International Steel Prices
Supply to Pull Global Sheet Prices Lower Over the Near Term: CRU
Written by Ryan McKinley
May 16, 2023
By CRU senior analyst, Ryan McKinley
Supply has become increasingly available to sheet markets around the world. In many cases, this in coinciding with weak demand, creating a supply glut over the near term and increasing competition among exporters in major sheet-producing regions.
The key for markets to retighten lies with China, with exporters there offering the most aggressive discounts so far (except for Russia).
Going forward, we believe the recent sharp price decrease in the Chinese domestic market was overdone and will be followed by some upward corrections in May as more steel mills rationalize production. The extent of any price recovery, however, will still be limited in the short term given lukewarm demand.
In other Asian markets, preliminary results from CRU’s Asian Business Confidence survey show that market confidence has fallen back to the levels last seen in October–November 2022. The drop is a consequence of the uncertainty around the current macroeconomic outlook and will keep buyers on the sidelines. Likewise, Japanese sheet export prices will continue to face downward pressure, although there may be some resistance from sellers as prices fall further.
Higher availability in the global market will also continue to impact European pricing over the near term even with ongoing output cuts and production issues. Domestic mills will have to compete with lower-priced imports to retain their share of paltry demand in the region, and this will weigh on the market for the next few months at least.
Russian HR coil in the Black Sea market will remain under pressure and exporters there will continue to offer material into Turkey and the MENA region at a discount to compete with imports from China.
The US market, while somewhat shielded from these developments because of tariffs, will also come under pressure from supply-side factors. With service center data now showing a looming surplus in the US combined with higher import levels over the summer months, we expect US sheet prices to fall back to more historically normal levels.
This article was originally published on May 11 by CRU, SMU’s parent company.
Request more information about this topic.
Learn more about CRU’s services at www.crugroup.com
Ryan McKinley
Read more from Ryan McKinleyLatest in International Steel Prices
Gap between US HR prices, imports little changed
SMU’s average price for domestic hot-rolled (HR) coil was $795 per short ton (st) this week, sideways week on week (w/w). The move was different in offshore markets last week, as prices eased marginally.
Gap between US HR and landed import prices starts to narrow
The price gap between stateside hot band and landed offshore product narrowed this week. Still, with the 50% Section 232 tariff, most imports remain much more expensive than domestic material.
Little change in price gap between US HR, imports
SMU’s average price for domestic hot-rolled (HR) coil held at $785 per short ton (st) this week, unchanged week on week (w/w). A similar dynamic was seen in offshore markets last week as well.
Price gap between US CR, most imports narrows
Cold-rolled (CR) coil prices ticked up in the US this week, matching a similar trend seen in offshore markets as well.
Domestic HR and offshore import prices continue to diverge
With only a modest decline in US prices, HR imports, on a landed basis, remain much more expensive than domestic hot band.