US steel prices driven down by cheap imports

China , Commodities , Metals , Steel , USA Jan 28, 2014 No Comments

SteelIncreased steel imports in the U.S. are expected to drive down prices. The average U.S. price for a roll of hot-rolled coil is now $676. By comparison, the current price for Chinese hot-rolled coil available to U.S. buyers is $540 a ton.

Steel imports are expected to hit 3.2 million tons in January, up 23 percent from a year ago, as price differences between U.S. and Chinese steel rose to $159 per ton. At this time last year, U.S. steel cost $19 less than Chinese steel, according to market analysis firm CRU Group.

Howard Allen, vice president at Midland Steel Warehouse Corp., is among the U.S. buyers who are purchasing more steel from abroad as the price spread grows. Midland Steel Warehouse, based in the Bronx borough of New York City, buys steel coils and slices them into smaller pieces, cut to specifications, for construction, lighting, office furniture and other products.

“After all the costs are factored in,” including shipping, “it ends up being about 10% cheaper,” Mr. Allen says.

China has a healthy steel surplus, which it ships off to countries including South Korea and Southeast Asian countries, according to the U.S. Department of Commerce. Chinese steel exports rose to 54.9 million tons from January to November 2013, up from 48.7 million tons a year before. In contrast, the U.S. has a steel trade deficit of about 1.5 million metric tons, meaning it imports more than it exports.

U.S. steelmakers have been benefiting from stronger domestic prices, but the increased imports are expected to drive down prices and shipments at some of the companies. Financial effects from the rising imports began to be felt this month when steel ordered last fall started to arrive at US ports. Many analysts expect global and U.S. steel prices to fall this year, driven by global oversupply.


Pascal Blanc

Pascal has implemented numerous software solutions in the areas of procurement, sourcing, spend management, supplier evaluation and performance. His clients include Fortune 500 companies in Europe, Asia and North America. He is a co-founder of Source & Procure.

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