From The Editor

World Steel Dynamics is projecting a significant decline in the hot-rolled coil price over the course of the third quarter. Peter Marcus, managing partner of the firm, told attendees at last week’s Steel Success Strategies meeting the price of HRC could fall to about $750 per ton by October, compared with the $980 figure where it was sitting at June’s end.

Since the 232 tariffs were announced in the first quarter, the domestic price of hot-rolled coil has increased from around $700 to nearly $1,000 per ton. However, the world export price has not kept pace, increasing less than $100 per ton to $590 per ton entering July.

While uncertainty over the tariffs has been keeping imports out of U.S. ports recently, that condition won’t last. At $600 per ton for global HRC, a 25 percent tariff takes the world price up to $750. A $50 add-on to get the steel to the port pushes the cost up to $800 per ton. That still leaves the export price almost $200 less per ton than the current U.S. price.

Such a gap will lead to “an avalanche of foreign steel entering country, probably around September,” Marcus said. The resulting increase in supply will push the domestic price down to the $700 range.

Even still, Marcus says, it's not doom and gloom for the domestic producers. The price would remain well above the mill’s operating costs. Thus, mills will continue to be profitable, just at lower margins.

For more from this year’s AMM/WSD Steel Success Strategies coverage, see the August issue of Metal Center News.