United States hot-rolled coil prices have remained steady for the third week in a row. There is market consensus that prices are near a bottom.
It looks like prices peaked July and August. Presently, lead times are averaging three to four weeks. End-demand remains brisk, which means service centers must remain in the market.
The AMM reports, “Fears of a possible strike or lockout at U.S. Steel or ArcelorMittal USA might also be bolstering prices, some sources said. But most said the prospects of a labor-related disruption were unlikely.”
Also, solid support for prices should result from limited future imports. Fourth-quarter imports will likely drop, because of the doubling of tariffs on Turkish steel from 25% to 50%.
Higher duties will make Turkish imports too expensive for US buyers, in comparison to North American mills. In addition, some banks are cautious of financing steel imports, because of the possibility of abrupt Section 232 policy changes.
As a result of the doubling of Turkish tariffs, some US imports have been diverted to other markets like Canada or Mexico. But other imports were too far in transit to divert.
Because of Section 232, for US importers to divert or re-export the steel to other markets, US prices must be 25% higher than the rest of the world. But logistics, time and duties make even 25% margins risky.
Downbeat market participants continue to express concern about the impact of high US steel prices on domestic manufacturing. But the concern seems misguided considering the US economy is booming.
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