US steel producers forecast a decline in profits in the third quarter of 2022

American steel producers forecast a decline in profits in the third quarter of 2022. A column by Michael Cowden, senior editor of Steel Market Update, reports about it for The Fabricator.

Very few steel mills have met their stated targets thanks to the price hike announced in August 2022. Then, for the first time since March, some steel producers in the USA and Canada increased the prices of their products by $50-75/t, depending on the enterprise. The reason was a temporary sharp rise in the prices of raw materials and steel in connection with the full-scale invasion of the Russian Federation into Ukraine.

So, for example, according to Steel Market Update, the price of hot-rolled coils (HRC) in mid-August 2022 was $800/t. Later, it decreased a little and fluctuated from week to week, but was never able to exceed this level.

US mills may announce another round of price hikes, but that will be more difficult to do after the drop in scrap prices in September. In addition, most producers are willing to negotiate about lower prices for hot-rolled sheets and plates.

American steel producers forecast a decline in profits in the third quarter of 2022 compared to the second. In particular, Steel Dynamics Inc. (SDI) explains this by falling flat steel prices, and Nucor by lower margins and flat and plate steel shipments.

US Steel, one of the largest steel producers in the US, also forecasts weaker financial results in the third quarter of 2022. In September 2022, the company shut down blast furnace №8 at the Gary Works steel plant in Indiana due to poor market conditions. Previously, at the same enterprise, US Steel stopped the lines for the production of galvanized rolled products, and at the Mon Valley Works plant in Pennsylvania until October 2022 scheduled maintenance of blast furnace №3 will be performed.

As Michael Cowden points out, plants sometimes delay maintenance to buy time while waiting for improved market conditions. The analyst does not say that this is exactly what is happening at US Steel, but he suggests keeping an eye on it.

As GMK Center reported earlier, the share of imports in the rolled steel market in the United States in August 2022 is estimated at 23%. The permitted imports of rolled steel into the United States in August 2022 was 2.063 million tons.