Steel, ferrous scrap prices still seen bottoming, but then a boom: World Steel Dynamics

Steel hot-rolled coil prices in the US are likely to bottom at around $500/short ton this year, but then rally to $720/st in Q1 2020 as they ride a global steel boom, Peter Marcus, managing partner at World Steel Dynamics, said Tuesday at the Steel Success Strategies conference 2019.

He also forecast that the world HRC export price, currently at about $500/metric ton FOB, falls to $450-$475/mt in the months ahead "as steel buyers remain spooked by fears that a global trade war will be slowing global growth."

He said that such a reduced global export price for HRC would meet the definition of a "death spiral" because "the global median-cost mill's marginal cost, delivered to the port of export, is about $444/mt."

But as in the US, the world export price is forecast to increase to $600-$700/mt in early 2020.

The situation now, as Marcus explains, has steel prices plummeting in home and export markets.

"There's a chill in the marketplace as steel buyers are sitting on their hands and not placing orders," he added.

But World Steel Dynamics is expecting a major change in psychology "from apprehension to ebullience, if and when, President Trump signs a new trade pact with China."

Marcus also sees US ferrous scrap participating in an early-2020 boom. Shredded delivered to US mills, now at $266/long ton (based on the latest S&P Global Platts assessment), could bottom at about $235/lt "but then rally to $390/lt" in Q1 2020.

He said steel scrap currently "is about $80/mt undervalued relative to the prices for iron ore and coking coal when adjusting for usage in the blast furnace."

Source: S&P Platts