Steel Products Prices North America

Have Prices Peaked? No Clear Consensus

Written by Tim Triplett

Have flat rolled and plate steel prices peaked? Opinions vary widely among Steel Market Update’s sources. We spent all day today working on gathering flat rolled and plate pricing information. In the process, we also collected comments from steel buyers as to whether they felt steel prices have “peaked” or if there is more room for prices to run. We received a wide variety of responses and we would like to share some of them with our readers:

Some anticipate a correction in steel prices soon:

• “Yes, we believe that carbon flat products have peaked. While I don’t see an erosion in prices to be imminent, there is likely to be a correction of some sort within the next 60-90 days. This should not be a sharp decline, however.” Service Center

• “We feel flat rolled prices have peaked. It is our opinion that many [tariff] exemptions will be granted by President Trump and pricing will start to erode. Mills are remaining firm on spot pricing but are easier to work with now on contract tons, which signals that bookings for galvanized are starting to decrease.” Manufacturer/OEM

• “I think the mills will likely open June spot this week and I believe the price will be close to $860 per short ton. This is probably a peak. I believe with more clarity on Section 232 exemptions, the return of imports and idled mills coming back on line, the current tight supply situation will ease and there will be a price correction.” Manufacturer/OEM 

• “I think prices have peaked. Hopefully they maintain current levels. Several factors could swing things higher: Essar/Algoma sale, NLMK getting hit with tariffs on slabs.” Manufacturer/OEM

• “The market appears to be peaking. Last week we saw prices offered between $850 to $900 with a lead time of June or July shipment. Today, it appears the top range is down to $880 with one mill offering May production. It is too early to draw any conclusion.” Manufacturer/OEM

• “Steel pricing does seem to have leveled off. I expect prices to stay where they are for several more months, then possibly start to erode after summer as demand tapers off.” Manufacturer/OEM

• “I think HRC has peaked at $900 per net ton domestic. We don’t see erosion at all. Plate has room to go. We’re on allocation of plate. We’re actively pursuing other mills to buy plate, with little to no availability.” Service Center

• “We think we are at a peak but will not see any movement down until the quarterly contracts have been placed. Everyone is loading up on their contract amounts, but we think that will change by the third quarter, which should open up plenty of spot tons.” Service Center

• “Pricing has peaked for the moment as the mills are attempting to stave off foreign. We are having a hard time getting customers to buy future foreign. If no one is buying foreign, you have to think material will get tight in a few months – maybe just around contract time. The progress on the 232 negotiations is not moving swiftly.” Service Center

• “The domestics seem to be keenly aware that this market is volatile and pushing price beyond where it should be for the sake of short-term gain will cause the golden goose to die a horrible death.” Manufacturer/OEM

Other buyers’ comments suggest the price trend is less clear:

• “I am 50/50 on it. It looks as if the mills understand they can’t go much higher. It will be interesting to see how they react to the scrap increase.” Service Center

• “I really don’t have any clarity. The potential quotas could be a game changer. Regardless, I expect the Trump administration to achieve an 80 percent operating rate for domestic production. I think that progress means prices will be elevated for a while. Current prices are fat enough that there should be no supply disruption as a 25 percent tariff is covered and imports can flow.” Service Center

• “I have no first-hand price info as we are only buying under contract. Plate feels very tight as demand is growing well, and imports had already been cut by the trade case. I expect the HRC-to-plate spread to grow. Otherwise, I think HRC should be near a top unless there’s a new quota-based shock. The HRC to CRC spread is still under pressure.” Service center

• “Mill pricing is flat to up slightly from May to June. I think we are close to a peak and will see a somewhat “orderly” pullback in plate prices in 2H18, perhaps beginning as early as July if scrap trends down. There is not much import out there with the trade action, so I don’t think it will collapse on us right now, but I do think it will moderate.” Service Center

• “My sense is that prices will start pulling back some in late Q2 and Q3.” Service Center

• “It’s hard to say. Price increases seem to be slowing, but lead times are also out to June/July on new material. Given the current state, it’s hard to see a price decrease of any significance before August production. So, I would guess if the order books start lightening up, maybe a late third-quarter reprieve is possible?” Manufacturer/OEM

Some buyers are convinced steel prices still have room to rise:

• “I think some players are calling a ‘top’ too early. One main index printed $859 last week, and this week we see at least one mill offering HRC at $900. While momentum has waned a bit, I still think we have a few more weeks of a very tight market.” Service Center

• “I believe we are in a lull until all the facts come out regarding exclusions, quotas, etc. Futures are up strong today indicating a rising environment. I think we hover around current pricing for the next 30-45 days as more detail surfaces regarding trade rules. In the event Russian slabs are not exempt, Brazilian slab is subject to a quota, etc., I see another $30-50 run-up in pricing.” Service Center

• “I can’t comment on plate but with the spot numbers being so close to HR, I can see them continuing to rise. For flat rolled, I expect May and June to be marginally up. Prices will flatten out and stay within a narrow range through Q3.” Service Center

• “I do not think prices have peaked yet on the indexes. I believe the indexes will get to at least $900 per ton for HR. I don’t see any price erosion until mid-Q3 at the earliest.” Service Center

• “I believe the shortage of supply is still very real and prices have not peaked yet, though my view is slanted to only southern steel mills. No mill has hot roll availability in May in the South, they are already into June. Galv and CR are also into June for all mills in the South.” Manufacturer/OEM

• “I am not predicting any meaningful price erosion over Q2. Mills are booked solid with contractual business and most have virtually no spot tons to sell. I think the trend line will remain up.” Service Center

• “I think prices have a little room to inch upward for a while as there are no good foreign alternatives short-term and lots of questions regarding the rules on quotas, tariffs, timing, exemptions, etc., longer term, leaving the market tight well into the third quarter.” Service Center

Late this evening we got a comment from a large service center general manager who told us, “HR might be plateauing at this time, but I think Plate is still moving up. Since leadtimes are currently for summer arrival, I think we may see an 8 week stable phase (+/- $40/ton) with chance for another leg higher in fall. I see the USW contract expirations in late summer at USS and AM as potentially very significant. By that time, we’ll know much better the 232 impacts, and I think there’s a good chance that increased domestic Pipe and Tube demand could  put pressure on HR supply. In addition, the existing supply of Russian slabs could be exhausted by then, creating yet more potential pressure on HR availability. So, while we may go through a “quiet” period (relatively speaking), there’s a strong chance we see a resurgence of volatility in later summer.”

We will be here watching to see who is right. Right now the momentum is with the domestic mills…

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