Recent market and political developments have led to multiple price increases in flat rolled carbon steel over the past few weeks. Domestic mill prices on hot rolled carbon steel have increased by over 3.00 cwt alone over the past few weeks, leading to an uptick in orders and extending lead times to at least a month from previous lead times of at least two weeks.
Cold rolled, and coated products such as galvanized steel coil have also seen sharp price increases and extended lead times. This movement has lent to lower supply in the market and greater demand, giving merit to the recent price increases. It is now evident that these increases will stick, and could potentially increase.
Potential increases are due to several domestic and international factors including the Trump Presidential election, an increase in foreign prices, the anti-dumping and countervailing rulings in favor of domestic mills earlier this year, and lower general inventories across the domestic downstream marketplace.
As the Trump transition administration sets into motion, the market is already anticipating more protectionist trade policies and anticipating the launch of the President-Elect’s campaign pledge to massively boost infrastructure spending. Trump’s unofficial senior trade advisor, Daniel DiMicco, of former Nucor fame is favored to officially be named to head up the office for US Trade Representative, where he is expected to have a strong influence on deterring foreign steel imports.
This, in addition to the already favorable anti-dumping and counter vailing rulings in favor of domestic mills earlier this year and news that the Commerce Department is moving ahead with an anti-circumvention and dumping case against Vietnamese coil product (and Chinese substrate), has emboldened domestic mills’ pricing strategies. Importers are nervous about bringing product in as they try and navigate what Trump’s potential policies could be.
Independently, foreign prices continue to increase because of surging demand in Europe and around the globe further increasing the unattractiveness of imports. Industry experts now expect a substantially large drop off in flat rolled steel imports in 2017 and potentially beyond.
Finally, current steel inventories downstream in the market are lower than they were last year, leading to a recent scramble in order increases and an extension of lead times, allowing domestic mills to further sure up price increases.
So what does this all mean? Domestic mills now have several forms of leverage to hold and more than likely add to the recent price increases. All market indicators point to a very strong domestic market for the end of 2016 and Q1 of 2017. If purchasers wait too long hoping for price decreases, they may find themselves in a disadvantageous position.
Camden Yards Steel has anticipated the recent price increases and currently has great numbers in inventory. If you need any flat rolled steel sheet or plate, or are considering hedging against further price increases in the market, please give us a call today at 888-373-9300.
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