This month’s key North American steel forecast highlights:
Unprecedentedly high flat steel product pricing in the United States was forecast to persist through the current quarter and well into the second half of 2021.
Actual US hot-rolled coil prices in April slightly outpaced our forecasts, with Fastmarkets’ US HRC index averaging $1,390 per ton in April, versus our forecast price of $1,340 per ton for the month.
Upward pricing momentum continued, with prices hovering around $1,500 per ton in early May, supported by persistently tight supply, a lack of spot market availability, extended lead times, strong demand from steel consumers and service centers, with inventories depleted throughout the supply chain, and with restricted supply and higher steel prices globally, which limited both the availability and competitiveness of imported steel.
We maintain both our view that flat steel product prices will peak in May and that any subsequent downturn in flat product pricing will be modest and gradual. Our forecasts of a May price peak may prove to be premature, but this remains our base case expectation.
We acknowledge, however, considerable upside risks for prices in the current inflationary market environment. Depleted inventories across not only the steel distribution chain, but also in key manufacturing sectors such as automotive, will support steel demand for the remainder of 2021, preventing the price collapses seen in previous market cycles.
US steelmakers have abandoned traditional price increases on hot-rolled coil, cold-rolled coil and hot-dipped galvanized coil, with prices accelerating rapidly albeit without any formal price rises.
In contrast, and reflecting both somewhat slower demand and less severe supply shortages in the plate market, domestic steel plate mills continued to rely on formal plate price increases, with the latest price rise announced in late April.
North American mills were targeting plate price rises of around $60-80 per ton in the latest effort, while they continued to attempt to regain premiums over HRC.
While the latest move will probably prove successful, we do not expect plate prices to reassert their traditional premium over HRC before late 2021 at the earliest.
Domestic long steel product prices showed further gains in April, despite softening prices for obsolete scrap. On multiple mill price rises, long steel product prices were expected to maintain momentum in May, with impressive gains evident across the major product categories.
All indications were that further price increases will be well supported, especially with construction activity accelerating, while manufacturing activity remained buoyant.
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