US steel market sentiment grows more constructive for June: survey

Sentiment on finished steel and raw material prices improved in June compared to May, according to a Platts survey June 12, as market participants saw domestic mills raise spot offers for finished steel and accept flat pricing for June ferrous scrap following US President Donald Trump's announcement doubling tariffs on steel imports to 50%.

However, sources were wary of any uptick in prices against a backdrop of weakened demand and ample domestic supply, leading to potential price uncertainty.

Of the surveyed US producers, distributors, traders and end-users, 56.3% said finished steel prices would rise in June, while zero participants expected higher prices in May. All survey respondents who expected June price increases indicated gains of less than 5%. Of the whole, 31.3% said June prices would move sideways, up from 19% surveyed for May prices. The share of those who expected June prices to trend downward was 12.5%, down sharply from 81% in May.

Platts, part of S&P Global Energy, last assessed US hot-rolled coil prices at $865/st ex-works June 11, up $5 from the previous assessment and $25 since May 29 amid US President Trump's May 30 announcement doubling tariffs on steel imports to 50%.

Domestic spot offer levels have trended higher since the start of the month. Recent repeatable offer levels have been heard in a range of $870-$900/st EXW from Midwest mills, with lead times indicated at three to four weeks and some producers citing an uptick in ordering following the tariff hike news.

However, concerns prevailed over whether the recent uptick in prices was solely brought on by tariff increases as opposed to real improvements in end-user consumption.

"Everyone wants to push numbers up because of tariffs," a trader said. The source said there wasn't a lack of spot availability in the market nor strong demand, which he said would keep buyers mostly on the sidelines and any price increases limited.

"Mill lead times are still short to average, and capacity is still plentiful," a Midwest service center source said, adding that mill delivery time frames for HRC were in the first week of July. Other market sources said some mills were still working through June spot tons.

Other sources acknowledged that flat-rolled finished steel prices would likely trend up in the near term on the back of tariff increases, but they were concerned about pricing uncertainty for steel in inventory.

"It [tariffs] is only beneficial for US steel mills who were already quite profitable," a distributor said. "That may eventually be good for everyone in the industry who can survive long-term, but it will be really painful in the short term for everyone in the US who makes, sells, or buys anything made of steel; our stalled backlog is suddenly toxic and even more uncertain."

In terms of demand, 56.3% of participants said consumption levels would be unchanged in June, compared to 42.9% who held the same outlook for May demand. The share of those who expected demand to diminish in June was 31.3%, compared to 52.4% in May. Meanwhile, 12.5% of respondents expected improvements to demand of less than 5%, compared to 4.8% in May.

On inventory, most survey participants said inventory levels would either be flat or decrease in June. Within that group, 43.8% said supply would be unchanged in June, compared to 61.9% who held the same outlook in May. The share of those who said inventory would decrease in June was at 37.5%, rising sharply from 9.5% surveyed in May, while 18.8% said inventory would increase in June, down from the 28.6% surveyed in May.

When asked about production, 37.5% of participants expected flat production rates for June, down from 71.4% who said the same in May. An identical 37.5% said production levels would increase in June, up from 9.5% in May. Of the whole, 25% said production would decrease in June, compared to 19% surveyed in May.

On raw materials, most participants, or 62.5%, said prices would steady in June, compared to 23.8% who held the same outlook in May. The share of those who said June prices would trend higher was 25%, while none of those surveyed in May said prices would increase. Of the whole, 12.5% said June raw material prices would lower, down sharply from 76.2% surveyed in May.

The daily Platts TSI US Midwest shredded scrap index was last assessed at $380/lt on a delivered basis June 11, unchanged from June 10. Platts last assessed No. 1 busheling prices at $425/lt on both a delivered Midwest and delivered Southeast basis June 11, unchanged from the previous assessment.

June-delivered scrap prices were flat from May levels, as sentiment on HRC prices turned around following the tariff increase announcement. The slight uptick in HRC prices led US mills to accept flat pricing for June scrap.