As the east coast in USA shudders to the windy onslaught of Sandy speculation about X factor kindling revival in global steel prices gains weight. As USA grapples in assessing the extent to the infrastructure and population expectancy of reconstruction is simmering in every quarter.

However given protectionist policies of the USA off late the rebuilding is likely to ring fortunes for the domestic mills. However it is possibility of curtailed supply of key steel making raw material viz., scrap and coking coal culminating in spike is raising aspirations.

USA being a major supplier of scrap will certainly cause upheaval in this milieu. Moreover winter being lull period for scrap generation has historically been period of buoyancy. Scrap levels off late has appreciated by USD 15-20 per tonne in the last fortnight with approaching winter shortage and opening of Turkish buying. Presently scrap (HMS 1&2, 80:20) from USA and European sources are USD 400 per tonne and USD 390 per tonne respectively CNF, Turkey. However given the double whammy of winter and curtailed supply from USA after the hurricane an appreciation of at least another USD 50-60 per tonne before the year closes is in vicinity.

Like-wise constricted supply of US coking coal owing logistical and mining impediments would help to bolster the sagging prices. Noticeably coking coal price have already bottomed out after rampant production cuts by miners. An appreciable increase of USD 15-20 per tonne in spot prices has been reported in late deals.

In the backdrop of cost escalating factors taking center stage price improvement in finished steel is likely in Q4 despite Chinese profligacy and unrelenting European crisis.

Source - Strategic Research Institute

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