The downward trajectory of US strip mill product steel prices came to an end, in November. MEPS’ research shows that local steelmakers achieved at least part of their proposed increases or, at worst, prevented domestic values slipping further.
Amid a weak trading environment, a number of US steel buyers initially labelled the mills’ proposed price hikes as a ‘defensive move’ to halt the downward pressure on steel transaction values. Surging raw material expenditure supported mill efforts. Supply from offshore sources is extremely limited, largely due to ongoing trade defence measures.
Many buyers remarked, previously, that uncertainty surrounding the US presidential election had created a negative impact on domestic steel demand. A number of significant public construction projects were put on hold.
From MEPS research, in November, the general consensus view from steel market participants is that Donald Trump’s Republican election victory will have positive implications for the US steel industry. The new president’s ‘America First’ policy will likely feature increased infrastructure spending, which will boost steel demand from the construction sector, in particular. The expected greater use of import protection measures will also safeguard the interests of US steelmakers against the dumping of cheap imports.
However, further trade barriers will restrict choice for the US consumer. By limiting offshore supply options, steel buyers are likely to struggle to purchase their material at competitive prices. Furthermore, a major aspect of the electoral campaign was a promise to renegotiate several trade deals. If the US goes against the ethos of free trade, both regionally and globally, then steel exporters, who focus heavily on the world market, will be particularly affected.
MEPS believes that US transaction values are likely to strengthen, in the near term. Supply-side cuts and a slight demand pickup could prompt price increases at the beginning of 2017.