AMERICAN STEEL PRICES FIRM UP DESPITE IMPORT THREAT
The large price gap between North American
steel markets and the rest of the world has been sucking in high
volumes of imports. But this increased foreign competition does not
appear to be damaging US domestic mills’ ability to raise their
In the first two months of this year, US
steel imports were just over 7 million short tons (6.3 million
metric tonnes). This was about 18 percent more than the figures
recorded during the previous two months, and a substantial 26
percent above January/February 2005.
The strong prices available in the US
market are the main reason why imports are rising. As MEPS
has regularly reported, North America has the world’s highest
steel prices for most products. And the premiums are far from
negligible: some types of steel have been selling for hundreds of
dollars more in the USA and Canada than in many Asian and European
The recent narrowing of these wide price
differentials may put a brake on imports. But the inflow of steel
has also been spurred by other factors such as the strength of US
demand for steel and the low level of stocks in the US supply chain.
Service centre inventories – in terms of months’ supply on hand
– fell to a two-year low in March.
If imports had continued to surge into the
US at the pace seen in January and February, 2006 would have been a
record year for volume. But it appears the rate of arrivals is
decelerating. US market sources report fewer offerings by foreign
mills, with some of the steel that had been destined for North
America going instead into Asia.
Tighter domestic and import supply is
allowing US mills to advance their prices. The last couple of weeks
have seen many reports of mill efforts to raise transaction prices
for May orders. These increases – which in some cases include
surcharges for scrap and other inputs – cover many long and flat
products including merchant bars, beams, sheets and plates.
In response to the higher import levels, US
mills have been making noises about unfair trade, foreign government
subsidisation of steel producers, and other market-distorting
practices. But they are not likely to succeed with any new
anti-dumping or countervailing duty petitions under present
circumstances. Although import volumes have risen, so have US
steelmakers’ profits – making it impossible for them to provide
the required proof that they have been injured.
The picture may soon be changing. Domestic
availability of flat products should improve before the start of the
second half - now that two blastfurnaces are back on stream after
relines. This may ease the upward pressure on prices later in the
Source: MEPS - International
up for free MEPS steel news e-mail updates