Posted on 04 Dec 2020
Sentiment was very firm in the US steel market heading into December, according to the monthly US steel sentiment survey by S&P Global Platts, with all participants expecting higher steel and raw material prices in coming weeks, and most expecting increased production and declining inventory levels.
In the survey of US producers, distributors, traders and end-customers, conducted in the run-up to December, the index for steel price development was at 86.8, indicating broad expectations of an increase (an index of 50 indicates stability).
The producer, trader, and end user sectors were all equally most bullish, with the price development index among the three groups at 87.5, while raw material suppliers, brokers, and distributors were slightly less bullish at 83.33.
"Low supply, demand very strong, no imports to backstop like 2018," one trader said. "Prices have to keep rising."
Participants expected steel production to see an uptick as well, with the index including all groups at 69.7. Notably, end users and mills were the most bullish at 87.5 and 75, respectively. The production change index for the trader group came in at 68.75, and 58.3 for raw material suppliers, brokers and distributors.
Once again, as in November's survey, the raw materials index was the most bullish indicator at 88.75, with mills, traders and end-user segment indices indicating 81.25, 94.4 and 87.5, respectively.
"Supply for metallic raw materials is becoming extremely tight and will reflect in pricing for December," a second trader said. "The question is end customer requirements and will export continue to strengthen?"
Another trader said he expected the strength in the scrap market to continue into January.
The index for inventory level development was bearish for December at 39.5, suggesting stock levels would decline, while the end user inventory development index was the most bearish at 25. The mills, suppliers, brokers, and distributors index was in the low 30's, while the traders' inventory expectation response level was 46.9.
"Low inventories [and] increasing demand will lead to shortages on longs and higher prices," a long product producer respondent said, adding the market could approach a point where it would once again be attractive for buyers to seek import options.
Source:Platts
