The Advance/Decliner Index is our effort to quantify the anecdotal price information we find in our every day reading about global steel price trends. We also are looking at relative prices in the U.S. versus abroad in our attempt to gauge international price pressure/opportunities heading our way.
Advance/Decliner Index Jumps. Our Advance/Decliner Index jumped to 91% from 68% last week, reaching the highest level since June 2008, before the onset of the current global economic rout. While there are fewer price changes in the market in general due to the holidays, the data continue to show broad-based pricing strength, lead by surging prices in China. Our China index rose for the fourth straight week, climbing to 100% from 91% last week. This is the third time in the last two months our China index has hit 100%, meaning there were no reported price declines. Our ex-China index also strengthened, rising to 87% from 62% the prior week, the highest level since June.
Strength Still Most Evident in Flat-Rolled. China recorded eight price increases this week, followed by the US with four, Turkey had three, Brazil posted two, while Italy, Southeast Asia, Europe, and India each recorded a single price rise. Turkey and Japan posted one price decline each this week. There were seven price increases for flat-rolled products, followed by pipe, rebar, and beam with three, merchant bar with two, while billet, plate, and wire rod reported a single price rise. Flat-rolled products and beams each reported one price decline.
Relative Domestic Prices Still Hitting Record Lows; We Expect Meaningful Upside in Domestic Prices. While HRC and beam prices are strengthening on a relative basis, domestic prices continue to be remarkably low versus the rest of the world driven by a weaker economy in the US than other regions, particularly China. Normal premia in the US market ranges from $35-60/tn; this is simply not the case today. Rebar prices in the US in December have fallen $48/ton or 10% from November and are down still more sharply relative to all other regions where prices have risen; a $65/tn rebar price increase for January seems assured in our view; rebar prices are at a 10-year record low vs. Japan and near that same level vs. China. Plate prices have fallen 7% in December, and are down relative to China and Europe. Absolute HRC prices in the US have risen 5% in the month, and are up relative to China, Europe and Japan, but still near record low levels. Domestic beam prices increased by $25/ton or 4.0% in December and are up relative to China, Japan, and Europe which have posted an increase of 1.7% and decreases of 0.2% and 4.8%, respectively.
Outlook. Global steel prices continue to rise in an increasingly volatile pricing environment. We expect the upward trend in domestic prices to continue in the near and intermediate term, supported by low relative prices, depleted inventories, a reduction in imports, and a pickup in exports.