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US Steel Prices: Analyzing the Bullish Drivers

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US Steel prices

The earnings of steel companies such as ArcelorMittal (MT), U.S. Steel Corporation (X), and Nucor (NUE) are sensitive to changes in steel prices. It’s therefore crucial for steel investors to keep track of US steel prices.

In this article, we’ll study recent movements in US steel prices and look at the various bullish drivers that could support steel prices in 2017. Remember that there are several grades of steel, but HRC (hot rolled coil) prices are seen as the benchmark.

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Spot prices

Spot HRC prices ended 2016 in the ballpark of $600 per ton, a rise of more than 55% in the year. Spot steel prices continued their upward momentum in January 2017. However, prices came under pressure in early February.

After the initial lull in February, US steel companies such as AK Steel (AKS) pushed for price hikes. These price hikes held ground, and steel prices rose in March. However, we saw some weakness in steel prices in April amid sell-offs of seaborne iron ore (CLF) and Chinese steel prices.

Bullish drivers

Meanwhile, US spot HRC prices are still up handsomely in 2017, having built on last year’s gains. Let’s see what factors could support US steel prices this year:

  • further improvement in domestic demand led by the construction sector
  • low supply chain inventory after two consecutive years of destocking
  • stable steel scrap prices
  • reluctance of domestic producers to increase their supplies
  • expectations of a blanket import tax

In the coming articles, we’ll see how these factors could impact steel prices. Let’s begin by looking at some demand indicators.

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