NEGOTIATOR’S TAKE: Signs Steel prices are falling |
07.25.16 – Flat-rolled U.S. products gained more than 60% already in 2016 –
Steel has seen a change in fortunes this year. It has actually been the best-performing industrial metal (DBC) this year. Flat-rolled steel products in the U.S. have gained more than 60% so far in 2016.
However, after the spectacular rally in U.S. spot steel prices between March and June, we’ve seen some downward pressure on flat rolled steel prices. Spot hot rolled coil prices have fallen ~$30 per short ton from their June peak. In one of our previous series, we noted that U.S. steel prices might have already peaked, and we could see prices fall in the near term. You can read Steel Industry Mid-Year Review: Can the Party Continue? to explore this in detail.
What to do now?
It’s important to note that while steel prices have risen almost everywhere this year, U.S. steel prices have seen the biggest appreciation as compared to other major steel-consuming regions. The key driver of the big spike in US steel prices has been the impact of trade cases. Anti-dumping duties have been imposed on three key steel product categories: hot-rolled, cold-rolled, and corrosion-resistant steel products.
Capitalizing on trade duties, steel companies such as AK Steel (AKS), ArcelorMittal (MT), Nucor (NUE), and U.S. Steel (X) have hiked their base selling prices several times this year. However, the impact of trade cases seems to be slowly waning away as is evident from the recent downward pressure on US steel prices.
We could see some more downward pressure on U.S. steel prices in the coming months.
SOURCE: Market Realist
AUTHOR: Mark O’Hara | View Mark’s profile at LINKEDIN