Article Revised August 4th, 2022
Steel prices appear to be on the upswing in the United States and Canada. According to Steel Market Update, as of last month, benchmark flat-rolled steel base prices on non-contract purchases are averaging $635/ton ($31.75/cwt) on benchmark hot-rolled steel, $830/ton ($41.50/cwt) for cold-rolled coil and $840/ton ($42/cwt) on galvanized and Galvalume steels.
There are several factors affecting this upward movement. First, there was the idling of two different US Steel mills in Kentucky and Kansas, as well as the permanent closure of their Alabama operation, which has contributed to a reduction in the availability of steel in the U.S. A second factor is the antidumping and countervailing duty trade cases against foreign steel that began to spring up at U.S. mills last June, in particular the cases against China (it’s important to note that China manufactures half of the world’s steel supply). At that time, Congress made it easier to file these cases and changed how “injury” was to be determined. As these cases are quite hard for foreign companies to defend, the net effect has so far been an approximate 8.5% reduction in the availability of imported cold-rolled and coated steels in the United States in total.
It’s interesting to note that although there has been a decrease in Chinese steel coming into the U.S., the steel market is not exactly hurting in China. This current upward momentum is in stark contrast to the low prices seen in 2015. According to Credit Suisse Group AG, the steep drop in steel and iron ore prices last year were the direct result of slowing economic growth in that area, which created too great of a supply in a market where demand was lower than expected. This year, however, Chinese policymakers have focused on growth and added stimulus, which has revived a flailing property market. Now, steel demand is expected to increase as much as 10% in China this year alone.
Finally, in both the U.S. and China, there’s been a fairly large drop in total steel inventory on hand, which has also contributed to the decrease in availability and the associated surge in prices. For instance, in the U.S., overall inventory surpluses ran well over 1 million tons in 2015. However, a more recently completed analysis shows inventory at a much less alarming level, somewhere around 46,000 tons. In China, output has increased to an all-time high this year in order to meet demand driven by high property prices. Yet even this record-breaking output has not been enough to continuously replenish inventories to the needed levels.
As a vertically-integrated provider of precision metal solutions, EVS Metal knows that keeping a close eye on metals prices, in particular steel and aluminum, is one of the most important things we can do to continue to provide value to our customers. Understanding when to buy and when to hold — as well as keeping most manufacturing processes in-house — are some of the key factors that enable us to keep costs down. Ready to learn more about EVS Metal’s value proposition and commitment to customer satisfaction? Simply request a quote online, or give us a call at (973) 839-4432 today.