Steel Summit Attendees to Get Tanners’ Take on Prices

As a net importer, the United States relies on foreign tons. Fewer import offers can quickly boost domestic steel prices. Imports into the U.S. are likely to decline this year, Tanners says.

President Trump’s pending decision on Section 232 tariffs or quotas could influence the market. Recommendations from the Commerce Department have been kept under wraps, so the president’s plan is unknowable at this point. On the positive side, Trump could fulfill campaign promises and take a strong stance against imports. On the negative side, his administration could play it safe and avoid inviting retaliation against other U.S. goods in advance of the midterm elections, Tanners notes.

Aside from possible Section 232 trade protection, the recent decisions to limit Vietnamese cold rolled with substrate from China, combined with other trade actions, have also slowed steel import offers to the U.S., giving domestic producers some room to raise prices.

Conditions in China remain supportive of the bullish view at Bank of America Merrill Lynch. China steel analyst Matty Zhao has raised her 2018E steel price and demand forecasts up to a 1 percent rise from a 1.4 percent drop. She expects price resilience through the first half as mills must restock inventory after winter closures in anticipation of seasonally strong construction demand in the second quarter. 

“Our positive view on steels is supported by our colleagues in China raising their steel price and demand forecasts,” Tanners says. “Chinese production cuts are a game changer, in our view and limit global steel oversupply. We expect higher priced exports and fewer tons from China to be supportive of higher prices in the U.S.” The current official forecast from Bank of America Merrill Lynch is for hot rolled coil prices to average $680 per short ton this year.