Demand Growth Required to Sustain US
Steel Price Rises
Flat product selling figures, in the US, have been under
negative pressure, for much of this year. In an attempt to halt further price
deterioration, domestic producers announced consecutive list price hikes,
totalling US$80 per short ton, in recent weeks. This has been the catalyst for
an uptick in purchasing activity. Extended delivery lead times, due to planned
mill outages, and a continued shortage of import alternatives, have had a
stabilising effect, while creating a pricing floor in the market.
This will offer some welcome respite to US steelmakers. Prices are expected to
move up, either side of the New Year. Inventory replenishment and a continued
revival in scrap costs should exert upward pressure on steel selling values.
However, MEPS predicts that it is unlikely that this will lead to a prolonged
recovery. Steel prices are forecast to peak in the spring. It is widely
acknowledged that the US steel sector remains fundamentally oversupplied, given
the current level of activity.
Domestic capacity utilisation, in the US, remains slightly above 80 percent,
year to date. The World Steel Association predicts that growth, in US steel
demand, will be just 0.4 percent, in 2020 – following on from an anticipated 1
percent expansion, this year. With little demand improvement projected, any
pricing revival, in the near future, is likely to prove to be a false dawn for
US steel manufacturers.
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