via Metal Miner
of Monthly Metals Index (MMI) From May to June, it remained stable with a small decrease of 1.33%.
Overall, U.S. flat steel prices were weak, with declines accelerating throughout June. HRC prices fell about 9%, their biggest month-on-month decline since February. CRC and HDG prices each fell 6%, while flat steel prices were down 4%.
Bearish steel prices search for new bottom
Steel prices continue to search for new bottoms as the steel market continues to weaken. As of June 13, hot rolled coil prices hit their lowest level since October 2023 on reports of weak demand. Steel mills are reportedly holding back on scrap orders, leading some to believe scrap prices could continue to fall in June.
Steel mills reported variable performance last quarter. Nucor and SDI saw demand recover from Q4 2023 to Q1 2024, while Cliffs and U.S. Steel saw shipments decline. All four of these mills saw year-over-year declines in shipments. By the beginning of the second quarter, steel mills were warning the market that impending maintenance outages could significantly tighten domestic supplies. However, these warnings only provided temporary support for prices in early April before the downward trend resumed.
sauce: Metal Miner Insight
Market reaction was lukewarm, but domestic crude steel production declined throughout April due to the shutdowns before gradually recovering in May. By June, domestic steelmakers appeared to have throttled back production again, perhaps attempting to regain control of the market. As of mid-June, steel prices remained weak and steel mill lead times gradually shortened, which may ultimately force steel mills to throttle back production further.
Imports surge, especially from Vietnam
Import demand likely played a role in the decline in domestic prices. After all, U.S. prices were significantly higher than global prices early in the second quarter, stimulating import demand. Plate steel imports surged in March and April, a trend that continued in May, according to licensing data.
HRC, CRC, HDG Imports, Source: U.S. Department of Commerce
Interestingly, there has been a significant increase in steel plate imports from Vietnam since the beginning of 2024. In fact, average monthly imports for the first five months of 2024 increased by more than 453% compared to the same period in 2023.
This surge appears to be mostly due to HDG, but CRC volumes are also up significantly from recent averages. Since March, Vietnam has overtaken Mexico to become the second-largest exporter of HDG to the US. May licensing data showed Vietnam accounting for over 23% of the total volumes. While this is not unprecedented, it does raise some red flags. Read on for more information on how to use geopolitical changes to your advantage. The art of timing your purchases.
HRC Import
CRC Import
HDG Import
Vietnam imports fuel China dumping fears
Vietnam has long faced accusations of being a dumping ground for Chinese steel, due to the large quantities of Chinese-made HRC imported into Vietnam, where it is processed into CRC and HDG, which makes it easier to disguise the origins of the material before it reaches export markets and potentially evades tariffs on Chinese steel.
The large-scale imports of cheap Chinese HRC into Vietnam have caught the attention of at least two Vietnamese steelmakers. On March 19, Hát Phát Group and Formosa Hát Tánh Steel Corporation said: Submitted a proposalRequesting the Ministry of Industry and Trade (MoIT) to launch an anti-dumping investigation into HRC imports from China.
However, it is unclear whether Vietnam’s Ministry of Industry will agree to an investigation given the backlash from other steelmakers. The two companies that filed the anti-dumping complaint are the exclusive producers of HRC in Vietnam. Other steelmakers, including HDG producers, expressed concern about the impact such an investigation would have on Vietnam’s steel industry as a whole. A reduction in steel supplies from China would inevitably increase steel prices in Vietnam, making the final product less competitive in the international market.
Vietnamese steel inflow could threaten U.S. market
Now, an influx of Vietnamese imports into the U.S. appears to be weighing heavily on domestic steel prices, and as reining in China is increasingly playing a game of whack-a-mole, it could lead to the U.S. opening a separate anti-dumping investigation or taking new protectionist measures against Vietnam.
Steel tariffs Announced Direct targeting of China over the past few months may not be enough to stem the surge in Chinese exports — after all, China’s steel industry continues to underpin global steel demand. OversupplyChina’s steel production remains strong despite weak domestic consumer demand and a weak construction and real estate sector, while subsidies to the industry keep Chinese steel prices at the bottom of the market, hurting the profitability of steelmakers elsewhere.
Nicole Bastien
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