This month’s key North American steel forecast highlights:
US flat product prices maintained momentum through November, with increases accelerating in early December in response to supply shortfalls, rising scrap prices, and improving demand. While we correctly forecast further pricing gains in November, actual prices surpassed our forecasts, with US hot-rolled coil averaging $727 per ton in November, versus our forecast of $705 per ton.
Given the increasingly severe spot market supply shortage for sheet products, we have significantly upgraded our price forecasts not only for December, but for 2021 as well. We are forecasting US HRC prices to average over $900 per ton in the first quarter of 2021. Elevated finished steel prices and strong demand will prompt blast furnace restarts and increased import flows in the near term, however, we do not expect any supply increase to undermine pricing momentum before the end of the first quarter next year.
While 2021 progresses and a Covid-19 vaccine is fully adopted, from approximately mid-2021 onward, we are forecasting a significant shift in consumer spending away from manufactured goods back to travel, services and experiences, where we foresee a significant release of pent-up demand in the second half of 2021. Even while consumer demand for manufactured goods slows, however, manufacturing demand, and in turn demand for steel, will remain elevated as inventories are replenished throughout the supply chain.
While the shift in consumer spending to services, experiences and travel will temporarily dampen consumption of steel-containing goods, the spending shift will benefit overall economic growth and expansion, in a positive development for industry and recovery of the total US economy, rather than the split economic recovery we have witnessed in 2020.
US long product prices followed scrap prices higher in November, and the impressive $70-80 per long ton December scrap price increases prompted domestic mills to raise prices by $50-95 per ton, depending on product, in early December. We expect these price increases to be partially to fully accepted, with prices forecast to continue to rise through early next year, with further scrap pricing gains also forecast for January.
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