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Q3 2020 Steel Report Overview

Global steel commodities saw significant decline in Q2 ‘20 due to COVID, however global HR was most negatively affected due to the Auto production shutdown in March and May. Even as global markets have started to reopen, the only significant market recovery observed thus far has been in China, while the recovery in US prices lost steam in July and European prices have yet to show any signs of recovery at all.

• US HR prices ended in July at multi-year lows ~$520/MT as more states are reversing or slowing reopening plans. Prices are expected to continue trending downwards, but could recover back to current levels by the end of the year.
• EU HR prices fell 14% QoQ in July to 420 EUR/MT, erasing all progress made in Q1, the first significant rally in EU prices in the last two years. Although no recovery has been observed with reopening efforts in EU so far, those reopening efforts remain unhindered as they have been in the US, suggesting some recovery could be imminent.
• China HR prices ticked upwards in Q2 2020 and reached ~$538/MT in July as one of the first markets to begin reopening following COVID lock-downs.
• Scrap prices in the US continued to rise amid the pandemic and production shutdowns, up 6% QoQ, while Chinese and EU prices turned downwards, bottoming out in April/May; Chinese scrap has subsequently risen back to pre-COVID levels while EU scrap remains at it’s floor; Iron Ore prices displayed a strong upward trend in Q2 2020, as the pandemic disrupted Brazil’s ability to make shipments globally and currently trades at ~$100/MT.

As always, we look forward to hearing your questions and comments

The Steel Team at Applied Value

Global Steel prices saw a final upward push in January before the impact of COVID-19 turned the market downwards. Now in April, most steel prices have fallen between 4 and 16% since January. The most significant downward movement occurred first in China and then in the US markets.

• The US HR price increases that began in Oct 2019 have nearly been erased in early 2020, as prices dropped 16% in Q1, starting April at ~$560/MT.
• EU HR prices surged 14% in Q1 2020, the first significant upward movement in pricing in over two years as buyers looked to increase their stocks during a panic buy caused by news that the Italian mill Ilva would potentially close and cause a significant supply shortage. The potential closure stems from ongoing negotiations between Arcelor and the Italian government rather than COVID-19. After peaking in March, prices have started falling in line with the rest of the market as demand and production have fallen off.
• China’s HR price plummeted ~15% Q-o-Q as it became the first country to experience the impact of COVID-19. Prices have yet to rebound, although demand and production have recovered nearly back to pre-COVID levels.
• Scrap prices rose 14% in the US, and 3% in Europe, but fell -3% China, while Iron Ore prices softened -1% over the same period. Coking Coal prices surged 17% in Q1, due to supply concerns in China/Australia.

As always, we look forward to hearing your questions and comments

The Steel Team at Applied Value

Steel prices in the US and China rebounded slightly in Q4 2019, rising off of multi-year lows in both regions. In contrast, European domestic prices fell even further as manufacturing activity continued to decline and crippled demand. European domestic flat steel prices are below that of both the US and China.

• US HR prices dipped early in Q4, falling to new historic lows of ~$541/MT in October before aggressively rebounding +16% to end the year at ~$625/MT.
•  EU HR prices continued downwards, falling 9% QoQ after nearly 20+ straight months of falling, despite upward movements in both the US and China.
• China flat prices slightly increased at 3% in Q4 2019, but the trend is unlikely to last as increased domestic production increases supply surplus.
• Scrap prices moved strongly upwards across the board with Q4 prices rising 6%, 6%, and 14% in the US, EU and China, respectively. The decline of Iron Ore prices has slowed with Q4 prices falling just 2%, although prices still remain 17% above levels from the same period last year.

As always, we look forward to hearing your questions and comments.
The Steel Team at Applied Value