US and EU steel prices continued their upward trajectory which began in Q1, gaining 34% and 7%, respectively. Chinese prices faltered somewhat, falling 2% after a nearly 12-month long price rally on weaker demand and fears surrounding section 232. Most of the focus in the steel industry has centered around the US’s section 232 investigation, which culminated with a sweeping 25% tariff on imported steel products and 10% tax on aluminum. Although many exemptions were ultimately made, fears of an impending supply shortage were largely responsible for the explosive run up of US prices.
- US HR and Coated prices skyrocketed 34% and 23% in Q2, respectively, driven by fears of a supply shortage caused by section 232. Although the exemptions have significantly diluted the effects of the tariffs, worries early in the quarter allowed mills to implement significant price hike
- EU HR and Coated prices rose 7% and 4%, respectively, driven by solid market fundamentals. Strong auto demand, supplier consolidation and an exemption from US tariffs helped propel prices upwards throughout Q1
- China’s Flats prices fell 2% in Q1, which can partially be seen as a correction from an extended price rally that began in May of 2017. The decrease in regional prices is also a result of slow activity during the Lunar Holiday period and worries about section 232 limiting export volumes
- Raw Material prices rose moderately in Q1, with iron ore and coking coal increasing 5% and 2%, respectively, although softening Chinese prices resulted in downward pressure towards the end of the quarter. Scrap prices jumped 18%, with the US regional market experiencing the largest gains from the explosive increase in US flat steel prices
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Q2 2018 Steel Report (April 11, 2018)