Steel market sentiment in the US regarding rolled metal prices continued to deteriorate in May, as many buyers refused to make planned purchases, expecting a further fall in quotations, a study of the US steel market by S&P Global Commodity Insights showed.
In a survey of US manufacturers, distributors, traders and end users, 75.8% expected a fall in prices for finished products in May, compared to 9.8% of pessimists in April. Only 6% of those surveyed noted that prices had risen slightly as lead times were shortened but remained stretched, with most order books filled by mid-June. Of those surveyed, 18.2% expect finished product prices to remain stable.
US mills have been trying to maintain supply levels, but as contract buyers have lowered their maximum contract tonnage, this has created more opportunities in their orders, and spot prices approached $1,100 per tonne.
The biggest decline in prices is expected for flat steel
Flat steel mills have become more price-neutral as how buyers see the situation deteriorating in the coming months and are on hold, especially against the backdrop of competition from Asian imports with prices below $900.
As plants began to emerge from the shutdown season and some were able to increase capacity, many buyers expect prices to drop as cheaper import alternatives become available, but those tons are limited and many buyers are reluctant to enter into futures deals with third-quarter delivery times given economic uncertainty.
Commodity traders and traders have seen prices decline on finished products as mini-mills struggled to raise scrap prices as export markets softened along the coast and scrap exporters looked to Turkey for possible restocking.
Scrap prices are back in the spotlight : 66.7% of participants expected prices to trade lower and overall 97% expected prices to fall or trade sideways for the month.
As scrap trading ended in May, prices for Bushel scrap fell $25/liter in the US Midwest, while shredded scrap prices fell $40/liter in both the Midwest and South.
Platts TSI US Hot Rolled Coil Evaluation Begins decline after five straight months of growth as mills look to support spot prices on strong order books and backlogs in smelting. Platts, part of S&P Global Commodity Insights, valued US TSI hot rolled coil at $1,125 per ton on May 10.