US steel prices tumble in February

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WSJ – Domestic steelmakers in the US slashed prices in February to cope with a flood of imports juiced by the strong dollar, a move that will pressure their profit margins and reduce costs for buyers of steel, including auto makers.

According to figures released Wednesday by the American Iron and Steel Institute. imports rose 33% in January compared with the year before, reaching 3.85 million tons, compared with 2.9 million tonnes a year earlier. The jump in imports comes as oil and gas drillers cancel orders for steel pipe, underscoring the resilience of overall US demand compared with other markets.

Ms Lisa Goldenberg, president of Delaware Steel Company said that “Now, the muscular currency is making foreign steel less expensive by comparison and is fighting against us in a very big way.”

The imports are rising off an already high 2014 base. Imports of steel from Russia jumped 96% in 2014 from a year earlier, to 6.5 million tonnes, while imports from China rose 69% to 2.8 million tonnes.

To stem that tide, steelmakers with major US operations such as ArcelorMittal, US Steel Corporation and Nucor Corporation have cut prices in the past few weeks. The benchmark hot rolled coil index is down 17% since the start of the year, to around USD 500 per tonne, its lowest level since August 2009.

Mr Stuart Barnett, president of Highland Park, Ill. based steel distributor Barsteel Corporation said that imports are now between 15% and 20% of his product mix, from a usual level of about 5%. Barsteel annually ships around 85,000 tonnes of steel to manufacturers, auto makers and mining companies. I like to buy more steel from US suppliers and that he still relies on the domestic industry for higher tech steels, like for seat belt clips and bumpers, in the US.”

Mr Barry Bernsten, managing partner at American Steel Industries LLC said that “Suddenly you can buy domestic American hot rolled coil for the same price you can buy it from India, Egypt or Turkey. Overall, foreign steel has been consistently available at a discount.”