Steel coil prices in U.S. surge to 12-month high

The Steel Index weekly reference prices for steel coil products in the U.S. have surged to 12-month highs and continue to rise sharply.

Prices for steel coil products in the U.S. have hit their highest levels for more than a year, according to the latest prices published by The Steel Index. Coil products are used in all sheet steel applications and account for around half of all steel consumed.

The Steel Index reference price for U.S. domestic hot-rolled coil increased by a further US$38/metric tonne (US$34/short ton) last week to reach US$699/metric tonne ($634/short ton) FOB Midwest mill. This is an increase of US$73/tonne ($66/short ton) or 12 percent over the past month.

This U.S. hot-rolled coil (HRC) reference price is now 24 percent higher than the 12-month low of US$564/tonne ($512/short ton) recorded only six months ago in July 2007.

The increases look set to continue, with 81 percent of respondents to The Steel Index weekly market sentiment survey expecting prices to rise further over the next three months.

"Steel price volatility like this makes life extremely challenging for steel buyers and sellers," commented Steven Randall, managing director of The Steel Index. "No-one can risk locking themselves into fixed price contracts any more. Instead they are increasingly turning to the use of indexes in their steel price agreements. A recent survey of our clients revealed that 56 percnet are currently using The Steel Index as a basis for pricing their physical steel transactions."

The Steel Index reference prices for U.S. domestic cold-reduced and hot-dipped galvanised coil products also hit 12-month highs recently, up 17 percent and 13 percent respectively over the past 6 months. The story is similar for prices of Chinese steel coil exports to the U.S. and Europe, which have risen by over 25 percent since July 2007. Coil prices in Western Europe have been slower to follow, but now also are rising.