US steel prices
The Brexit vote created a financial tsunami on June 24. It drowned all risk assets. Bears were back selling everything from commodities (DBC) to equities. U.S. Steel Corporation (X) and AK Steel (AKS) lost more than 10% each. Nucor (NUE) and Steel Dynamics (STLD) lost more than 5% each. Not surprisingly, ArcelorMittal (MT) was among the biggest losers in the steel space. In 1Q16, the company got more than 53% of its revenues from Europe.
However, as we noted in our previous series, US steelmakers recouped their losses after the Brexit vote. Read Did Steel Companies Overreact after the Brexit Vote? for more details.
Steel prices fall
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 the 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. Spot HRC prices have risen sharply this year after steep anti-dumping duties were imposed.
We have seen a small correction in spot HRC prices, according to data aggregated by the Metal Bulletin. Spot HRC prices have shed ~$20 per short ton from their June highs. Currently, they’re quoted in the ballpark of $620 per short ton.
Although the correction in steel prices happened around the same time as the Brexit vote, there are other factors that seemed to drive the recent downward pressure. We’ll discuss these factors in the next part of the series.