steel price

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.

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

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.

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

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.

Need buying strategies for steel? Try two free months of MetalMiner’s Outlook

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

Coking coal has more than doubled in a matter of days as a cyclone caused disruptions to Australia’s coal exports. The impact was significant and several miners had to declare force majeure on their coal deliveries.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

It is estimated that shipments accounting for 50% of the global coking coal supply will be delayed and that Australia will need at least two months to regularize its coking coal exports after the natural disaster.

Australian coking coal’s free-on-board price in US dollars per metric ton. Source:mining.com.

Coking coal prices rose sharply in the second half of last year when China reduced allowable work days at the country’s coal mines, which reduced output and tightened the global coking coal market. These events added fuel to rising steel prices in China. But a slump in coking coal prices since December added pressure to steel prices, especially in China since the country strongly depends on the commodity to make steel.

Can Higher Coking Coal Prices Give a New Boost to Chinese Steel Prices?

The Chinese cold-rolled coil price. Source: MetalMiner IndX.

A recent CNBC article states that Australia is the world’s biggest coking coal exporter and therefore, China’s largest supplier. The recent disruptions are forcing China to look for alternative supplies such as Russia, Mongolia or Indonesia. In addition, China won’t import more coking from North Korea as a punishment to recent North Korean missile tests.

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Higher coking coal prices translate into higher input costs, particularly in China. Chinese steel prices set the floor for international steel prices, a topic that we discussed recently. Steel buyers should monitor the recent surge in coking coal prices closely since steelmakers will potentially pass on the increase to consumers, giving a boost to weakening steel prices in China.

U.S. automakers’ sales figures for March came in below market expectations and gave early evidence that America’s long boom cycle for automotive sales may finally be losing steam. Automakers sold 1.56 million new cars and trucks in March, a 1.6% decline compared with the same month a year ago.

Ford Motor Company took the biggest hit among sales drops, seeing its March numbers fall more than 7% from February’s.

Industry consultant Autodata put industry Seasonally Adjusted Annual Rate at 16.62 million cars, trucks and SUVs for March.

That was below the 17.3 million analysts polled by Reuters had expected, and the first time since August that the SAAR – a crucial industry metric – had fallen below 17 million.

General Motors had the best month, reporting a 2% increase in sales to just over 256,000 vehicles, with sales of its Tahoe and Suburban SUV models seeing their best sales month since 2008.

Sales at Ford Motor Co. fell the aforementioned 7+% to 236,000 vehicles, with fleet sales to rental agencies, businesses and government entities down nearly 17% on the year. Sales of Ford’s F-Series pickup trucks rose 10% but that simply could not offset the losses elsewhere. Sales at Fiat-Chrysler Automobiles fell 5% in March. Automotive sales in the U.S. risen since end of the 2008 recession and hit a record last year of 17.55 million last year. Toyota Motor Corp. and Honda Motor Co. reported smaller losses.

The fall in new car sales is even more curious considering that consumer confidence is at its highest level since 2000. Could the level of vehicle replacement that had driven sales since 2008 finally be falling? Vehicle inventories at dealerships have risen to the highest point since 2004, according to Edmunds.com.

If auto sales have, indeed, plateaued, then prices for automotive steel and aluminum could as well, at least in the expansive U.S. market. Our Automotive MMI remained flat this month at 88.

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US Cold-rolled coil prices since 2012. Source:MetalMiner IndX

U.S. Cold rolled-coil prices rose to their highest levels since March of 2012 this week. Spot steel prices saw some upward action in January, however, prices really came under pressure in early February.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

In March, U.S. steel mills are pushing for another round of price hikes. So far, they seem to be succeeding.

China Steel Prices

Hot-rolled coil price spread. Source: MetalMiner IndX

Back in November, we predicted a surge in steel prices as we moved into the new year. When international steel prices rise, U.S. mills can more easily justify a price hike. Chinese prices set the floor for international prices. Last summer, U.S. steel prices declined sharply while Chinese prices held well. That caused the international price arbitrage to come down to normal levels.

The price arbitrage started to widen again this year as momentum in U.S. steel prices picked up. However, the arbitrage is still relatively narrow compared to historical levels, especially in hot-rolled coil. Therefore, U.S. mills still have some room to hike prices. Still, for the rally to be sustained throughout the year, Chinese steel prices will need to keep rising.

Falling Chinese Steel Exports

In January, Chinese steel exports fell near 24% compared to the same month last year. In absolute terms, January steel exports were at their lowest level since June 2014. Exports fell by double digits in the last four months of 2016. While more countries act against the threat of a flood of Chinese steel, we could see further moderation in exports this year, which bodes well for global steel markets. What’s surprising is that exports have falling despite rising output.

According to the data released by the World Steel Association, China’s January steel production rose 7.4% to 67 mmt while global steel production rose 7% from a year ago. In addition, China’s operating steel capacity increased in 2016, since most of the announced cuts in capacity were already idle.

So far, solid demand in China has absorbed the increase in output, or at least most of it. The Caixin Manufacturing PMI in China rose to 51.7 in February, beating market expectations and marking the eighth-straight month of growth. In addition, there are rumors that China is stocking its excess steel production. According to SteelHome, hot-rolled coil and rebar inventories in China have surged so far this year.

All About Production Cuts

In conclusion, U.S. mills could continue to raise prices in the short-term. However, for a sustained bull market in steel prices, Chinese steel prices will have to rise as well. China’s domestic demand looks strong, but it won’t be enough to support a rising price trend in the face of rising output.

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Beijing “has ordered curbs on steel and aluminum output in as many as 28 northern cities during the winter heating season, as it steps up its fight against pollution,” according to Bloomberg, but we need to see if those cuts actually materialize this year. China will need to intensify its efforts to curtail excess steel capacity. Otherwise, if production continues to grow unabated, it could hamper this price recovery.