MArket Fragility: Import & Domestic Supply Tightens
- Import prices are on the rise as availability becomes constrained.
- Without supply from Russia and Ukraine, Europe needs to look elsewhere for steel.
- U.S. and European manufacturers will begin competing with each other for steel imports as supply redistributes.
- Cleveland Cliffs idled a blast furnace at Indian Harbor, restricting supply, even though steel demand is increasing.
- Domestic suppliers have announced flat rolled increases by a minimum of $275/t.
- Rising input prices (scrap, iron ore, zinc, coking coal) are driving spot prices higher.
FREIGHT COSTS EXPECTED TO RISE
- Recent fuel price increases have yet to appear in freight costs. Typically, there is a lag time of several weeks for freight prices to adjust to changes in fuel costs. These adjustments have not occurred.
- Oil prices have recently softened on the hopes that Gulf countries could boost production and COVID lockdowns across China will reduce global demand; however, oil remains at a historical high. Oil is trading at +43% a barrel compared to March 2021.
This material, information and analyses (the “Content”) may include certain statements, estimates and projections prepared with respect to, among other things, historical data and anticipated performance. Content may reflect various assumptions by Majestic Steel USA, Inc. concerning anticipated results that are inherently subject to significant economic, competitive and other uncertainties and contingencies and have been included for illustrative purposes. Content is provided AS-IS.