The upward trajectory for US domestic flat rolled steel prices has continued in the past seven days, sources note, adding that mills, service centers and end users alike “are keeping close tabs on the race for the White House.”
“If Trump wins, we expect that the White House will push for more tax cuts and deregulation,” a source said. “Some think that the administration would become even more protectionist in terms of trade, which means that foreign steelmakers could face swaths of new tariffs or even new AD/CVD cases, until foreign steel is pushed out of the market almost entirely.”
Another noted that if Biden wins, there’s “almost widespread consensus that another COVID-19 stimulus deal is all but guaranteed, and it will likely include an infrastructure deal, which could help boost the economy,” he said. “But, in the long term, we may see corporate tax hikes and the end of Section 232 tariffs, which a lot of people aren’t excited about.”
For now, the state of the flat rolled steel market is trending positive, especially in that a much-predicted sharp correction in pricing, which many, including SteelOrbis, believed was likely to occur at the end of October, has yet to emerge. “Historically, when we’ve seen everyone jump into the market at once, lead times go out and prices shoot up. But, once everyone gets their steel, that’s typically followed by a buyer’s strike. That hasn’t happened yet, and in looking at the market, this may be the one time that doesn’t happen.”
Others agree the market “has legs” and that activity is surprisingly robust.
“Yesterday, GM reported Q3 earnings that blew Wall Street expectations completely out of the water,” a source said. “If you look at the year-over-year numbers, you’re looking at earnings of just over $4 billion in Q3 2020 compared to about $2.3 billion from Q3 last year. The automotive market has a lot of strength and that’s playing a big role in the strength of flat rolled steel prices.”
A fourth source notes that most mills aren’t taking spot orders for December, and some have speculated that another round of price increases might be in the works. “I would be surprised the mills didn’t announce something before the end of the year,” he said. “On the other hand, and this can’t be ignored, Big River is about to start churning out tons, and [mills’] capacity utilization rate keeps climbing. So the long-term question is whether there’s insufficient production to meet demand, or whether production is about to outpace demand. I guess we’ll all have to stay tuned to find out.”
For now, prices for HRC risen by $1.00 cwt. ($22/mt or $20/nt) in the past seven days, while US CRC prices have firmed by $1.00 cwt. ($22/mt or $20/nt) on the bottom end since our last report a week ago. As such, current HRC prices are now trending at $32-$35 cwt. ($705-$772/mt or $640-$700/nt), ex-mill, whereas CRC prices are being heard in the range of $42-$44 cwt. ($926-$970/mt or $840-$880/nt), ex-mill.