- The upward momentum in United States' flat product prices is yet to show any signs of slowing, with US HRC prices hitting new record highs during April. Steel supply is forecast to remain short of demand due to no improvement in underlying supply and demand fundamentals, which is propelling US flat product prices higher in the near term.
- Based on the underlying supportive market fundamentals, we have upwardly revised our flat product price forecasts again this month but maintain the view that prices will peak during May. Although import supplies remain limited, imports are rising and we understand steelmakers may have slightly more spot availability next month, which would help to ease pricing pressure. We equally maintain the view, however, that any downward correction in sheet prices in the coming months will be modest and mild, with sheet prices forecast to remain at or near record highs throughout the rest of 2021.
- Coil prices in Europe continued to rise to new record highs and regional HRC prices climbed over €1,000 ($1,204) per tonne for the first time on April 30. European steelmakers have been increasing their offers on a weekly basis and buyers have been more concerned with securing material than negotiating discounts. Price dynamics in the region continue to be determined by an acute shortage of material, with lead times stretching into the end of the third quarter of the year.
- We have upwardly revised our European coil and plate price forecasts to reflect the latest spot market levels but we maintain the view that the uptrend should not continue for much longer. The latest data shows that flat-steel production picked up in March in Germany and Italy and there should be a return to normal output levels in the second quarter. Acciaierie d’Italia (formerly known as ArcelorMittal Italia) plans to restart blast furnace No4 in June, although there are some maintenance closures scheduled during the third quarter at other producers. Semiconductor shortages remain a problem for automakers, with some production outages at a number of European car manufacturers and if more material starts to appear in the spot market with early delivery times, it will be difficult for steelmakers to maintain the price rally.
- Chinese domestic flat steel prices rose as we expected in April and export prices rose stronger than anticipated while producers started to factor in a possible removal of export tax rebates. We expect further price increases in the Chinese domestic market in May but prices should start trending down as we approach the second half of the year. In the export market, Chinese material remains competitive and we have upwardly revised forecasts in expectation of a return in trading activity in May but we believe that we are close to the pricing peak. The recent changes to the rebate system are not likely to have a significant impact on the price level in China because producers and international buyers have already priced in a removal of the rebates. Looking further ahead, Chinese HRC exporters will become less competitive in the seaborne market so will increase supply within China, while other producers should get more opportunities to compete in traditional Chinese export markets.
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