Steel Price Tracker:US prices strengthen as EU plate prices fall

Will steel prices fall or keep their strength.

    Steel equities continue to be volatile, driven by macro woes and commodity pricemovements. Although current spot conditions remain strong, we still forecastcost support to fade and, thus, European prices to fall (current spot conditionswould imply further significant earnings upgrades across the space). Our top picksare: 1) ArcelorMittal, which looks attractive to us based on: strong cash flow(7-12% FCF yield), valuation and additional upside optionality, and 2) Voestalpine,which we believe has more room for upgrades, generates strong underlying CF(9-10% FCF yield) and has a less volatile business model.

    HRC: S. European prices down E3.

    Last week, S. European prices were down E3 to E509 (down USD8 to USD592)and N. European prices were down by E1 to E540 (down USD6 to USD628). Priceshave risen E26 in the past three months.

    US HRC prices up USD13; Chinese export prices down USD6.

    US HRC prices were up USD13 last week. Several US players prepared themarket for a USD40/t price hike. The price gap with Europe rose to USD54/t,while the price differential with China increased to USD138/t. Chinese HRC pricesdecreased by USD6 to USD545. The spread between Chinese and S. Europeanprices decreased to USD47, less than the two-year average spread of USD58,with Chinese prices up E15 (+USD3) in the past three months.

    Plate: S. European prices down E24.

    S. European prices fell E24 to E535 (down USD33 to USD622). Prices fell E27in the past month. N. European prices also fell by E14 to E575 (down USD22 toUSD669). US prices were stable at USD759 (also stable in Euro terms at E648).

    Iron ore: Fines 62% Fe prices up USD4; coking coal: prices up USD2.

    The prices of Fines 62% were up by USD4 WoW. Chinese steel output decreased1% WoW to 1.82mt/day in the second ten days of October. Prices of premiumcoking coal (Australian exports) increased by USD2 to USD180 last week. Theyincreased in euro terms by E2 to E155.

    Scrap: European prices up USD1/t.

    European prices increased USD1/t to USD284t, while Turkish prices were up byUSD6 to USD309/t last week. If current prices were to remain stable until end-Q4, the QoQ price decrease for European scrap in Q3 would be USD28.