Steel prices are surprising to the downside, particularly in the United States. A buyers’ market is in force, with falling prices and short lead times. Ore and coal prices are high, but scrap is falling. US prices are falling for almost all products, with the sharpest declines in flats. This is somewhat a give-back, as flats were far stronger than longs in 2018. European prices are trending sideways, believed to be near the cost of production so there is little remaining downside possible unless mills liquidate inventory at a loss. China rebounded slightly from early 2019 lows on optimism of government stimulus.
The upside is limited, and the peak should be relatively soon – May or June – unless another round of unexpected stimulus is announced. Price weakness is driven by faltering demand. New orders are falling in all regions of the globe, so buyers have leverage.
Prices in the United States fell so rapidly in late 2018 that they are barely above the (Europe plus 25%) level that is mandated by Section 232 tariffs. Imports were a huge bargain in mid-2018 when the premium reached 53%, but now are disfavored. This sets a floor to US pricing. As prices hover near the minimum level imports will fall, allowing some partial price recovery by late summer or early autumn.
