Prices have exploded in the United States with the market rapidly pricing in the Section 232 tariffs. Lead times are far into the summer and allocation has already started. Prices will peak in the second quarter at levels not seen since the spike in 2011. As idle capacity ramps up and availability improves, prices ease in the third quarter, but not much. By early 2019 US prices are stabilizing, but at very expensive levels. Flat prices are about 25% above prior estimates, and long products are 18–20% higher.
Chinese prices are easing slightly, a month ahead of our schedule but in line with our narrative. Prices were higher than justified by fundamentals. As the Chinese government signals it will not stimulate in 2018, holders of futures contracts should start to liquidate. Momentum in European markets is also fading, with the next move expected to be down. Supply disruptions are ending; high prices attracted imports, with the supply/demand balance now pointing to falling prices in the second half of the year.