A reduction in supply and an increase in order fulfillment allowed prices to stabilize

Sentiment in the US steel industry continues to improve amid rising prices for various types of products. This is evidenced by the results of a survey of US producers, distributors, traders and end users conducted by S&P Global.

In December, 71.8% of respondents expected an increase in rolled steel prices this month, up from 68.6% in November, and 17.9% believed it would be significant. Only 2.1% of respondents see the potential for a slight decline in prices in December.

The proportion of those who expect steel prices to rise has been steadily increasing since early October, when US steel mills began the latest series of price increases.

A reduction in spot supply and longer lead times allowed new supply from steelmakers to gain a foothold in the market. Hot rolled coil (HRC) prices in the US rose to $1,090 per short tonne, up from this year’s low of $690 per tonne recorded in late September.

HRC orders are expected to be delivered in late January or February. US mills report stable demand for various types of flat products, with some noting an increase in demand for high value-added products from the automotive sector.

However, according to buyer sources, spot activity remains subdued overall. Buyers are still reluctant to build up inventories due to the recent price increases and are more focused on contract tons.

According to the survey, 56.4% of respondents believe that steel production will remain unchanged in December (compared to 60% in November). Overall, 33.3% of respondents believed that it would increase this month.

As for sentiment on raw material prices, 97.4% expected them to increase or remain unchanged in December (97.1% in November). Among the participants of the December survey, more than 66% predicted a slight increase, while 17.9% expected a significant increase.

Market participants believe that scrap prices are likely to rise in the short term, as export demand for this raw material has supported the increase in quotations in the US domestic market and continues to hold. One respondent noted that scrap is scarce and prices need to rise to encourage the flow of obsolete grades to shredders at recyclers.

As GMK Center reported earlier, the fundamental indicators of US steel companies remain stable, says the review of the international rating agency Fitch Ratings about the prospects for 2024. New supply entering the market will meet additional demand growth and continue to displace imports.