Steel prices continue to set new record highs week after week

Signs last month that steel prices were beginning to lose steam proved premature. Price tags for flat-rolled and plate steel products have continued to move upward, setting new record highs week after week. Moving up along with steel prices are the anxiety levels of fabricators and manufacturers who must pay unprecedented prices for their raw materials.

Steel Market Update’s check of the market on March 8-9 showed the benchmark price for hot-rolled steel reaching $1,270/ton ($63.50/cwt), topping the previous high mark set in 2008 by $200/ton.

“This is crazy. I’ll tell you one thing, my customers can’t stay in business at these price levels. We’re having a hard time passing on the increases,” one manufacturer in the Midwest told SMU.

“Restricted supply with the current demand makes pricing anyone’s guess. There is nothing there to stop the madness, although we are reaching a critical cost/affordability point with customers. It could force some customers out of the game,” commented one service center executive.

When COVID hit last spring, much of the economy shut down to stop the spread of the virus. Since then, steel-intensive U.S. manufacturing has come roaring back—though steel producers have been judicious about ramping up production once again. Today, a year after the pandemic began, steel demand continues to outpace supplies. Buyers report extreme difficulty acquiring enough steel to meet their customers’ needs. Mills are scrambling to fill contract orders and have few tons available to offer spot buyers. Many service centers and OEMs have ordered foreign material—which is cheaper compared to the sky-high domestic prices—and a considerable volume of imports is due to hit U.S. shores in the next few months. Yet various mills have announced maintenance outages on furnaces and other equipment that will offset the imports to some degree and keep supplies tight, at least for the short term.

For many buyers, price is secondary to availability. “With basically no spot tons available from mills, it sounds like it’s service centers selling to each other between now and May or June,” commented one respondent to SMU’s March questionnaire.

The market has actually tightened further in recent weeks, observed another service center exec: “The U. S. Steel-announced blast furnace outage and the AM/NS Calvert outage in May are examples of why it’s difficult to get the capacity utilization rate much higher in this environment. With hot-rolled futures now over $1,000 through November, capitulation seems to have emerged and high prices may be here for a long time.” U. S. Steel has confirmed a 25-day outage in May at one of the two blast furnaces at its Mon Valley Works in western Pennsylvania. AM/NS Calvert had not responded to a request for confirmation about an outage there before this article went to press.

To offer some historical perspective, hot-rolled has nearly tripled from a low of $440/ton ($22/cwt) in mid-August last year. The previous high recorded by SMU in July 2008, before the financial crisis, was $1,070/ton ($53.50/cwt). That’s equivalent to about $1,280/ton ($64/cwt) in current dollars adjusted for inflation.

SMU pegged the average cold-rolled steel price in mid-March at $1,450/ton ($72.50/cwt), more than double the low of $635/ton ($31.75/cwt) last August. The former record high reported by SMU for cold-rolled was $1,150/ton ($57.50/cwt) in July 2008.Like cold-rolled, galvanized steel also reached a record price early last month of $1,450/ton ($72.50/cwt). That’s up from the pandemic-driven low of $630/ton ($31.50/cwt) last July and far exceeds the previous high of $1,020/ton ($51/cwt) in June 2008.

SMU’s average price for steel plate in mid-March was $1,120/ton ($56.00/cwt). Plate prices dropped from around $1,000/ton ($50/cwt) in January 2019 to a low of $590/ton ($29.50/cwt) in August 2020. While it has recovered sharply like the flat-rolled products, the price of plate remains well below the price of sheet, which is highly unusual. That speaks to the sketchy health of the major plate markets (such as energy and heavy equipment) when compared the stronger flat-rolled markets (automotive and appliance).