steel price

This morning in metals news: MetalMiner’s Stuart Burns weighed in on the outlook for iron ore prices and steel prices throughout the remainder of this year; the unemployment rate was unchanged in April; and the copper price has soared past the $10,000 per metric ton mark.

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Iron ore prices likely to remain elevated

bulk cargo iron ore

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Commenting on MarketWatch, MetalMiner’s Stuart Burns said steel prices are likely to lose some steam in the second half of the year. In turn, so will iron ore price.

However, the drop is not likely to be significant. In fact, he noted he expects prices to remain elevated for the balance of the year.

“Iron is experiencing a perfect storm at the moment, Beijing’s environmental constraints are having a two-pronged impact on prices,” he told Marketwatch.

Unemployment unchanged in April

US unemployment checked in at 6.1% in April, the Bureau of Labor Statistics (BLS) reported.

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Western Europe’s hot rolled coil and cold rolled coil prices continued to rise over the past month.

High demand from China and rising input prices supported prices, market sources told MetalMiner.

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Hot rolled coil prices rise

hot-rolled coil steel

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Hot rolled coil from European mills have transacted in the past two weeks for €1,000-€1,020 ($1,200-$1,225) per metric ton exw for rolling and delivery as far ahead as Q4, sources said. Cold rolled coil for the same production and delivery times transacted for about €1,100 ($1,320).

Prices for hot rolled coil in late March reached about €900 ($1,140-1,200). Meanwhile, CRC reached approximately €980 ($1,180).

Deals on imports of HRC over May from India and Turkey concluded at about $1,100 per ton cost and freight (CFR) European ports for delivery in June and July, a second trader stated. That marked an increase from $900-$910 in late March.

A Russian steelmaker also let some steel go into Europe at prices lower than the imports from Asia, another European trading source reported, though no other sources told MetalMiner about this.

The Russians only concluded those transactions in the run-up to Russia’s May holidays. This year, the holidays last 10 days and include May Day on May 1 and Victory Day on May 9, the European trading source warned.

A construction boom in the country has also made Russia’s domestic market the end-user for its rolled product, the source added.

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imports

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Preliminary US steel imports reached 2.1 million metric tons in March, the Census Bureau reported earlier this month.

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US steel imports rise, paced by sheets and HDG strip

US steel imports picked up in March from the 1.7 million metric tons brought in during February.

The biggest increases came from sheets and hot dipped galvanized strip, sheets and strip, and reinforcing bars.

Imports of sheets and hot dipped galvanized strip reached 221,721 metric tons, up 43.1% from the previous month. Imports of the product also gained by 18.8% on a year-over-year basis.

Meanwhile, imports of reinforcing bars reached 128,343 metric tons in March, up 65.6%

In oil-relevant news, imports of oil country goods reached 115,905 metric tons in March, up 45.4%. While the demand outlook for oil is still volatile, the ongoing vaccine rollout and the summer season will likely boost demand in the coming months. (Per the Centers for Disease Control and Prevention, 43% of the population has received at least one vaccine dose.)

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Given the outbreak of the COVID-19 pandemic throughout the world in early 2020, it’s no surprise that year-over-year crude steel production levels have surged so far this year.

In its monthly production analysis, the World Steel Association (worldsteel) reported global crude steel production jumped by 15.2% year over year in March.

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Global crude steel production surges in March

China steel production

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Global crude steel production reached 169.2 million metric tons during the month, worldsteel reported.

Meanwhile, global crude steel production in Q1 2021 reached 486.9 million metric tons. The Q1 output marked an increase of 10.0% compared with Q1 2020, when the world began to grapple with the pandemic.

China crude steel production remains robust

Despite announced production curbs, especially in the Chinese steelmaking hub of Tangshan, the country’s steel output remains robust.

China churned out 94.0 million metric tons of steel in March, worldsteel reported. That marks an increase of 19.1% year over year.

Steel demand remains strong in China, which helped prop up metals markets last year with stimulus-driven infrastructure spending projects. While the rest of the world continued to struggle, both with the pandemic and economically, China posted GDP growth of 2.3% (low by China’s typical growth rate, but still notable given the scope of the pandemic).

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NLMK plant

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Russian steelmaking group Novolipetsk Steel (NLMK) reported a 4.1% year-over-year rise in its Q1 crude steel production.

The jump came partly due to completion of maintenance on its long products facility at the Lipetsk site.

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NLMK output rises in Q1

The group tapped 4.37 million metric tons of liquid steel in Q1 2021. Meanwhile, it tapped just over 4.21 million metric tons in Q1 2020, NLMK said.

Crude production rose 12.1% quarter on quarter, however, from 3.9 million metric tons.

Average capacity utilization across all of NLMK’s hot ends in Russia, Italy and the United States averaged 94.5% in Q1. The figure is unchanged from the previous quarter and year over year, the group indicated.

NLMK can produce 17 million metric tons per year of crude steel. That comes mainly from its main integrated site at Lipetsk, about 465 kilometers southeast of capital city Moscow. That asset also casts slab for further rolling at the plant or for export to subsidiary rolling mills in Europe and the United States.

The group also has electric arc furnaces in Russia at NLMK Kaluga, NLMK Ural, at its Italian site NLMK Verona and at NLMK Indiana in the United States.

Indiana can produce 770,000 metric tons per year of crude via one electric arc furnace. Estimated crude capacity from the 68-tonne EAF at Verona is about 500,000 metric tons per year.

NLMK’s consolidated sales, including semi-finished and finished products, fell 3% on the year to 3.91 million metric tons from 4.5 million metric tons.

Quarter-over-quarter sales were 14% lower from 4.22 million metric tons, the group said.

A decrease in commercial pig iron sales due to repairs to blast furnace operations at Lipetsk, plus an increase in intragroup slab sales, impacted sales results, NLMK said.

The group’s consolidated flat sales rose by 2% in Q1, however, to about 2.06 million metric tons from 2.02 million metric tons in Q4 2020. Those sales are down 7% from the more than 2.21 million metric tons the group sold in Q1 2020.

NLMK Russia Long Products, the only segment of the group that produces finished and longs, saw the highest increases in consolidated quarter on quarter at 635,000 metric tons, up 8% from 587,000 metric tons.

Year over year, the increase rises to 18% from 539,000 metric tons.

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Before we head into the weekend, let’s take a look back at the week that was and the metals storylines here on MetalMiner, including coverage of steel prices, US electricity consumption and much more:

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Week of April 12-16 (steel prices, electricity consumption and more)

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The Raw Steels Monthly Metals Index (MMI) rose by 7.8% for this month’s reading, as steel prices continued to rise.

April 2021 Raw Steels MMI chart

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Steel price gains slow

As we’ve chronicled in this monthly column, steel prices have been rising consistently since last summer.

Buyers have struggled to find supply in what eventually became an allocation market.

Steel prices have posted double-digit percentage gains on a month-over-month basis. However, that ascent appears to be slowing somewhat.

The US hot rolled coil price, for example, continued to increase. The US HRC three-month price rose 20% month over month to $1,280 per short ton. However, the price has flattened out thus far in April.

Are steel prices finally reaching a peak? That is not yet clear, but price gains have certainly started to slow.

Supply developments

Speaking of allocation markets and tight supply, buyers will take some solace in the fact that some new supply will be coming on stream, both in the short and medium terms.

Work continues on Steel Dynamics’ new Sinton, Texas facility, which is scheduled to open by mid-year.

Excluding costs associated with investment in the Sinton flat rolled steel mill ($18 million), the company said it expected its first quarter earnings to be in the range of between $1.94 and $1.98 per diluted share, which it said could represent a record earnings quarter for the company.

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green hydrogen

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Whether we agree with the rationale or not, the carbon footprint of everyday materials like steel and aluminum is becoming an increasingly important component of consumers’ purchasing decisions.

In the US, some states — like California — have mandated purchasing departments for state projects to report the carbon footprint or CO2 content of the products they buy. The move aims to measure and, if possible reduce, carbon content.

But in the US such moves are still patchy and largely state-led. Meanwhile, meaningful direction from the new Biden administration on the issue is still largely in development.

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Europe aims to reduce emissions

In Europe, the EU is coordinating moves to reduce greenhouse gas emission by the steel sector. The EU is providing funding for research and support in the form of infrastructure, such as hydrogen gas supply networks.

In a recent post, our ex-colleague Jeff Yoders wrote a fine piece on efforts by ArcelorMittal to commercialize reductions in the carbon content of an initially small proportion of its output — just 2% or 600,000 tons per annum — by issuing certificates, which certify the reduction in carbon footprint of their steel that can be used by customers who need to report the carbon content of their supply chain or those that face carbon taxes.

The vouchers allow buyers to show an offset of Scope 3 emissions, which can come from anything in a company’s value chain.

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The Construction Monthly Metals Index (MMI) ticked up 1.0% for this month’s reading, as US construction spending dipped in February.

April 2021 Construction MMI chart

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US construction spending

Construction spending in February reached a seasonally adjusted annual rate of $1,516.9 billion, or 0.8% below the revised January estimate of $1,529.0 billion, the Census Bureau reported.

Meanwhile, the February rate marked an increase of 5.3% year over year.

Furthermore, spending the first two months of 2021 totaled $213.2 billion, or up 4.9% year over year.

In the private sector, spending reached a rate of $1,165.7 billion, or down 0.5% from January. Under private construction, residential construction fell 0.2% to $717.9 billion. Nonresidential construction spending fell 1.0% to $447.8 billion.

Meanwhile, public construction spending reached a rate of $351.2 billion, or down 1.7% from January. Educational construction fell 3.2% to $86.9 billion. Highway construction reached $102.3 billion, or down 0.6% from January.

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steel

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After dipping slightly the previous week, US steel capacity utilization jumped to 77.6% for the week ending March 27, the American Iron and Steel Institute (AISI) reported.

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US steel capacity utilization rises

US steel capacity utilization picked up from 77.3% for the week ending March 20.

Meanwhile, steel capacity utilization for the same week in 2020 reached 75.3%.

Production during the week ending March 27 reached 1.76 million net tons. The output total marked an increase of 1.1% year over year and an increase of 0.4% from the previous week.

Meanwhile, for the year to date, production totaled 21.4 million net tons. US steel capacity utilization during that period reached 76.8%. Output during the period is down 5.6% year over year. Furthermore, US steel capacity utilization during the same period in 2020 reached 79.6%.

In addition, production for the week ending March 27, 2021, by region totaled:

  • Northeast: 166,000 net tons
  • Great Lakes: 617,000 net tons
  • Midwest: 189,000
  • Southern: 712,000 net tons
  • Western: 76,000 net tons

Steel price gains

Steel prices remain on the rise.

US hot rolled coil closed Wednesday at $1,310 per short ton, or up 8.8% month over month. Cold rolled coil, meanwhile, $1,490 per short ton, or up 8.36%.

Hot dipped galvanized is up 6.98%, hitting $1,578 per short ton on Wednesday.

ATI strike

In supply news, earlier this week we covered the United Steelworkers union’s announcement of a strike at nine Allegheny Technologies Inc. (ATI) sites.

In a statement, the union cited “unfair labor practices” and said members had not received a wage increase since 2014. In its own statement, ATI expressed disappointment in the move.

On Wednesday, the union released an update on negotiations with the company.

“In addition to the company’s unreasonable and unnecessary contract proposals, we believe ATI
has violated federal labor law and engaged in serious unfair labor practices,” the union said Wednesday. “Management’s conduct has undermined our ability to bargain for the contract we deserve, and their actions are intended to intimidate or coerce us from standing together to fight for a fair contract and to break our solidarity.

“In December 2020, before bargaining began, ATI announced shutdowns impacting workers in Louisville and Waterbury and the #3 Finishing Dept at Brackenridge, yet the company still refuses to grant these workers their shutdown benefits and pensions unless, we ratify their contract, thereby holding our members and their families hostage.”

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