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It is Steel Eclipse!

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by - 5/23/2016 5177 Views

Flat Rolled Steel is The Shooting Star.

The steel prices, especially U.S flat rolled are shooting up very briskly not seen since 2008, according to industry sources. I should say it is a STEEL ECLIPSE! Fasten your seat belt lest you have jolts.

“Someone mentions a price and you think, ‘That’s ridiculous’—and then it goes even higher,” a Gulf Coast steel buyer said. “They (mills) have all the pricing power right now.”

“This is definitely something else. We saw 12 months of falling prices and now we’ve seen a complete recovery in two-and-a-half months,” an East Coast trader said. The latest price assessment for hot-rolled coil stands at $30 per hundredweight ($600 per ton), up 13.2 percent from $26.50 per cwt ($530 per ton) previously. Cold-rolled and hot-dipped galvanized base prices, meanwhile, have surged to $39 per cwt ($780 per ton), up 11.4 percent from $35 per cwt ($700 per ton).

Hot-rolled coil prices are now up 69 percent from a December low of $17.75 per cwt ($355 per ton) and are on par with levels seen at the start of January 2015 according to pricing records. A similar trend has played out with cold-rolled and hot-dipped galvanized base prices, which are up 62.5 percent from a December low of $24 per cwt ($480 per ton) and stand at their highest point since mid-October 2014.

It’s not just prices for steel that are up. Coating extras—heavily discounted when the market was weak—are being enforced in full, market sources said. And the previously common practice of freight equalization has vanished from the ferrous scrap market, they noted.

“They (mills) are not looking to cut anyone a deal at this point,” the Midwest service center source said, adding that his company in turn has drawn a line in the sand when it comes to passing through higher prices.

“We have raised prices every other week for the last eight weeks, and we’re not seeing a slowdown in orders,” the Midwest source said. “We’re seeing people coming out of the woodwork looking for steel because they can’t get it from their normal suppliers.”

The gains come as mills have aggressively increased prices while trade cases declining imports, reduced domestic capacity and lean inventories have left consumers scrambling for steel amid long mill lead times and controlled order entry or allocation, market sources said. The result is that the current market might be even frothier than 2008, some sources said, contending that it harks back instead to the 2002-to-2003 time frame when a Section 201 was in place.

The sharp rise in prices could create an equally strong backlash from downstream consumers, some sources said. “My purchase price for July is higher than my selling price to customers right now. I have to deal with that soon. And I know my customers will be squawking because they won’t understand the logic of it,” a second Midwest service center source said.

But there is some reasoning behind the change. Ferrous scrap prices had overcorrected on the way down, so a sharp upward correction was necessary, according to market sources. Despite the big rally, prices are only now returning to averages seen in healthy markets in the past, they said.

In 2014, for example, hot-rolled coil prices averaged $32.89 per cwt ($657.80 per ton), cold-rolled prices $39.11 per cwt ($782.20 per ton) and hot-dipped galvanized prices $43.59 per cwt ($871.80 per ton).

But while some said hot-rolled coil prices had returned to sustainable levels, others questioned whether the wide spread between hot-rolled and value-added products—now approaching $10 per cwt ($200 per ton)—was an aberration and might cause an import surge in the fourth quarter, similar to the flood that hit the U.S. market in late 2014 and contributed to a price collapse in 2015.

They also questioned why finished steel prices far outstrip increases in raw material costs. Mills should be able to make money at or slightly above $500 per ton ($25 per cwt), given current scrap prices and conversion costs, some contended.

Category : Metal

Tags : Steel Scrap, Steel Scrap Prices, Ferrous Scrap Market, Flat Rolled Steel Scrap

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About Georgy Abraham

As the bright morning of 28th May dawned in the year 1972, in the fulfillment of time according to the plan & will of Almighty Godbrought me forth into this world and I was brought up & educated in Orissa. My parents provided me with the best of education in an English medium school with high standa .... more info


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