With global steel production and consumption running at all-time record highs, steel prices around the world have been showing prodigious gains, with United States hot rolled steel coil at all-time highs, said United Kingdom steel consultancy Meps in a statement on Monday.
The US transaction price for hot rolled steel coil is at more than $700 a ton — a figure that is more than $200 higher than the previous record of $495 a ton recorded in the third quarter of 1988.
Conjoined economic recovery in Japan, Europe and the US lies behind the sensational increases seen in global steel prices. Additional factors are surging infrastructure and business developments in China, India and some other countries.
“Comparing July and August prices in 2004 with those for the same period in previous years, it is clear that current values are unparalleled in recent history for most parts of the world,” Meps said.
The most extreme example of steel price increases has been seen in the US, which has seen unheard-of gains in prices as steel mills have successfully strived to pass on increases in costs for raw materials, energy and transport to their customers.
US coil prices have shot up by more than 125% in the past 12 months. Since they touched their low point of $225 a ton in the third quarter of 2001, coil prices have advanced by a remarkable 215%.
“Part of the increase is undoubtedly attributable to the rationalisation of the US steel industry in the last couple of years. Some is due to shortages of raw materials, particularly coke,” Meps said.
A proportion is the result of a reduction in import competition. The narrowing of the cost advantage traditionally held by mini-mill sheet producers has resulted in the rise in prices for scrap and the shortage of alternative furnace feeds such as pig iron.
Industry rationalisation has also been partly responsible for the surge in hot rolled coil prices in Japan. There, the third quarter price of 62 000 yen a ton is 37% higher year-on-year, and 153% above its 2001 low point of 24 500 yen a ton.
In addition to the domestic recovery in demand, high export sales are helping to buoy up Japanese steel prices. The country’s steel exports reached a new record level of just more than 18-million tons in the first half of this year — a 7% increase on the 2003 performance.
Looking at sections and beams, some of the same factors lie behind current price highs.
In the US, in spite of additional capacity coming on to the market, transaction prices for sections have jumped by almost 80% over the past 12 months. The current level of $590 per ton is about 25% above the previous record high seen in 1988.
Sections prices in Japan have mostly been below 40 000 yen a ton over the past decade. The so-called “H-beam war” — an intermittent struggle for market share between mini-mills and integrated mills — ensured no substantial gains.
But today sections prices have surged to 67 000 yen a ton: an astonishing rise of 135% since mid-2002.
Mills in the US and Japan are likely to report a very strong level of steel output this year. Tightness in raw material supplies should not prevent Japanese crude steel production exceeding 111-million tons, its top point for more than a decade. US steel making looks set to be about 94-million tons — a four-year high. — I-Net Bridge