By CRU Senior Analysts Erik Hedborg and Andrew Gadd
CRU’s research shows that the dam breach in Brazil, as well as the recent fire at Vale’s blending terminal in Malaysia, will have limited impact on the availability of high-grade fines. Iron ore prices of all different grades have increased since the dam breach, but the premium for high-grade iron ore over the 62% Fe benchmark price has actually decreased since the accident. This confirms our view that Vale’s high-grade fines supply to the market is relatively unaffected by the dam breach. However, it is the supply of pellets and medium-grade fines with higher impurity levels that will be affected the most.
Manufacturers in New York State report that business activity improved in February. The general business index of The Empire State Manufacturing survey rose five points to post 8.8 after falling the previous two months.
A strong economy and record profits are stimulating expansion in the U.S. steel industry. Often crediting President Trump for “leveling the playing field” with steel imports, companies like U.S. Steel and Nucor are taking the opportunity to reinvest their windfall in new and upgraded facilities.
Steel prices are trying to rise following the $40 per ton increase announced by the mills last month, but how fast, how far and for how long remains the subject of much speculation. Comments from SMU’s market canvas this week show buyers with two basic views: Either, “Mills are very firm on pricing. We’ve got nowhere to go but up.” Or, “I expect prices to be stable for a few weeks and then continue to drop.”
Editor’s note: The following is excerpted from the Feb. 13 CRU Steel Sheet Monitor; editing by CRU Principal Analyst Josh Spoores.
In our Steel Sheet Products Monitor last month, we asked if the market was near an inflection point. That report was published on the sixth working day of the year and, at that point, global sheet prices were consistently lower in all regions from December. It is now five weeks later, and current data suggests that most markets have reached a price bottom, or they are about to.