RESEARCH: Key takeaways from the latest North American Steel Market Tracker

• Prices for hot-rolled coil have performed in line with our expectations over the past month, with US domestic HRC prices finding a floor in July in line with the forecast, before improving in August. US HRC prices averaged $473 per short ton in August, compared with our forecast price of $470 per ton.
• Our prediction that an industry-wide coil price increase would come during August, following July’s largely unsuccessful attempt, also proved correct, with mills announcing a $40 per ton price increase in late August. The price increase is poised for success, with HRC prices moving higher in early September on improving demand from the automotive, manufacturing and construction sectors, as well as rising scrap and raw material costs, lengthening domestic mill lead times, and continued low import competition.
• While the shape that the post-Covid-19 economic recovery would take has been hotly debated, the latest economic indicators most critical to steel consumption have been exhibiting a V-shaped recovery. Because the pandemic is far from over, it is premature to predict the final shape of the recovery but, for now, short-term economic indicators are pointing to increased steel consumption in the near term.
• Based on an improving demand outlook and rising scrap costs, we have upwardly revised our steel sheet price forecasts for September and October. We remain cautious for the final months of the year, however, reflecting both the pandemic and political uncertainty, in addition to the traditional slowing of business activity in the ramp-up to the holiday season.
• US domestic long product prices have been stable or declined during the current quarter. Rebar and wire rod prices suffered further declines in August, but we have increased confidence that prices have now reached a floor. We are forecasting modest upward improvement in US long product prices in September on higher scrap prices, with mills seeking to maintain margins, as well as continued improvement in construction activity.

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