A Nice Start to the Year for Steel

Includes: MT, NUE, X
by: Michelle Galanter Applebaum
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 Remains Relatively Flat
Our Advance/Decliner Index remained almost unchanged at 90% this week after rising the week before from 68% to 91%, the highest level since June 2008. While there were still fewer price changes in the market due to the holidays, the data continues to show broad-based pricing strength, particularly out of China and India. Our China index fell but remained strong, coming in at 89%, down from 100% last week. Our ex-China index climbed slightly, rising to 91% from 87% the prior week, the highest level since June.
Strength Still Most Evident in Flat-Rolled. India Posts Strong Week
China recorded eight price increases this week, followed by India with seven and Korea with three. India and China each posted a single price decline this week. There were six price increases for flat-rolled products, followed by beam with four, plate and wire rod with two, while merchant bar, billet, rebar and pipe reported a single price rise apiece. Flat-rolled products and rebar each reported one price decline.
Relative Domestic Prices on the Rebound
After hitting near record lows in December, domestic steel prices have shown a modest rebound thus far in January after several previously announced domestic price increases have been accepted by the market. Rebar prices in the US in January have already risen $60/ton or 13% from December and are up sharply relative to China and Europe where prices have slightly increased, and versus Japan where prices have fallen 7%. Rebar prices were at a 10-year record low vs. Japan in December, so the recent surge was expected. Plate prices have risen 12% in January to date, and are up significantly relative to China and Europe. Absolute HRC prices in the US have risen 12% so far for the month, and are up relative to China where prices have increased 4%, and up sharply relative to Europe and Japan where prices have fallen. Domestic beam prices increased by $40/ton or 6.3% in January and are up relative to China, Europe, and Japan which have posted increases of 1.7% and 3.0%, and a decrease 6.1%, respectively.
We believe the increase in domestic prices will continue as US prices begin to play “catch up” with the rest of the world and approach historical premiums. The upward trend in domestic prices is further supported by depleted inventories, a reduction in imports and a pickup in exports.
Disclosure: NA