Steel prices will rise well in 2017

Since its peak in summer, global flat steel prices have dropped slightly. Nevertheless, there is some reason to believe that the price is ready to rise. At the same time, prices in China, the world's largest consumer and producer of steel, are now at their highest level in two years, while prices in the United States have fallen. As a result, world prices that have passed arbitration have reached normal levels.

Cold rolled coils are still $ 162 more expensive in the US than in China, but domestic hot rolled coil prices are only $ 43 higher than in China. In conclusion, higher prices internationally will make it much easier for US factories to justify higher prices.

Chinese demand for infrastructure and construction has been robust this year. Whereas the automotive sector has become a key industry for steel demand. The Caixin PMI for October rose to 51.2, the highest level since July 2014. Auto sales in China increased 27% year-on-year in September, reaching the highest rate this year.

Donald Trump's victories suggest changes in the US steel industry, the essence of which is still unknown. What is clear is that the newly elected president has made trade, manufacturing and the steel industry a cornerstone of his agenda.

US steel stocks rallied last week as investors hope Trump will stimulate domestic infrastructure that could fuel a boom in steel demand. In addition, he announced that he would institute additional measures to protect domestic steel producers.

Another reason for expecting an increase in steel prices is the continuing strengthening of prices for all metals. We are seeing powerful movements in all directions. Even copper, a metal whose foundations do not look attractive, has recently risen by about 20%. Bullish sentiment in base metals is another reason for the rise in steel prices.