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A fragile balance in the metals market.


The month of July is over and everything we expected has happened. The Fed announced a 2.75% increase in interest rates (although I personally expected 3%). Leading central banks of the world also announced the tightening of monetary policy. Inflation in many countries has exceeded all targets and, despite the efforts of governments and banks, continues to grow. The choice of instruments to combat inflation is not so great.

But there is good news as analysts wonder how much the next round of rate hikes will be. Metallurgists were able to contain the fall in prices for their products in July and even managed to raise them a little. The price has stabilized, which cannot be said about the scrap metal market. By the end of the month, pressure on prices from metallurgists intensified, and prices on the world's leading markets could not rise above $400. This is a wake up call for me and we need to be very careful. So it's too early to talk about the recovery of the market. Now many simply minimally replenish their stocks with only the most necessary. At the moment there is too much uncertainty, the whole market is still waiting. There are still large stocks in warehouses that are not sold out.

Now it is necessary to monitor the economic situation in the Asian market, since the situation is not very simple and how the authorities will react to this, what position they will take, is still unknown.

In my opinion, August will be calmer than June, metallurgists will still be able to raise prices in order to provide themselves with a safety cushion for the month of September. As for scrap metal, we still need to see what will happen in the next two weeks, and then we can draw a conclusion. How well will the metallurgists behave and whether they will be able to keep the price level that they have today. For now, this is just a breather before the most interesting denouement that I expect.

My price expectations:

European market for hot-rolled products – $820–$860
The Asian market for hot-rolled steel is $620–$660.
Hot-rolled coil in the US market - $880-920.

(prices for all buyers are individual and depend on the volume of purchase and assortment and can be within $ 20-40 of the base prices)

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