Monthly Metals Index for Raw Steel

The Raw Steel Monthly Metals Index (MMI) remained relatively stable but leaned towards the negative side, with a decline of 0.96% from August to September.

US Steel Prices Seeking a New Low

As of early September, hot roll coil prices have dipped to their lowest since February 21. This decline has reversed many of the spikes seen earlier in the year. Prices initially surged by $241 per tonne due to higher tariffs, but since hitting a peak on March 27, they’ve dropped by $109, now resting at $818 per short tonne.

Similarly, prices for cold roll coils and hot-dipped galvanized steel are also on a downward trend. The overall momentum in the steel market appears slow, with a tendency to drift lower.

This price drop hasn’t caught Mills off guard, as they anticipated weaker results. In their second-quarter financial report, Nucor indicated, “We foresee margin compression in the Steel Mills segment, despite a solid backlog and stable demand outlook.” Yet, Nucor seems committed to finding stability.

Interestingly, consumer spot prices stayed steady for the third week running on September 8. Nucor’s pricing remains a bit higher than others in the market, suggesting they are trying to prevent further price declines.

Weak Demand from Construction

Demand in the construction sector is still a concern, adding pressure to steel prices as we head into 2025. Construction spending has been on a downward trend for over a year, but indicators suggest a potential rise in 2025. The Architectural Billings Index and other key indicators show that the market still faces challenges.

Anticipated rate cuts from the Federal Reserve could improve market conditions, yet policy shifts might take up to a year to surface, especially affecting the construction sector.

Fortunately, orders for durable products are performing relatively well, providing some balance. Yet, apart from the brief surges in May, overall growth appears modest. It seems that part of the activity could be attributed to companies accelerating purchases in anticipation of tariffs.

This tactic temporarily boosts orders for durable goods but may lead to a slump once tariffs are established. These fluctuations could make monthly order statistics less stable, and there’s uncertainty about whether durable product orders will support year-over-year growth.

What Lies Ahead for Steel Prices?

Currently, steel prices are on a downward trajectory, showing no signs of recovery. Mill lead times have shortened recently, sitting at historically low levels. From the demand side, it’s unlikely there will be significant improvements. This could mean further price drops are likely, unless supply dynamics shift.

On the supply side, maintenance periods are suspended, which usually helps factories regroup in controlling price trajectories. However, the extent of offline capacity this year remains uncertain.

Moreover, import dynamics are influencing domestic supply. Data from the Commerce Department indicates a notable decline in imports of hot-rolled, cold-rolled, and galvanized steel since the year’s beginning. This drop is partly a result of soft domestic demand, but tariffs have also sidelined many imports.

With dwindling demand and tightening domestic supply, hot-rolled coil futures hint at potential price stabilization. The futures market also shows a modest premium over spot prices, suggesting investors believe prices may be nearing a bottom. Yet, the landscape is subject to change, especially with possible quota arrangements for key trading partners.

Recent Movement in Raw Materials and Steel Prices

• China’s hot-rolled coil prices have remained stable, increasing slightly by 0.38% to $428 per short tonne as of September 1.
• Steel slab prices in China saw a minor rise of 0.36% per metric tonne to $521.
• Coal prices in China have stabilized, decreasing by 0.96% per metric tonne to $162.
• The price for LME primary steel scrap fell by 1.98% per metric tonne to $346.
• Korean standard steel scrap prices dropped by 2.55% to $189.