Spot steel prices
Spot steel prices in the US corrected sharply over the last six months. Steel prices are a key driver of steel companies’ profitability. Nucor’s (NUE) average selling price in the first quarter dropped $70 per ton for plate and $67 per ton for beams. Its profitability also fell over this period.
U.S. Steel (X) also reported a drop in its first quarter profitability as steel prices declined in the quarter. U.S. Steel and Allegheny Technology (ATI) each form ~4% of the SPDR S&P Metals and Mining ETF (XME).
The previous chart shows the spot prices of HRC (hot rolled coil) in the US. Please note that there are several grades of steel. However, analysts see HRC price as a benchmark for other varieties of steel products. The movement in HRC prices generally impacts the prices of other grades of steel as well.
HRC prices are down by almost a quarter this year. This can be verified from the previous chart. However, most of the fall came in the first two months. The spot HRC price was almost flat in April.
On April 30, AK Steel (AKS) announced a price increase across all of its flat rolled steel products. Earlier, ArcelorMittal (MT) also initiated a price increase for steel products. Other steel companies could also announce an increase in their spot selling prices. An increase in steel prices would have a positive impact on steel companies.
Steel prices are also impacted by the prices of major steelmaking raw materials. Iron ore and steel scrap are among the major raw materials for producing steel. In the next part of this series, we’ll discuss the latest trends in iron ore prices.