 6,810 CNY ($1,066) to 5,850 CNY ($915). Steel rebar plunged from 5,570 CNY ($872) to 4,950 CNY ($775). Meanwhile, H-beam steel fell from 6,070 CNY ($950) to 5,360 CNY ($839).

Historically, Chinese steel prices lead US steel prices. As such, steel buyers will want to continue to monitor prices for any indications of retrenchment in the US steel market.

MetalMiner webinar on Thursday, May 27

Speaking of falling prices, MetalMiner is hosting its next webinar tomorrow (Thursday, May 27) at 11:30 a.m. CDT.

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China’s “zero tolerance” warning to commodity speculators over the weekend sent prices of some metals and iron ore tumbling.

A meeting held on Sunday between at least five government departments, including the the National Development and Reform Commission (NDRC), concluded that the fight against hoarders and speculators leading to soaring commodities prices would be taken to the next level.

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Beijing aims to control runaway prices, warns commodity speculators

China map

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Bloomberg reported the government had also threatened severe punishment for violators indulging in excessive speculation and fake news in the trading of commodities including iron ore, steel and copper.

The NDRC summoned top metals producers to the meeting in Beijing.

Let’s not forget that China is the largest consumer of some of these commodities, like iron ore and copper. The prices of these commodities have surged this year, as the global economy partially recovered from the COVID-19 pandemic. In turn, that has led to renewed demand for manufactured goods.

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The Raw Steels Monthly Metals Index (MMI) picked up 9.0% for this month’s reading, as steel prices continued ascending this past month.

May 2021 Raw Steels MMI chart

With volatile steel markets, knowing which strategy to execute and when can make all the difference between saving and losing money. See how MetalMiner looks at different market scenarios.

US steel prices continue to rise

For buyers waiting to see a peak in steel prices: keep waiting.

At least for now, steel prices continue to rise, posting double-digit month-over-month price gains. Price rises took somewhat of a pause from late March into mid-April, but it proved temporary.

The US hot rolled coil price, for example, closed Tuesday at $1,456 per short ton, or up 10.39% from a month ago.

Meanwhile, cold rolled coil reached $1,645 per short ton, or up 8.8%. US hot dipped galvanized rose by 10.69% to $1,770 per short ton.

Iron ore booms in Asia

Similarly, steel prices are also surging in Asia.

That is reflected in a skyrocketing iron ore price, too, MetalMiner’s Stuart Burns explained earlier this week.

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This morning in metals news: US steel capacity utilization fell to 78.1% last week; meanwhile, a cyberattack halted operations of a major US pipeline on Friday; and, lastly, US steel prices continue to surge.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

US steel capacity utilization falls to 78.1%

steel shipment

Hor/Adobe Stock

US steel capacity utilization for the week ending May 8 dipped to 78.1% from 78.7% the previous week, the American Iron and Steel Institute reported.

Production during the week totaled 1,774,000 net tons, or down 0.8% from the previous week.

However, production increased by 45.1% on a year-over-year basis.

Production for the year to date reached 32,089,000 net tons at steel capacity utilization rate of 77.4%. Output is up 5.7% on a year-over-year basis.

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