Steel Products Prices North America

CRU Forecast: Steel Prices to Moderate in 2019

September 4, 2018

The Trump administration tariffs have had the expected effect on steel imports and steel pricing this year, but prices for hot rolled coil and plate could moderate a bit next year as economic growth slows and the cost of steelmaking raw materials begins to decline, forecasts Josh Spoores, principal steel analyst for the CRU Group.

Speaking at Steel Market Update’s steel summit on Aug. 29 in Atlanta, Spoores noted that hot rolled coil and plate prices have risen more than 40 percent since the end of 2017 due to a tighter supply-demand balance, as well as the 25 percent Section 232 tariff on steel imports. For hot rolled coil, Section 232 has created a historic premium of U.S. prices over domestic prices in Europe and China. U.S. plate prices are also at a premium, but not as excessive as HRC, Spoores said.

Import arrivals for both sheet and plate are down versus the peak 2015 levels. Sheet imports have fallen by 15 percent year to date, while cut-length plate arrivals are down 21 percent. “The storyline is that imports are not coming in at the rate they would be expected to [given the high steel prices] simply because of 232,” Spoores said. “In terms of plate, there is just an absence of imports.”

Service center inventories of sheet and plate are limited. Service center shipments of steel sheet are up 4.3 percent and plate shipments are up 11.3 percent year to date, but a seasonal slowdown is coming, Spoores said.

Next year, strong U.S. industrial growth will give way to slower, yet still positive growth, he predicts. “Looking at industrial production, we are at or have passed peak economic growth. Growth will continue next year but at a slower rate. As that continues, it will affect demand for steel sheet and plate.”

Current steel prices are more affected by supply and demand, along with the tariffs. In 12-18 months, steelmaking costs will fall back to 2017 levels, which may provide some room for finished steel prices to fall, Spoores said.

While CRU expects U.S. prices to ease over the next several months, they will remain substantially higher than their five- and 10-year averages. CRU forecasts HR coil prices in 2019 at around $750 per ton and plate at around $850 per ton.