North American steel prices set for decline
A
MEPS (International) product story
Edited by the Engineeringtalk editorial team
Oct 11, 2004
MEPS has seen profit upgrades from many of the major North American steel mills in recent weeks as a result of the higher than expected prices obtained in the market.
MEPS has seen profit upgrades from many of the major North American steel mills in recent weeks as a result of the higher than expected prices obtained in the market.
Rising scrap costs over the period changed market sentiment.
A large percentage of production is via the mini-mill route.
Consequently, scrap costs have a significant effect on selling prices in the flat products categories through the implementation of scrap surcharges.
These have increased by up to US $150 per tonne for the electric steelmakers in the last two months to September.
The integrated mills are imposing more modest scrap surcharges but increasing basis prices by substantial amounts as they follow their competitors upwards.
Strip mill low transaction values have moved up in the range US $50-106 per tonne since July due to a combination of tight supply and higher mill input costs.
Scrap surcharges are expected to move into reverse in November and steel prices are likely to return, in December, to just above the previous highs achieved in July.
The plate market is even more buoyant.
Demand is very strong and supply restricted.
Transaction prices jumped higher than anyone could have anticipated.
However, a decrease is predicted in November as scrap surcharges decline.
MEPS expects a steady decline in prices through 2005 after the downward adjustment in November and December.
The company's predictions could, however, be upset if scrap prices soar upwards once again.
Higher scrap charges have had little impact on steel prices in the long products sector over the past two months.
This is because commercial and industrial construction has failed to recover in the region.
Major projects are being cancelled or put on hold.
Demand for steel is slowing down and the threat from imports is always in the background.
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