US Steel Prices Stall Following Recent Revival
by Hans Diederichs
The recent revival in US flat product prices appears to have come to a halt, this month. The consensus view, from MEPS’ September research, is that US selling values have plateaued – with figures expected to be under negative pressure for the remainder of 2019.
Ahead of the seasonally slower fourth quarter, US steel manufacturers are likely to be intent on minimising the extent of the price erosion – with few market signals giving them cause for optimism. A combination of weak demand and relatively high domestic production is a threat to the sustainability of current prices.
Activity levels, in the US, are likely to soften, in the coming months. A slowdown in major end-user markets, such as automotive, construction and energy, is widely anticipated. Domestic capability utilisation remains around the 80 percent mark. Several US steelmakers have already outlined their plans to reduce output, next month, by taking extended periods of maintenance. The impact on the market is projected to be negligible, given that domestic supply is still likely to exceed demand.
Imported volumes remain an influence on the US steel market, despite the implementation of Section 232 measures. Recent exemptions for neighbouring Canada and Mexico, as well as quota agreements on steel imports from Argentina, Australia, Brazil and South Korea, have reduced the impact of the current trade legislation.
Several political and economic uncertainties, in the regional and global steel markets, persist. The ongoing trade tensions between the US and China will do little to boost buyer confidence, in the short term.
However, MEPS predicts that US steel prices have the potential to rise, once again, at the beginning of next year. A seasonal upturn in steel purchasing and an expected recovery in scrap costs are likely to exert upward pressure on US selling figures, in early 2020.
Source: MEPS Photo: Fotolia