Steel prices in the U.S. are rising and not necessarily because the market is improving. This week, the price of benchmark hot-rolled steel coil, used to make cars, was reported up at $630 per ton, a rise of more than 10% from a 2013 low of $570 on May 28.
A trio of unforeseen events have unexpectedly helped boost prices 10% in recent weeks to their highest levels since early January. A blast furnace outage in Ohio, along with one in Brazil, and a work lockout in Ontario have taken an estimated five million tons of annual capacity, or about 4% of total U.S. supply, off the market in the last three months.
But when production levels revert back to more normal levels, steel buyers are worried they might get stuck with inventory they are overpaying for now. They will have to sell at a loss when prices return to levels before the recent increase. Some observers predict prices will fall back to around $600 a ton in the fourth quarter as imports rise, once the blast furnaces are repaired and the labor issue is resolved, and more steel is being made available in the U.S. market.