Steel sheet prices already reflect slower growth in the US

US economic growth may slow to 2.2% this year from 2.9% in 2018, reflecting weaker growth in private investment spending in non-residential premises, according to a report by S&P Global.

Hot rolled steel prices in the United States have already declined 13.2% to $ 695 in Q1 2019 from $ 801 in Q1 2018.

US GDP and domestic steel prices have long been linked. Last year, when GDP grew 2.9%, the price of hot rolled steel coil produced in the United States averaged $ 833 per piece, the highest annual average price since 2008.

“Slowing global growth, trade tensions, and fiscal stimulus containment weakened investor confidence as market prices declined by December 2019,” said Beth Ann Bovino, chief economist at S&P Global in the United States.

“Nonetheless, the household sector, which accounts for two-thirds of total economic output, remains healthy, supporting a still stable domestic economy.” Bovino added: “While we currently do not expect rate hikes this year, if recent weakness is only a Soft Spot and not quicksand, the Fed could surprise the markets and decide to sharpen its monetary instruments later this year, with a rate hike just for the holidays ".

However, S&P Global continues to assess the overall chances of a 12-month recession at the 20-25% level set in February, "although we recognize that recent financial market turmoil adds hurdles to this estimate," Bovino said. ...

Typically, when GDP grows by about 3% or more, the steel sector is doing well as well.