Steel prices are likely to increase in US due to scrap demand

Steel prices are likely to increase in US due to scrap demand

Steel prices in US market have reached peak levels due to strong demand for scrap metal, increasing steel producers' forecasts for the third quarter. Steel prices have been on rise since the beginning of the year due to strong demand, weak US Dollar and the rise in raw material surcharges effected by the producers. In an attempt to avoid rising prices, many US steel producers have started to increase their production capacities however they had to reflect rising costs on to the customers. Due to strong demand and higher steel prices, many US steel producers expect to report higher earnings for the third quarter. As previously reported by SteelOrbis, Nucor Corporation reporting improved financial results for second quarter, expects its earnings to increase further in the third quarter. Likewise, International Steel Group (ISG) and Steel Dynamics also expect to report better earnings in the subject quarter. However the subject producers have announced that they plan to increase surcharges due to higher scrap prices and the shortage in the availability of the material. As previously reported by SteelOrbis back in July, Nucor announced that it would increase surcharge on flat rolled products to $180 per ton level effective for shipments as of August 1, 2004. On the other hand, certain analysts expect steel prices to ease as Chinese demand has started to slow down and China has expanded export quota for coke, a crucial raw material in steelmaking. It is also stated that exports from China to US are on the rise since the expansion of the quota.