Basic steel prices lose some momentum, but reprieve may be short lived as global demand set to increase.  

Steel

Basic steel prices are beginning to lose some momentum so far in April.

Commercial quality hot-rolled coil (HRC) base prices across the large consuming and producing northern hemisphere markets have been correcting since the beginning of the month, according to the LME and especially in the EU.

From $1,554 per metric ton on April 1st, European reference prices slipped to $1,451 per ton by Friday 8th April and in China and the US, prices have also retreated, albeit not so aggressively.

In fact, US base prices have resumed their traditional premium over European prices since April 4th though the delta, which traditionally relates to delivery charges well over $100 per ton is still unusually small at roughly $10 per ton, making the EU the most attractive import market to supply.

US premiums are struggling to recover right now due to reduced demand.

Earlier today the local steel institute, the AISI, showed mill deliveries for HRC had only increased by 3.0% year-on-year during the first two months, compared to growth of closer to 6% for steel in general, given the stronger demand for long products used in infrastructure and pipes used in energy applications.

Prices for long steels quoted by the LME are under little pressure so far in April and the metal spread over scrap is rising far above recent averages (>$300/t).

As steel prices in construction tend to be more impactful than steels in manufacturing, we doubt long products can avoid the corrections to come.

- Alistair Ramsay, vice president, analysis  

OCTG

Prices on the API plate market in Europe are still increasing weekly.

The current price for heavy plate of S355 grade in Europe is now over €2,000/tonne from stockists.

The war in Ukraine has severely disrupted Europe’s supply of steel slab, which in turn is affecting plate production and costs.

82% of Europe’s steel imports in 2020 were slabs produced in Ukraine, with the rest coming from Russia.

European re-rollers are trying to get alternative sources of slab from Asia and Brazil, but it is unlikely to be enough to replace supplies from Russia and Ukraine.

There are rumors that Chinese steel slab suppliers are being lined up to sell goods to Europe, although questions about Chinese slab specification and scope of use remain open and unresolved.  

Ongoing supply chain disruptions, skyrocketing energy and carbon prices, as well as persisting inflation will continue to put pressure on API plate prices.

Seamless linepipe suppliers have started quoting again after they stopped giving offers in March, the offered lead time is very long, causing prices to continue rising.

This month, seamless linepipe prices from leading European manufacturers have increased by €200-300/tonne compared to March.

The minimum price level of seamless linepipe is supposed to be around €2,200-2,300/tonne FCA for X65 grade.

Surging European seamless linepipe prices are set to extend their gains as Russia's invasion of Ukraine has disrupted logistics, spurred sanctions and sent energy prices soaring.

- Marina Bozkurt, senior analyst