US Long Steel Prices Remain Steady Despite Increased Cost of Production
- 03-Feb-2023 11:58 AM
- Journalist: Shiba Teramoto
U.S.: Although US price trends for long product Steel are typically not extreme, it is a relief to market participants. This predictability in pricing allows buyers to make purchasing decisions with confidence. It also encourages Steel producers to plan by investing in their businesses over the course of the long-term. As a result, domestic prices can be assumed to remain within a reasonable range.
Over the past five years, US customers of flat products have faced times of wild price shifts due to a myriad of elements. These include the introduction of Section 232 legislation, the effect of the COVID-19 pandemic, and consequences from the outbreak of war in Europe.
Long products in the US purchasing industry have been known to take the price dynamics of a rollercoaster ride. Steel users may expect the longs sector to follow suit, but historically long product prices have shown far more stability.
After seeing prices steadily decrease over a period, it appears that they are now beginning to go up again. Several increases in mill list prices have already been implemented and buyers can expect further basis value hikes in the first quarter of the year.
In December and January scrap costs increased significantly, contributing to the latest rise. Despite most of the production cost being associated with scrap materials, few changes were seen in the prices of beams, bars, and rods over the past few weeks.
The residential building sector slowed down due to reduced demand at this time of year. The Federal Reserve's decision to raise interest rates to control inflation had a major impact on the domestic housing market. On the other hand, other sectors related to construction have fared much better.
There was a backlog of commercial building projects throughout much of 2022, keeping activity levels strong. Over the next year, it is likely that several considerable public infrastructure projects will get approval and support demand for 2023.
Order intake for mills and stockholders remains reasonable, even when compared with other regions of the world. It is expected that further increases in scrap spending could potentially lead to higher prices for long products soon. The mills price plans are likely to be backed by a shortage of alternative sources from outside the United States. In the past few weeks, import prices into the US have been on the rise due to higher international Steel prices.
The benefits of sourcing materials from suppliers outside North America have become much less noticeable, and imported goods likely won't be attractive right now. Current trade laws and longer delivery times quoted by foreign producers are serious deterrents.
Despite production outages during the holiday period, domestic supply of most long Steel products remains readily available. Most common sizes can be found in mill stocks or can be obtained through the next scheduled rolling. Purchasing managers have highlighted that prices of rebar and long products are at historically high levels.
However, US long Steel manufacturers are expected to find it difficult to implement substantive price hikes in the winter months, particularly given current recessional concerns around the world. It is likely that long product values will take a dip for most of this year.