Steel Prices Easing, For Now

Many U.S. plants that had shut down or pared production during the recession, haven’t yet gone back online fully. AK Steel Holding Corp. in February said it would increase, by $50 a short ton, prices for all of its carbon, flat-rolled steel products, a move followed by other U.S. steelmakers. But U.S. prices, especially for hot-rolled steel, could be headed lower too, said Peter Marcus, economist and steel analyst for World Steel Dynamics Inc., a consulting firm.

“Steel buyers in the United States are bearish on the price outlook for hot-rolled,” Marcus said. “They’re now receiving offers for hot-rolled band from abroad in the $740-$800 per-net-ton range, which compares to the domestic price in the $870-$890 per-ton range.”

Many global steelmakers increased production in the second half as world economies strengthened. But price increases followed because of stronger demand. The price of plate steel rose 22% in major steel-producing countries and the price for pipe and tubing rose 14% in the second half.

Now, prices are falling as demand softens, in part because of unrest in the Mideast, the effects of Japan’s earthquake and tsunami and relatively high supply. In China, the world’s biggest steel producer and consumer, annualized steel production rose 16% to 708 million metric tons in February from November, according to the China Iron and Steel Association. Steel prices in China meanwhile have fallen around 8%-10%.

While analysts don’t believe lower steel prices are part of a longer-term trend, the WSJ reported, they could continue to fall as buyers and traders wait and pit sellers against each other. Mills in Russia, India, Taiwan and parts of Europe have tried to boost prices between 2% and 7% for several types of steel, but some buyers are holding off. ◆