Some producers’ offer prices from late last week are now at least €900 ($1,060) per metric ton exw. Meanwhile, delivery times extend as far out as October, market participants said.
Cold rolled coil is on offer for €980 ($1,155), they added.
“It’s impossible to get anything before June,” one trader said.
Hot rolled coil offers in mid March reached €850-900 ($1,000-1,060) for May rolling and June delivery. However, traders warned then that the price and lead times were not certain and could rise further.
Import offers for hot rolled coil are now $900-910 cost and freight (CFR) for European ports. That is up from $890-900 transacted earlier in March for material from India and Japan, respectively for May and June delivery, sources also noted.
Import prices could also face more increases, a second trader warned.
Three years have passed since former President Donald Trump imposed Section 232 tariffs on steel and aluminum.
The administration cited national security concerns when imposing the tariffs. In addition, it aimed to raise capacity utilization of the US steel and aluminum sectors. (For the week ending March 20, US mills reached a steel capacity utilization rate of 77.3%.)
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Some countries received exemptions and domestic buyers have been able to win exclusions, which have mitigated the strength of the tariffs.
Metals consumers have expressed their opposition to the tariffs. For example, the Coalition of American Metal Manufacturers and Users (CAMMU) called for an end to the tariffs last year, citing the negative economic impact of the COVID-19 pandemic.
However, a recent review of the tariffs offered a more positive view.
The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.
EPI: Section 232 tariffs produced ‘near-immediate benefits’
According to a recent report this week by the Economic Policy Institute (EPI), the Section 232 tariffs offered “near-immediate benefits.”
The US steel sector’s capacity utilization rate fell to 77.3% for the week ending March 20, the American Iron and Steel Institute reported this week.
Steel output during the week totaled 1.75 million net tons. The figure marked an increase of 0.7% year over year. Meanwhile, output declined 0.5% from the previous week, when capacity utilization reached 77.7%.
As for the year to date, production reached 19.6 million net tons. Capacity utilization during the period reached 76.8%. Production during the period fell 6.2% from the same time frame in 2020, when the rate reached 79.6%.
Offers for the flat rolled product from Western European mills are now €850-900 ($1,015-$1,070) per tonne ex works for May rolling and June delivery, traders told MetalMiner. That moved up by an average one-third from the €750 ($894) that producers were offering in early February.
Production cuts by Western European mills could, however, make it difficult to secure finished product at those times and prices.
“You cannot buy a single tonne,” one trader said about acquiring hot rolled coil from Western European mills at present.
Rises in raw material prices and reported difficulties in securing ferrous scrap are also pushing up prices, a second trader said.
Hot rolled coil is used in construction applications. The flat rolled product is also used as feedstock for welded pipe production. It’s also used for rolling cold rolled coil and and to produce further downstream.
Anti-dumping measures, Chinese demand
Also supporting prices on the Western European domestic market are EU anti-dumping measures on HRC from Turkey and China. In addition, high demand for finished product from China has offered support, sources said.
“The Chinese [economy] is doing very well,” the first trader said.
High hot rolled coil demand in Southeast Asia for building and infrastructure projects is also supporting Western European prices, sources noted.
This morning in metals news: the European Parliament recently voted on a resolution for a Carbon Border Adjustment Mechanism; China’s steel output reached nearly 175 million tons in January and February; and the US CRC price has widened the spread with the China CRC price.
European Parliam passes Carbon Border Adjustment Mechanism
Last week, the European Parliament passed a resolution for a Carbon Border Adjustment Mechanism.
“The European Parliament has sent a clear signal that a workable carbon border measure is of critical importance for the transition of industry towards climate neutrality,” said Axel Eggert, director general of the European Steel Association (EUROFER). “The measure must fill the gap of the carbon cost differential with global competitors and imports instead of replacing or reducing current levels of carbon leakage protection.”
Eggert added straight replacement of free carbon dioxide certificates for a border measure would be “bad policy.”
“Primary steelmaking makes up three-fifths of European production, and such producers would face carbon costs at least twenty times higher than global competitors exporting to the EU,” Eggert added. “This vote shows that the Parliament intends to defend manufacturing and jobs in Europe.”
China churns out 175M tons of crude steel in January, February
The Chinese steel sector produced 175 million tons of steel in January and February, according to National Bureau of Statistics data reported by Reuters.
Average daily output during the aforementioned period reached 2.97 million tons per day. The average came in higher than daily output in December 2020 and January-February 2020, Reuters reported.
US CRC widens gap with China CRC
The US CRC price has become increasingly expensive relative to the China CRC price.
US CRC closed Monday at $1,429 per short ton, or up 8.04% from a month ago.
Meanwhile, China CRC closed at $850 per short ton, for a spread of $579.
The US steel sector’s capacity utilization rate posted another incremental gain — this past week rising to 77.7% — as steel production remains steady, but buyers continue to face challenges in securing supply.
Steel production reached 1.76 million net tons for the week ending March 13, the American Iron and Steel Institute reported.
The 77.7% capacity rate during the week marked an increase from 77.4% the previous week.
Meanwhile, for the same week a year ago, steel production reached 1.74 million net tons at a capacity utilization rate of 75.3%.
For the year to date, steel production totaled 17.87 million net tons, at a capacity utilization rate of 76.7%. Output this year is down 6.8% from the same period last year, when capacity utilization reached 79.6%.
By region, steel production for the week ending March 13 totaled:
This morning in metals news: U.S. Steel offered a bullish view of the steel market in its first-quarter guidance; the Chinese steelmaking city of Tangshan is moving to tackle pollution; and the tin price has bounced back up over the last two weeks.
“Solid market fundamentals, low steel supply chain inventories, continued consumer-driven demand, and pent-up infrastructure demand has us increasingly bullish,” he said.
U.S. Steel expects adjusted net income in the first quarter to come in at $160 million, excluding special items.
The steelmaker has benefited from rising steel prices.
“The Flat-rolled segment is expected to generate significantly higher sequential EBITDA in the first quarter,” the steelmaker said in its guidance. “Higher steel prices over the past several months are increasingly flowing through the segment’s average selling prices in its adjustable and reset annual fixed price contracts. Additionally, the restart of Gary #4 blast furnace has improved operating efficiency.”
Tangshan authorities to address steelmaking pollution
Steel price rises have continued, much to the chagrin of buyers battling for hard-to-get supply.
However, the pace of the price gains has started to slow.
“The percentage of increase week over week seems to be getting smaller,” said Don Hauser, MetalMiner vice president of business solutions. “This may be a sign the peak is near. Short term, it is likely going to continue to rise, just at a slower pace. Steel prices may remain supported unless/until new production capacity comes back onstream, and some will get added this year.”
Overall, it’s a difficult time for buyers.
“Unforecasted material is still nearly impossible to find unless it’s by chance,” Hauser added. “Even forecasted material can be difficult to receive on time.”
Capacity utilization hits 77.4%
Speaking of supply and the steel price, steel capacity utilization reached 77.4% for the week ending March 6, the American Iron and Steel Institute reported.
The US steel sector churned out 1.76 million net tons of steel during the week, up 0.3% from the previous week but down 0.3% year over year.
Production for the year to date totaled 16.11 million net tons, or down 7.6% compared with the same time frame the year before. (Notably, this period in 2020 does not yet cover the beginning of lockdown restrictions related to the pandemic.)
During the winter season in recent years, power production that runs on coal and polluting industries such as steel and cement, many of which are not only large emitters themselves but also draw electricity from polluting sources of power generation, have been closed in phased programs to reduce air pollution.
But this is much more than those short-term remedies to peak smog levels.
The Financial Times suggests Beijing’s new Five Year Plan focuses on pollution. The plan will require legislation that will result in an unavoidable decline in steel output.
Apparently, local governments have already begun to impose curbs.
The January rate marked an increase of 1.7% from the previous month. Furthermore, the January rate rose 5.8% compared with January 2020.
Private construction rose 1.7% to a seasonally adjusted annual rate of $1,160.0 billion. Within private construction, residential construction rose 2.5% to $713.0 billion in January. Nonresidential construction ticked up by 0.4% to $447.0 billion.
Meanwhile, US public construction spending rose 1.7% to $361.5 billion. Educational construction dipped 0.1% to $89.9 billion. Highway construction rose 5.8% to $107.8 billion.
ABI moves up but remains low
The Architecture Billings Index (ABI), released monthly by the American Institute of Architects, reached a January reading of 44.9.
The January reading marked an increase from 42.3 the previous month. However, any reading less than 50 indicates a contraction in billings.
Meanwhile, the design contracts index moved up from 47.0 to 48.8.