Although the index started to rebound in early June, the Raw Steels Monthly Metals Index (MMI) remained bearish in May, falling 3.27% to its lowest level since November . Amid new tariffs announcements from the Trump Administration, U.S. buyers have their eyes fixed on steel prices, developments which MetalMiner’s weekly newsletter recently covered.
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HRC Futures Jump, HRC Spot Prices Slide
While it remains to be seen whether futures can hold onto their gains, the early June tariff announcement, which doubled Section 232 steel duties from 25% to 50%, saw futures jump significantly. Rebounding from a modest decline throughout May, futures rose nearly 14% in the first half of June. This saw the market shift to a narrow contango after roughly three months in backwardation, with futures now hovering above spot prices.
While tariffs saw futures appreciate, spot prices remain somewhat stable with a downside bias. Unlike the first 25% announcement issued earlier this year, its doubling caught markets by surprise. This gave buyers no window of opportunity to refill stocks before tariffs went into effect. As a result, the tariff jump offered little momentum to spot prices as buyers had no meaningful incentive to jump back into the market.
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Trade Agreements Start to Roll In
Buyers appear largely cautious as the market approaches the second half of . While the expressed goal of Trump’s tariff hikes has been to support domestic producers, they are mainly being used as a bargaining chip as the U.S. works to forge new trade agreements. As countries make progress in their negotiations in the coming months, the current tariff landscape is likely to see further changes.
Notably, the UK secured at least a temporary exemption from the additional 25% steel tariff hike. This move helped place a cap on HRC futures in June. As of June 11, futures stood roughly $60/st short of where they peaked in March as investors appeared to price in the prospect of future trade deals. Meanwhile, Mexico has also reportedly neared a deal with the U.S.
Although it has yet to become official, this will likely result in a quota system for steel imports, akin to those that emerged with certain countries under the Biden administration. In this arrangement, a certain volume of Mexican steel will likely be allowed in free of duties, and anything above that quota will be subject to a tariff.
Import Volumes Dropped
Both of these deals will offer relief to the domestic market now grappling with a sharp drop in imports. By April, data from the Department of Commerce showed combined HRC, CRC and HDG import volumes dropped to below where they stood at their weakest point in .
While the slowdown in imports has started to cause a slide in U.S. supply, the drop thus far appears to be somewhat modest. Additionally, the Q1 buying rush significantly lifted inventories, leaving a meaningful buffer as the market awaits future trade deals.
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What’s Next For Steel Prices?
For now, steelmakers have been quick to capitalize on tariff news, with Nucor recently increasing its consumer spot price. While lower import supply may help firm spot prices in the short term, the plateau is likely to prove temporary.
Overall, tariffs will probably create higher bottom U.S. steel prices, but do not necessarily mean prices have found that bottom yet. Future trade agreements will likely see more tariff relief as it relates to steel, which leaves little incentive for buyers to build inventories at this time. Without buying activity, mills will have trouble maintaining upside momentum to prices.
As outlined above, the U.S. market remains well-supplied at the moment, both because of the Q1 buying rush and higher output levels from U.S. mills. From a seasonal perspective, the summer months typically experience a slowdown in activity. Combined with well-stocked inventories, this adds another drag to the steel price trend.
With the U.S. manufacturing sector continuing to trend in contractionary territory, it remains difficult to support a bullish outlook at this time. Instead, the many headwinds suggest the risk for U.S. steel prices remains to the downside.
Biggest Moves for Raw Material and Steel Prices
- Korean steel scrap prices witnessed the largest increase of the overall index, with a 17.63% jump to $193 per metric ton as of June 1.
- Meanwhile, HRC three-month futures moved sideways, sliding by a modest 1.75% to $788 per short ton.
- Chinese HRC prices fell by 3.07% to $408 per short ton.
- U.S. shredded scrap steel prices experienced a 10% drop to $378 per short ton.
- Chinese coking coal prices declined by 19.48% to $107 per metric ton.
Planning a construction project involves many important decisions, and one of the most crucial is choosing the right materials. Steel is popular for its strength and versatility, but costs can add up quickly. Saving on steel doesn’t mean compromising on quality; it’s about making smart choices and knowing where to cut costs without sacrificing integrity.
Understanding Different Types of Steel
Benefits of Choosing the Right Steel Grade
Choosing the appropriate steel grade for your construction project is essential. Different grades offer various strengths and properties that can significantly affect your build’s performance and cost. By selecting the right grade, you ensure the steel meets your specific needs without overpaying for unnecessary features.
For instance, high-strength steel may be more expensive, but it allows for thinner and lighter sections, reducing overall material costs. On the other hand, using a lower grade where appropriate can save money without compromising safety or durability. Additionally, some steel grades are easier to weld or fabricate, which can reduce labour costs and construction time.
Investing time to understand these options and making informed decisions can lead to substantial savings. A well-chosen steel grade optimises both performance and cost efficiency, ensuring your budget is well spent.
Common Types of Steel Used in Construction
Several steel types are commonly used in construction, each suited for different applications.
1. Carbon Steel: Widely used for its strength and versatility, carbon steel is suitable for structural beams, columns, and heavy-duty frames. It’s affordable and available in varying grades to match different needs.
2. Alloy Steel: This type includes elements like chromium, manganese, and nickel to enhance properties like strength, toughness, and resistance to wear. Alloy steel is often used in areas requiring high durability, such as bridges and high-rise buildings.
3. Stainless Steel: Known for its corrosion resistance, stainless steel is ideal for areas exposed to harsh weather or moisture, like exterior fascias and kitchen fixtures. While more expensive, its longevity and low maintenance can justify the investment.
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4. Tool Steel: Used for manufacturing tools and machine parts, tool steel is highly durable and heat-resistant. It’s generally not used for structural purposes but is essential for the construction process.
By understanding these types and their applications, you can choose the most appropriate and cost-effective steel for your project.
Tips for Buying Steel in Bulk
Advantages of Bulk Purchasing
Buying steel in bulk can lead to significant cost savings. Bulk purchasing usually comes with volume discounts, reducing the price per unit compared to smaller orders. These discounts become more substantial as the order size increases, making it an excellent option for large-scale projects.
Another advantage of bulk buying is the reduction in transportation costs. Ordering large quantities at once means fewer deliveries, which can lower the costs associated with shipping and handling. This is especially beneficial for construction sites located far from suppliers, where transportation expenses can quickly add up.
Purchasing in bulk also helps ensure you have a consistent supply of steel throughout your project. This continuity avoids delays due to waiting for additional materials, helping you stick to your timeline and avoid the extra costs associated with project overruns.
Negotiating with Suppliers
Negotiating with suppliers is key to getting the best prices on steel. Start by researching market prices to understand the going rates, and use this information during negotiations. Being well-informed puts you in a stronger position to bargain for better deals.
Building a good relationship with your supplier can also be beneficial. Reliable suppliers might offer better prices or more favourable payment terms to regular customers. They might provide additional services like more flexible delivery schedules, which can further reduce your costs.
Don’t hesitate to ask for discounts, especially if you are purchasing in large quantities. Inquire about any available promotions or deals that could apply to your order. By being proactive and negotiating effectively, you can lower your costs and ensure you’re getting the best value for your investment.
Smart Sourcing and Timing
Finding Reliable Steel Suppliers
Finding a reliable steel supplier is crucial for getting the best deals and ensuring quality. Begin by researching and comparing different suppliers. Look for reviews and ask for recommendations from other builders to get an idea of which suppliers are dependable.
A good supplier will provide high-quality steel and offer excellent customer service. They should be willing to answer questions, provide quotes promptly, and offer flexible delivery options. Building a strong relationship with your supplier can also lead to better prices and more customised services, which can save you money in the long run.
Visiting the supplier’s facility, if possible, can give you insight into their operations and the quality of their products. Consistent quality is key to avoiding costly replacements and ensuring the success of your build.
Best Times to Buy Steel for Cost Savings
Timing your steel purchases can impact how much you spend. Prices for steel can fluctuate due to various factors, such as demand, production costs, and market conditions. Understanding these trends can help you buy at the most cost-effective times.
Typically, steel prices are lower during the off-season for construction, which is usually in the winter months. Buying steel when demand is lower can lead to significant savings. Additionally, keeping an eye on market reports and news about the steel industry can provide clues about when prices might drop.
Another good time to buy steel is when suppliers have sales or are trying to clear out their inventory. These deals can happen at the end of the fiscal year or during certain holidays. By being strategic about when you buy, you can make your budget stretch further.
Maximising Efficiency in Steel Use
Minimising Waste with Accurate Calculations
Accurate calculations are key to minimising waste in your steel projects. Carefully measure and plan the amount of steel needed to avoid over-ordering. Using detailed blueprints and sophisticated software can help ensure you buy just the right amount.
Make sure to consider the cutting and welding processes, as these can generate waste. Efficient planning of cuts and joins can reduce the amount of scrap steel left over. Training your team to follow best practices in steel cutting and welding can also minimise mistakes and reduce waste.
Revising plans to fit standard steel sizes can further reduce waste. By designing structures that use common steel dimensions, you can avoid custom orders and the waste that comes with off-cuts.
Reusing and Recycling Steel in Your Project
Recycling steel is an excellent way to save money and benefit the environment. Steel is 100% recyclable without losing its quality, making it a sustainable choice for construction projects. Reusing scrap steel from one part of the project in another can cut down on the need to buy new materials.
You can also source recycled steel for your builds. Many suppliers offer high-quality recycled steel at a lower cost than new steel. This option is both eco-friendly and budget-friendly.
Encouraging your team to recycle and reuse materials can lead to significant savings. Setting up a system for collecting and sorting scrap steel on-site ensures that it can be easily repurposed or sold to recycling facilities. By reusing and recycling, you maximise your investment and contribute to more sustainable building practices.
Conclusion
Saving on steel for your construction projects involves a combination of smart choices and effective strategies. From understanding the right types of steel to buy to finding reliable suppliers and timing your purchases wisely, each step can contribute to significant cost savings. Planning accurately to minimise waste and reusing materials where possible also helps in making the most of your resources.
The benefits of these practices extend beyond cost savings. Efficient use of steel contributes to a more sustainable construction process, reducing the environmental impact of your projects. By reusing and recycling materials, you not only save money but also help in preserving natural resources.
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