It’s time to wish a hearty happy birthday to the steel price rally that was born a little more than one year ago.
On Aug. 11, 2020, Steel Market Update (SMU) reported the benchmark price of hot-rolled steel at $440/ton ($22/cwt), with lead times averaging about four weeks. SMU’s check of the market on Aug. 9-11, 2021, put the average hot-rolled coil (HRC) price at an astounding $1,900/ton ($95/cwt), with lead times in excess of 10 weeks.
For flat-rolled steel prices to climb steadily week after week for an entire year is unprecedented (see Figure 1). It’s the product of trillions in government stimulus and pent-up demand from a pandemic that is equally unprecedented. So far the booming economy has outpaced the industry’s ability to produce an adequate supply of steel.
In Q2 nearly all the public companies—mills and distributors—reported all-time record sales and profits, with most forecasting the same or better for Q3. When steel prices are four times higher than normal, everyone looks like a genius.
Steel prices in the U.S. are the highest in the world. They are so high that foreign mills can offer delivered volumes ranging from $200/ton to $600/ton cheaper than the domestic mills, depending on the product and country of origin. That spread has enticed more buyers in the U.S. to take a chance and place foreign orders as they search for relief from the short allocations from their domestic suppliers. Finished steel imports were up more than 18% for the first seven months of the year, based on U.S. Census data, and are expected to continue rising in the second half.
Source : https://www.thefabricator.com/thefabricator/blog