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Wednesday, March 22, 2017 7:20:09 AM
Steel Prices: Cold-Rolled Coil Hits A 5-Year High, Will They Continue To Rise?
Mar. 22, 2017 6:30 AM ET|
Includes: SLX
US cold-rolled coil prices since 2012. Source:MetalMiner IndX
U.S. cold rolled-coil prices rose to their highest levels since March of 2012 this week. Spot steel prices saw some upward action in January; however, prices really came under pressure in early February.
In March, U.S. steel mills are pushing for another round of price hikes. So far, they seem to be succeeding.
China Steel Prices
Hot-rolled coil price spread. Source: MetalMiner IndX
Back in November, we predicted a surge in steel prices as we moved into the new year. When international steel prices rise, U.S. mills can more easily justify a price hike. Chinese prices set the floor for international prices. Last summer, U.S. steel prices declined sharply while Chinese prices held well. That caused the international price arbitrage to come down to normal levels.
The price arbitrage started to widen again this year as momentum in U.S. steel prices picked up. However, the arbitrage is still relatively narrow compared to historical levels, especially in hot-rolled coil. Therefore, U.S. mills still have some room to hike prices. Still, for the rally to be sustained throughout the year, Chinese steel prices will need to keep rising.
Falling Chinese Steel Exports
In January, Chinese steel exports fell near 24% compared to the same month last year. In absolute terms, January steel exports were at their lowest level since June 2014. Exports fell by double-digits in the last four months of 2016. While more countries act against the threat of a flood of Chinese steel, we could see further moderation in exports this year, which bodes well for global steel markets. What’s surprising is that exports are falling despite rising output.
cont http://seekingalpha.com/article/4057031-steel-prices-cold-rolled-coil-hits-5-year-high-will-continue-rise
Mar. 22, 2017 6:30 AM ET|
Includes: SLX
US cold-rolled coil prices since 2012. Source:MetalMiner IndX
U.S. cold rolled-coil prices rose to their highest levels since March of 2012 this week. Spot steel prices saw some upward action in January; however, prices really came under pressure in early February.
In March, U.S. steel mills are pushing for another round of price hikes. So far, they seem to be succeeding.
China Steel Prices
Hot-rolled coil price spread. Source: MetalMiner IndX
Back in November, we predicted a surge in steel prices as we moved into the new year. When international steel prices rise, U.S. mills can more easily justify a price hike. Chinese prices set the floor for international prices. Last summer, U.S. steel prices declined sharply while Chinese prices held well. That caused the international price arbitrage to come down to normal levels.
The price arbitrage started to widen again this year as momentum in U.S. steel prices picked up. However, the arbitrage is still relatively narrow compared to historical levels, especially in hot-rolled coil. Therefore, U.S. mills still have some room to hike prices. Still, for the rally to be sustained throughout the year, Chinese steel prices will need to keep rising.
Falling Chinese Steel Exports
In January, Chinese steel exports fell near 24% compared to the same month last year. In absolute terms, January steel exports were at their lowest level since June 2014. Exports fell by double-digits in the last four months of 2016. While more countries act against the threat of a flood of Chinese steel, we could see further moderation in exports this year, which bodes well for global steel markets. What’s surprising is that exports are falling despite rising output.
cont http://seekingalpha.com/article/4057031-steel-prices-cold-rolled-coil-hits-5-year-high-will-continue-rise
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