Amid the ongoing talk about the Section 232 investigation, the consensus view of US steel market participants is that they are uncertain about the future direction of domestic pricing.
At this time of year, US steel prices would be expected to soften, as market activity slows down in the run-up to the summer holiday period. However, the possible introduction of further trade legislation to curb steel imports is giving US steel producers the opportunity to reverse the traditional pricing trend.
Following a series of price falls during the second trimester, a number of US domestic steel manufacturers announced list price hikes, in June, in an attempt to halt the negative price pressure. Research indicates that hot rolled coil values are showing signs of a reversal of fortunes. Across the other flat products measured, in the US, local steel mills have managed to minimise further price losses, in the past four weeks. It is widely acknowledged believes that domestic service centres are procuring material for stock purposes, in anticipation of figures rising – based on the upside pricing risk associated with the Section 232 investigation.
A number of US steel buyers remark that they are reluctant to purchase offshore material, in the current circumstances, because of delivery concerns. Foreign suppliers are likely to be hesitant about exporting to the US, owing to the threat of tariffs and quotas being introduced. Several US service centres note a slowdown in import offers being made, in recent weeks.
Offshore volumes currently represent just over a quarter of the US steel market. It is widely acknowledged that US mills are, at present, afforded a large amount of protection against the dumping of cheap imports, in comparison with producers in the rest of the world. If foreign supply options are limited further, US steelmakers will, undoubtedly, have the chance to raise steel values with minimal resistance.
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