Sheet steel demand remains strong, sources note, adding that an anticipated uptick in imports is unlikely to have an immediate impact on US spot market prices. The reason for this, they say, is linked to planned maintenance outages. Cleveland Cliffs has idled its No. 7 Blast Furnace at Indiana Harbor East starting yesterday, Sept. 1. That furnace will not be restarted until Oct. 15. US Steel’s Gary Works also has a 38-day planned blast furnace outage that’s set to start in late September, and Nucor’s 25-28 day outage at its Gallatin, Kentucky plant will start in November.
The restriction in demand, another source said, may be tied to this week’s price upticks. As of today, US domestic HRC prices are trending at $95-$97 cwt. ($2,094-$2,139/mt or $1,900-$1,940/nt), FOB mill, against a range of $95-$96 cwt. ($2,094-$2,116/mt or $1,900-$1,920/nt), FOB mill, a week ago.
US CRC prices, on the other hand, are now trending at $106-$109/mt ($2,337-$2,403/mt or $2,120-$2,180/nt), FOB mill, against a range of $105-$106 cwt. ($2,315-$2,337/mt or $2,100-$2,120/nt), FOB mill, a week ago.
“I have a funny feeling that mills are going to keep announcing these types of outages as a means of keeping prices from falling,” another source added. “There’s still a lot of new capacity that’s set to come online, and if that’s going to impact prices in the way that a lot of people think it will, it makes absolute sense that the mills want to make their money now, before the rug gets ripped out from under the market.”
In terms of external factors that could impact the price of sheet steel, there are several factors worth watching. For example, yesterday, General Motors announced plans to temporarily halt production at “nearly all” of its US-based plants due to the ongoing semiconductor chip shortage. Additionally, Ford has also announced they’ll pausing production at 8 of its 15 North American plants over the next two weeks; shifts will also be cut at plants in Michigan and Kentucky.
Also, of note, is the continued pressure by lobbying groups to end the Section 232 tariffs. “The crisis involving steel prices and supply continues to worsen. The United States has become an island of high steel prices. US manufacturers are now paying $1,334/ton more for hot-rolled steel than their competitors in China and $734/ton more than their European competitors,” said Coalition of American Metal Manufacturers and Users (CAMMU) in a press statement earlier this week. “The domestic steel industry’s capacity-utilization rate is up to 85 percent, far above the US Commerce Department’s announced target of 80 percent that was used as a reason for the Trump Administration imposing the Section 232 steel tariffs in 2018.”
According to CAMMU, and multiple other industry experts, the current steel shortage will only be exacerbated if Congress passes an infrastructure bill.
“If US steel-using manufacturers can’t get the steel that they need and at competitive prices, they will lose business to competitors in other countries who are paying far lower prices for steel,” the organization continued. “With domestic steel producers enjoying record profits, it’s clear that this tariff protection is no longer needed.”