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What Has Driven Steel Prices in 2016?

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US steel prices

Spot steel prices in the US (DIA), especially in the flat-rolled segment, have risen steeply in 2016. In this part of the series, we’ll explore what factors supported the upward momentum in spot steel prices.

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Key drivers of 2016 performance

  • Trade actions – US steel companies including U.S. Steel Corporation (X), Nucor (NUE), and AK Steel (AKS) have had their share of victories in their battle against what they claimed were unfairly traded steel products. Anti-dumping duties have been imposed on three key steel product categories—hot-rolled, cold-rolled, and corrosion-resistant steel products.
  • Demand-supply issues – Steel buyers including service centers (RS) went about destocking their inventories last year. Thanks to trade cases, steel buyers were left with few options but to buy steel from domestic steel mills. Steel producers have maintained a supply discipline that led to higher lead times. Higher lead times are supporting spot steel prices.
  • Strengthening raw material market – Raw material prices tend to impact steel pricing. With higher raw material prices, steel mills faced little resistance in raising their spot offers.
  • Stability in other industrial metals – Other industrial metals including aluminum and zinc have also recovered from their January lows. Higher base metal prices helped build momentum in steel prices.
  • Increase in Chinese steel prices – Chinese steel prices recovered sharply in March and April. Among other factors, China’s reiteration of its “commitment” towards cutting excess steel capacity helped steel prices. China is the largest steel producer and exporter. As a result, Chinese steel prices tend to impact pricing elsewhere.

However, we started to see some of these drivers fade away. In the coming parts of this series, we’ll explore how this would impact US steel prices.

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