At the 2023 Steel Summit conference in Atlanta, GA, panelists Josh Spores, Timna Tanners, and John Anton said they believe that US flat rolled steel pricing is likely to remain mostly flat for the rest of 2023.
But that’s not to say there aren’t key market indicators that market players should keep their eyes on.
“This year might be a year to forget,” said Spores, principal steel analyst at CRU. “Mill shipments down 4 percent year-to-date yet service centers are well supplied. We have a little bit of surplus right now with sheet supply, but with the number of outages we have coming up, we don’t see issues with lead times based on orders that have already been placed.”
And while Spores notes that there is current weakness in industrial demand, CRU’s economic team is forecasting a rapid rebound for industrial production in 2025. “We should see some strong prices in 2025,” he added.
Tanners, managing director of Wolfe Research, said that the potential UAW strike is very likely to happen, which she feels is the biggest risk to steel pricing in the short term, noting that the strike has the potential to add roughly 90,000 metric tons of excess sheet to the market per month for as long as the strike goes on.
“There are three possibilities,” she said. We either see a deal, there is a brief strike, or there is a longer strike. The [union] is really going after the best contract they can get. The longer the strike, the greater the chance that a couple of mills are likely to idle, which could potentially lead to a supply shortage in Q1 of next year until production ramps back up.”
Anton, director of S&P Global Market Intelligence, said that he believes that in the short term, “sheet is boring which is good. It’s right around it’s [pricing floor] and demand will remain weak with no short-term upside pressure, but mills are maintaining discipline so prices are unlikely to fall further.”
He believes that the ultimate floor is somewhere between $760–$780/nt ($838-$860/mt), although “mills would still be profitable at $720/nt ($794/mt). Tanners believes that sheet is likely to trend at $750-$800/nt ($827-$882/mt) as the range for HRC.
“Demand is not great and there is plenty of capacity,” Anton continued. “Construction and manufacturing in other parts of the world is not great. Demand can’t drive prices up, and all of this leads to one of the flattest forecasts I have ever had.”
Tanners said she also believes that the market is entering a “sheet storm,” which will also prevent prices from going up.
“I still think there is too much sheet supply for the next few years,” she said. “There is still lots of new capacity on the sheet side, and [prior] demand has driven capacity. Warehouses went from boom to bust. Years ago some of the big drivers of sheet demand was warehouses, because Amazon and others were buying sheet at any price and that was really driving up the price of steel. That warehouse activity is starting to fall off, and non-residential construction spending is down substantially.”
Higher interest rates, she continued, must also be considered. “Ignore the Fed at your own risk,” she concluded. “Higher interest rates get attention.”