The Raw Steels Monthly Metals Index (MMI) steel prices for the month remained consolidated, with a modest 1.78% decline from November to December.
Mills Keep a Lid on Production, Steel Prices
After a disappointing Q3 for U.S. flat rolled steel prices, mills appeared to take capacity discipline seriously in the final months of 2024. The end of scheduled maintenance outages saw no meaningful increase in output, which experienced only a moderate increase from its early October low. As of the first week of December, domestic mills held the capacity utilization rate for raw steel production at 75.1%, down from its 2024 peak in August at 80.2%.
While constrained at the moment, mills could begin ramping up output should demand see a meaningful pickup in early 2024. In its Q3 financial earnings calls, Cliffs appeared optimistic about the coming year. CEO Lourenco Goncalves told investors, “I am anticipating a very strong Q1, and I believe that we are going to have volumes back to normal by the first half of next year.”
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Mill Lead Times Suggest No Steel Price Rebound Yet
It is worth noting that confidence among mills does not necessarily correlate to reality. In the same call, Goncalves also stated, “Customers will start to place orders [after the elections], and things will start to heat up fast.” So far, that doesn’t seem to be the case. As of late November, mill lead times suggest slow market conditions. HRC lead times hovered around the 5-week mark, slightly below their historical average. Meanwhile, lead times for CRC, HDG, and plate trended shorter last month, suggesting an increasingly oversupplied market.
Lead times appeared slightly longer by the start of December, albeit not by enough to confirm a rebound. Buyers also noted that mills remained flexible on steel pricing. Q1 typically witnesses a seasonal pickup in demand following a normal pattern of destocking efforts during the final quarter.
To what extent that pickup occurs will likely determine whether mills will be able to bring more capacity back online. Expectations for increased trade barriers will offer support to the domestic market, although it is impossible to know what will come to fruition and when.
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Steel Prices to Leave 2024 on a Low Note
Despite volatility across a number of markets, 2024 proved a lackluster year for most industrial metals. Demand conditions largely underwhelmed expectations, leaving only those markets experiencing supply constraints, such as zinc and tin, to see a meaningful increase from the start of the year.
In fact, both zinc and tin appear poised to close the year around 15% higher than where they started. This contrasts sharply with the entire steel category, which seems prepared to close the year down significantly. As of December 6, the MetalMiner HRC price index stood at $683, translating to a nearly 37% decline from where they closed 2023 at $1,077. This is comparable to respective 29%, 33% and 36% decreases in CRC, HDG and plate prices.
- Q1: Mills lost control over the price trend by the end of 2023, followed by almost entirely uninterrupted declines in steel prices. Q1 saw the bulk of 2024’s price declines, with HRC prices falling nearly 26% during the first three months of the year.
- Q2: By the close of Q1, mills warned markets of impending maintenance outages. After a bearish first quarter, HRC prices responded with a short-lived $26/st increase at the start of April before the downtrend resumed. Declines appeared more moderate from the previous quarter as prices fell almost 11% from the close of March.
- Q3: By July, declines began to stagnate. Prices found a bottom for the year on July 26 at $655/st. Starting in September, mills once again commenced maintenance outages. However, this time, the cuts appeared significant enough to shift the trend from down to sideways. While still down quarter over quarter, HRC prices fell by just under 2% during Q3, signaling the end of a roughly 7-month downtrend.
- Q4: While a few weeks remain until the new year, the steel price trend remains decidedly sideways. As of December 6, prices have fallen 2.4% from the end of Q3. Unless HRC prices rise in the final weeks, Q3 will prove the best-performing quarter of 2024.
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- Comex HRC three month futures saw the largest and only increase of the overall index, with a 4.64% rise to $790 per short ton as of December 1.
- Meanwhile, Chinese steel slab prices fell 4.6% to $520 per metric ton.
- LME primary three month steel scrap prices fell 8.33% to $352 per metric ton.
- Chinese coking coal prices witnessed an 11.19% decline to $194 per metric ton.
- Standard Korean steel prices saw the largest drop, falling 13.13% to $157 per metric ton.
