Why Steel Prices Went Up Last Month - And Why They May Not Hold

The monthly Raw Steels MMI® hit 81 in July, an increase of 1.3 percent from 80 in June – and it all comes down to scrap and oil prices.


The Raw Steels price index was the only index within our MMI series that saw a price increase. This was the result of relative scrap price support, higher China slab prices, higher LME billet prices (slightly) and higher HRC futures prices.

“Though the Raw Steels MMI® performed better than all of the other MMI indexes this month, we remain somewhat skittish in terms of drawing any conclusions about lasting steel price support,” said Lisa Reisman, managing editor of MetalMiner. “Many of the steel market fundamentals remain weak, however, with oil prices and scrap prices having a peculiar relationship; as our friends at Gerdau Market Update have noted, scrap prices tend to rise as oil prices rise.”

And it appears as though oil prices may rise.

Scrap price support may serve as the lynchpin to the current run-up in steel prices, but by the looks of other metals markets, we remain somewhat skeptical.

Key Steel Index Price Drivers
The spot price of the U.S. HRC futures contract rose 9.3 percent over the past month to $632.00 per short ton. After rising 6.7 percent, the 3-month price of steel billet finished the month at $160.00 per metric ton on the LME. At $620.00, the U.S. HRC futures contract 3-month price finished the month up 3.3 percent.

Chinese slab prices increased by 9.2 percent this month.

Korean steel scrap finished the month even. Last month was consistent for U.S. shredded scrap as well. Chinese coking coal fell a slight 2.1 percent over the past month. Chinese billet and Korean pig iron both held pat last month.

The Raw Steels MMI® collects and weights 13 global steel and raw material price points to provide a unique view into global steel price trends over a 30-day period.