US steelmakers announce second round of price increases

American steelmakers have raised their list prices in the past few days. This follows an initial announcement in late April /early May when US mills tried to draw a line to stem the recent drop in steel sales prices. Measures to block the coronavirus have led to a sharp decline in demand. Local steel companies cut production and the capacity utilization rate fell to nearly 50 percent.

So far, buyers of rolled metal have accepted part of the first proposal to upgrade the list, but prices remain below those that were fixed in mid-April. Scrap metal costs have started to rise and this may stimulate an upward trend in the flat steel market.

Q4 Recovery Expectations
A recovery in the U.S. steel market is expected by the fourth quarter of 2020, but this will depend on how quickly the consumer market responds to the easing of Covid-19 restrictions. The automotive, oil and gas, agricultural and construction sectors have been hit hard since March. However, there were no positive signs. The US government recently announced it intends to accelerate capital expenditure projects to spur growth in the manufacturing and construction segments. This could pull the expected recovery forward into the third quarter.

Recently, many car factories have tentatively begun work. This will have a positive impact on the steel industry. However, the steel market is expected to rise slowly due to lower consumer demand. Consequently, many obstacles remain for US steel prices.

Companies operating after the lockdown are forced to apply revised health and safety procedures. This will require structural changes in operations and will affect how companies do business both internally and externally.

Positive sentiment in Canada despite Covid-19
Although the current pandemic has negatively affected the Canadian steel sector, there is a more positive sentiment among market participants compared to their southern neighbors. The weak Canadian dollar and high backlog rates have partially protected domestic prices, especially for long goods. However, over the past month, there was a decline in the cost of selling steel due to the threat of imports from both US and Asian suppliers. Reports show that US factories have been aggressive with sales to Canada to fill their order books.