NORTH AMERICAN STRIP MILL PRODUCT
STEEL PRICES POISED TO RISE – MEPS
The downward trajectory of US strip mill product steel
prices came to an end, in November. MEPS’ research shows that local steelmakers
achieved at least part of their proposed increases or, at worst, prevented
domestic values slipping further.
Amid a weak trading environment, a number of US steel buyers initially labelled
the mills’ proposed price hikes as a ‘defensive move’ to halt the downward
pressure on steel transaction values. Surging raw material expenditure supported
mill efforts. Supply from offshore sources is extremely limited, largely due to
ongoing trade defence measures.
Many buyers remarked, previously, that uncertainty surrounding the US
presidential election had created a negative impact on domestic steel demand. A
number of significant public construction projects were put on hold.
From MEPS research, in November, the general consensus view from steel market
participants is that Donald Trump’s Republican election victory will have
positive implications for the US steel industry. The new president’s ‘America
First’ policy will likely feature increased infrastructure spending, which will
boost steel demand from the construction sector, in particular. The expected
greater use of import protection measures will also safeguard the interests of
US steelmakers against the dumping of cheap imports.
However, further trade barriers will restrict choice for the US consumer. By
limiting offshore supply options, steel buyers are likely to struggle to
purchase their material at competitive prices. Furthermore, a major aspect of
the electoral campaign was a promise to renegotiate several trade deals. If the
US goes against the ethos of free trade, both regionally and globally, then
steel exporters, who focus heavily on the world market, will be particularly
MEPS believes that US transaction values are likely to strengthen, in the near
term. Supply-side cuts and a slight demand pickup could prompt price increases
at the beginning of 2017.
Steel Review - November 2016 Issue
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