US Steel Prices Expected to Recover in Second Half Of 2019
by Hans Diederichs
US flat product steel prices have been in a steady state of decline since the mid-part of 2018. A gradual uptick in domestic capacity utilisation was a contributory factor to the price erosion. Imported volumes remain an influence, despite the protection of Section 232 measures.
According to MEPS’ research, in July, the majority of US steel market participants believe that the bottom of the pricing cycle has now been reached. In an attempt to prevent further cuts, US mills announced two list price hikes, totalling US$80 per short ton. Local buyers, who were strongly opposed to the initial mill pricing initiative, started to place third trimester orders, in anticipation of rising selling values. This led to an uptick in mill bookings.
A number of US producers strengthened their pricing claims, by announcing their intention to idle blast furnaces during the summer months. Escalating iron ore costs are squeezing the margins of the integrated mills, relative to the scrap-based steel manufacturers. It is widely acknowledged that US mills would need to reduce supply, to align themselves with current demand requirements, if the recent pricing proposals were to be accepted by the market.
MEPS projects that US selling figures will recover in the second half of the year. Transaction values are likely to be supported by low inventory levels and tightening supply. A revival in scrap costs is expected, in the same timeframe. This should exert upward pressure on steel prices.
Source: MEPS Photo: Fotolia