North American Steel Price Upturn Expected to Continue
2017 may well be regarded as the year of continued recovery for the global steel industry. During the past twelve months, the upward movement of world steel prices has been a consequence of supply-side factors and increased costs for the steelmakers.
Import protection has become a key feature of the global steel scene, notably in North America. This has given regional producers the opportunity to lift prices – in the likelihood that steel buyers will find it increasingly difficult to switch to low-cost foreign alternatives.
Existing trade measures by the US authorities and the prospect of further restrictions, upon the conclusion of the Section 232 investigation, encouraged local steel manufacturers to announce a series of list price hikes from October 2017 onwards. Local mills have secured a large proportion of their pricing initiatives, to date. It is likely that US producers will target further advances, in the coming months.
From MEPS research, in January, the majority of North American steel participants are projecting a demand improvement, across a number of steel-consuming sectors, including energy and construction, during the course of 2018. Furthermore, it is widely perceived that the implementation of the US infrastructure bill could be a ‘game changer’ for the domestic steel sector.
MEPS predicts that North American steel prices will increase, in the short term. Selling figures are expected to reach the peak of the current cycle, during the second quarter. However, it is likely that any significant demand pickup or the imposition of a new round of trade barriers, following the Section 232 investigation, will aid regional producers’ ambitions to keep prices at their elevated levels, for the remainder of the year. Conversely, in the absence of these supportive factors, steel selling figures could fall, following the recent dramatic price upturn.