US steel prices
Steel prices drive steelmakers’ earnings. It’s crucial for investors in companies like Nucor (NUE) and ArcelorMittal (MT) to keep track of spot steel prices (CLF). While there are several types of steel products, analysts see HRC (hot rolled coil) prices as the benchmark.
According to data compiled by Metal Bulletin, spot HRC prices are ~$620 per ton. Prices have been moving sideways for the last few months. Looking at the year-to-date action, spot HRC prices were in the vicinity of $600 per ton at the beginning of the year. HRC prices rose to $660 per ton in March before falling to $580 per ton in June. Since then, US steel markets have shown resilience. While some analysts expected US steel prices to weaken in the second half of the year, Timna Tanners, a Bank of America Merrill Lynch analyst, expects HRC prices to rise to $700 per ton in 4Q17. Read The Curious Case of U.S. Steel’s Upgrades and Downgrades to find out why analysts have different views on U.S. Steel Corporation (X).
While US steel imports have been sticky and the import penetration level is above the comfort levels, US steel prices haven’t shown signs of a major slowdown. However, we have seen some moderation in HRC prices this month despite steel companies like AK Steel (AKS) pushing for price hikes.
While HRC prices have weakened in September, cold rolled coil prices have held their ground. We’ll discuss this more in the next part.