Steel prices remain at their lowest levels. Almost every industrial metal price rose in April as a weaker dollar gave a boost to commodity markets. However, steel prices remained quiet, hanging at record lows.
The monthly raw steels MMI® registered a value of 60 in May, on par with April’s value.
Raw Materials Undercutting Scrap
Scrap prices are at their lowest levels and we don’t really see anything that could give prices significant momentum on the upside, at least until a bigger supply response is seen.
Why Manufacturers Need to Ditch Purchase Price Variance
Unless we start seeing the dollar depreciate against other currencies, European scrap exports will keep gaining market share, leaving a supply excess for US steelmakers.
Cheaper to Produce
Moreover, although prices seem low, it’s still cheaper to make steel still using iron ore than scrap. Pig iron or billet could substitute some scrap as primary raw material in which case, US exporters would sell more in the domestic market, causing US scrap prices to keep falling lower.
Meanwhile, steel imports keep arriving. Since US prices are no longer inflated compared to the rest of the world ,we would imagine steel imports will start slowing down through the remainder of the year. However, Chinese exports could actually increase due to the recent removal of export tariffs.
Either way, steel demand remains weak, particularly in oil and gas tubular markets while the market remains oversupplied. It doesn’t seem likely that steel prices will rise significantly higher this year.
May Steel Prices
Last month, the steel billet 3-month price rose 3.3% on the LME to $315.00 per metric ton. US shredded scrap saw its price rise 0.8% to $250.00 per short ton.
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The spot price of the US HRC futures contract closed the month at $450.00 per short ton after dropping 5.3%. Korean steel scrap prices fell 3.6% to $124.29 per metric ton. After rising the previous month, Chinese slab prices dropped 2.8% to $388.47 per metric ton. The US HRC futures contract 3-month price fell a slight 2.5% over the past month to $512.00 per short ton. The steel billet cash price ended the month on the LME at $300.00 per metric ton, down from $300.00.
Prices for Chinese billet remained constant this past month, holding at around $333.66 per metric ton. Chinese coking coal held pat last month at $174.08 per metric ton. Hovering around $491.59 per metric ton for the month, Korean pig iron remained unchanged.
The Raw Steels MMI® collects and weights 13 global steel and raw material price points to provide a unique view into global steel price trends over a 30-day period. For more information on the Raw Steels MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.