U.S. steel prices continue to rise despite market skepticism, flat-rolled steel prices surge with a fifth hike since November, and European steel capacity begins to rise after last year’s declines.
Cliffs was not alone in raising prices. By February 3, NLMK USA followed with its own $50/st increase. This brought its minimum price for hot rolled coil to $875/st. ArcelorMittal USA and Nucor also raised their flat-rolled steel prices by $50/st.prices once again. Both steelmakers announced additional $50/st increases to bring their price minimums for HRC to $900/st. This marks the fifth hike for both Nucor and Cliffs since November.
Also, mill lead times have seen a moderate increase since the start of the year. This may suggest that supply has tightened. However, it could also be the result of buyers taking forward positions to optimize pricing amid the trend inversion. This would discount any real shift in market dynamics or rebound in demand.
Meanwhile, the spread between HRC and U.S. Midwest HRC 3-month future prices has also begun to decline. That said, future prices still remain at a premium. Typically, HRC prices sit at an average of $20/st over future prices. However, future prices are currently around $50 higher. Moreover, the two prices hold a nearly 94% correlation. Therefore, this likely indicates that, while HRC prices may continue to rise in the short term, further upside potential is likely narrowing.
European steel output saw substantial declines throughout last year. This managed to add support to prices despite demand weakness. Most recently, Liberty Steel U.K. idled three mills, including Liberty Steel Newport and a hot-rolled mill in Wales. In total, crude steel output in the E.U. fell 10.1% year over year in November. According to the, output from non-member European nations fell 11.2%. This pushed European steel prices above U.S. prices.
Meanwhile, rising prices, low inventories, and improved demand has triggered some steelmakers to increase production. In early January, U.S. Steel Kosice in Slovakia restarted a blast furnace idled back in September. ArcelorMittal, which saw a 20% cut to its total European blast furnace capacity during Q4, also began to bring capacity back online. This included the return of blast furnaces in Poland, France, and Spain.saw a 16.
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