US steel companies
Spot HRC (hot rolled coil) prices, which are often seen as benchmarks for other product categories, witnessed huge swings in 2016.
According to the data compiled by Metal Bulletin, US HRC prices fell to $470 per ton in October 2016. However, we saw a significant recovery in prices in November after President Donald Trump was elected, with spot HRC prices reaching $540 per ton during the month.
Steel prices continued their upward trend in December, and spot HRC prices ended 2016 in the ballpark of $600 per ton.
Action in 2017
Spot steel prices saw some upward action in January 2017. However, prices came under pressure in early February, mainly due to falling steel scrap prices (STLD). After having lost some ground in February, US steel companies such as AK Steel (AKS) now seem to be pushing for another round of price hikes.
The key question could now be this: Can US steel prices rise from these levels? To answer this question, we’ll have to look at underlying demand-supply dynamics as well as the raw material pricing environment. We’ll also need to look at the outlook for Chinese steel prices.
We should remember that although China accounts for only ~2% of US steel imports, Chinese steel prices still impact the dynamics of US steel markets.
Notably, higher raw materials prices have been key drivers of steel prices in the past couple of months. In the next article, we’ll analyze the recent trend in raw materials prices.