SMU Data and Models
SMU Market Trends: Most See Prices Moving Higher
Written by Tim Triplett
June 7, 2018
Nearly three out of four respondents to Steel Market Update’s market trends questionnaire this week say they predict flat rolled steel prices will move even higher from here. No doubt views were influenced by the Trump administration’s decision to stand firm on tariffs, even on imports from close trading partners in Canada, Mexico and the EU.
About 74 percent of the steel executives who responded expect prices to move higher, while 24 percent expect them to stay about the same. Only 2 percent see prices moving lower. Their comments clearly reflect concern over the effects of the tariffs:
- “It depends on the tariffs and how long they remain in place on NAFTA and EU countries.”
- “It’s all dependent on the current Section 232 and if countries are exempted or, if applied for, product exemptions are accepted or rejected.”
- “I would expect little change in the next buy cycle. As we move into the fourth quarter, it’s possible to see some upward price movement. I don’t believe it will be a lot, maybe $20-$30 a ton.”
- “As long as scrap stays at the current pricing level, steel prices should be relatively stable. Perhaps they will go up another $50 if trade disputes are resolved soon with a quota system.”
- “The stage has been set again for the mills to try to push a price increase. Whether or not it will stick will depend on the strength of demand. Even more of a concern will be just how tight this market will get and how available steel will be.”
- “Prices will move higher for a few weeks more, but expect pricing to decline rapidly towards the end of the third quarter.”
- “U.S. prices will probably go higher, but ultimately will be controlled by foreign prices, which are currently more than 25 percent below domestic prices.”
- “The domestic mills will push another increase in before the tariffs are negotiated out.”
- “Prices may move slightly higher, but I think the big push will be for the steel producers to try to lock today’s high prices and market confusion into their 2019 contract negotiations.”
- “Uncertainty will keep prices high.”
- “Based on Section 232 shutting out Canada, the mills will seize the opportunity to take us all for a Toronto sleigh ride!”
Tim Triplett
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