Sheet prices will fall across the remainder of 2018, except in the United States where they peak in the third quarter. The decline is not a sign of weakness, but because prices have been above fundamentally sound levels. The last time sheet was at first-quarter 2018 levels, Australian iron ore was $130/dry metric ton unit (dmtu). Now it is $65/dmtu. The decline adds about $110/metric ton to sheet profit margins. Mills will keep some of it, but there is room for prices to fall, particularly at blast furnace mills.
Buyers will need to adopt region-specific strategies. The US situation is very different from Europe, China, and any other major region. In the United States there is clarity on Section 232 protection. The bad news is that the European Union, Canada, and Mexico lost their exemption and are subject to a 25% tariff. The good news is that the European Union received a tariff instead of a quota, vastly reducing the danger of late-year shortages and extreme price spikes. US prices will rise in the third quarter as previously ordered Canadian and Mexican tons arrive and face the 25% tariff. For the fourth quarter and into 2019 prices slide because US levels are 50–80% higher than European and Asian, so even with the tariff imports will be relatively cheap.
Elsewhere prices are easing but the pace is slower than expected. Chinese mills ramped up production following the winter pollution control season, but many dirty mills did not restart or are curtailed. Prices slip then steady, but fundamentals do point downward. European and Indian prices are just past the peak and should slide through the remainder of the year, but again the pace is slow.
