Our Sites

The rise in steel prices continues

Factors suggest that the current pricing trend won’t reverse itself soon

Steel prices keep climbing given the upswing in demand and the potential for tariffs to be levied against imported steel.

Flat-rolled and plate steel prices have been on the rise and are expected to continue climbing in the coming weeks.

The current “up” cycle began nearly four months ago. According to the Steel Market Update (SMU) hot-rolled index, hot-rolled coil (HRC) prices bottomed in mid-October 2017 at $580/ton ($29/cwt) for freight on board from domestic steel mills east of the Rocky Mountains.

The first price increase in the cycle was $40/ton, announced the week of Oct. 17. Since then four more price announcements totaling another $120/ ton have been made. The SMU hot-rolled average has increased to $745/ton ($37.25/cwt) as of the week of Feb. 13.

The last time HRC prices reached an average of $745/ton was in mid-January 2012. That was the peak price in that cycle, and prices fell over the next six months to $600/ton. SMU anticipates more price increases to come in February or early March for both flat-rolled and plate products.

Spread Between Hot-Rolled and Cold-Rolled/Coated Back to Normal

One of the unexpected consequences of the successful antidumping (AD) and countervailing duties (CVD) rulings in 2016 was a widening of the spread between hot-rolled base prices and those of cold-rolled and galvanized. The normal spread had been $100-$140/ton ($5-$7/cwt) for many years. Many of the AD/CVD rulings were finalized during the latter part of 2016, putting pressure on sourcing of cold-rolled and coated products.

At the time oil prices were low and the energy markets were weak, which helped keep hot-rolled prices low in the U.S. With oil prices rebounding and oil rig counts expanding, the energy markets are much stronger, affecting supply and thus pricing of hot-rolled coil. SMU expects that the spreads will return to the upper range of the “normal” spread in the coming weeks.

SMU also is seeing a reduction in coated product imports, which could push the spread higher if this continues over the coming months.

Possible Impact of Section 232

In a briefing with reporters on Feb. 16, U.S. Commerce Secretary Wilbur Ross shared his department’s Section 232 recommendations with the press. (President Donald Trump initiated an investigation under the rarely used Section 232 of the Trade Expansion Act of 1962 last spring. Under this section of the law, the administration has the authority to impose trade sanctions if it believes imports pose a threat to national security.) The U.S. Commerce Department is recommending a 24 percent global tariff on steel shipments coming into the U.S. and a 7.7 percent duty on aluminum imports. Trump has until April 11 to decide if he will enact these recommendations, take another approach, or do nothing at all.

In a letter to the president Feb. 12, 15 trade associations, representing more than 30,000 U.S. manufacturers employing more than 1 million American workers, appealed to the president not to further restrict imports of foreign steel products, many of which are already subject to high AD and CVD.

“Restrictions on basic steel imports will adversely impact national security, the economy, and the steel industry itself because it will undermine [U.S. steel-using manufacturers’] competitiveness and our ability to make value-added products here,” the coalition stated.

The coalition’s arguments include:

  • U.S. manufacturers employ far more workers than the steel industry.
  • Tariffs that reduce competition and raise the price of steel will force companies to move production overseas.
  • Domestic steel companies are reporting record earnings and don’t need the government to intervene on their behalf at this point.
  • New steel tariffs are likely to trigger retaliation against American exports of many products, from industrial materials like steel and aluminum to agricultural goods.
Learn More About the Steel Market

To catch up on the latest involving the domestic steel market, consider attending the SMU Steel Summit 2018, the largest steel conference in North America. SMU will conduct its eighth SMU Steel Summit Conference on Aug. 27-29 in Atlanta. The conference attracts manufacturing companies, steel service centers, steel mills, trading companies, and suppliers to these industries. We anticipate close to 800 executives at this year’s event.

You can find more information about the conference at www.steelmarketupdate.com.

About the Authors
Steel Market Update

John Packard

President/CEO

800-432-3475

John Packard is the founder and publisher of Steel Market Update, a steel industry newsletter and website dedicated to the flat-rolled steel industry in North America. He spent the first 31 years of his career selling flat-rolled steel products to the manufacturing and distribution communities.

Steel Market Update

Tim Triplett

Executive Editor

Tim Triplett, senior editor for Steel Market Update and the former editor-in-chief for Metal Center News, can be reached at tim@steelmarketupdate.com.