Steel prices in the US will rise, and the economy will be "fantastic"

The second half of 2019 will be “fantastic” for US steel prices, Cleveland-Cliffs CEO Gonsalves said in an interview.

A 21% decrease in the price of hot rolled steel produced in the United States since the beginning of 2019 (to $ 582.75 from $ 740 per tonne) has affected companies throughout the steel supply chain for better or worse. But iron ore company CEO Cleveland Cliffs is seeing a big upturn.

Make no mistake: Goncalves wants to see higher steel prices because the HRC price of steel - along with IODEX and Atlantic pellets reference prices - are the three drivers behind the Cleveland Cliffs iron ore contracts to supply steel mill pellets.

Gonsalves explained that the HRC price in the US is mainly influenced by the purchasing behavior of service centers and the structure of scrap purchases at mini-factories.

“If mini-mills stop buying scrap and allow scrap prices to fall, and at the same time service centers go on strike, hot rolled steel prices will drop,” Gonsalves said, adding that this is part of normal, seasonal purchasing behavior.

“This happens every year in June /July - when people are on vacation and the automotive sector is switching to new car models; it happens every year, ”he said. "The only difference this year is that it started earlier because of US President Donald Trump and all this commerce buzz."

In his opinion, service centers will have to start buying in the near future, because now "they have empty warehouses."