MEPS - THE NORTH AMERICAN STEEL
PRICE RECOVERY IS BROUGHT TO A HALT
The recent North American steel price recovery has proved
short-lived as regional values continued their downward trajectory, this month.
From MEPS research, in September, one US market participant warned steel buyers
to “hang onto their hats”. He predicted that US flat product steel prices could
fall as quickly as they rose in the first half of the year.
The US steel industry is heavily dependent on the automotive sector. This month,
US steel buyers remarked that auto sales have slowed down. Construction activity
is at a relatively low level, while the energy sector is unlikely to recover
until 2018 at the earliest.
The sustainability of the recent price rises, in the US, hinged upon supply-side
considerations. The introduction of import barriers on a number of flat products
initially supported the domestic producers.
However, steel imports, into the US, are steadily rising, month-by-month, from
countries not covered by the trade cases. The restrictions are unlikely to be
strong enough to reverse the negative price tendency that exists currently.
Furthermore, US crude steel production is well below capacity. The
re-introduction of ArcelorMittal’s No 3 blast furnace at Indiana Harbour and the
ramp up of the Big River facility, in Arkansas, will bring additional supply
into the domestic market.
Steel Review - September 2016 Issue
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