Steel yourself

4 days ago, I wrote some stuff about China, export tariffs and steel prices.

The price of U.S. Midwest Hot-Rolled Coil Steel (HRC) fell 6% last night.

Any decline in HRC prices shouldn’t be a surprise. As it featured near the top of my list in a recent post titled, “It’s a sellers market“, where HRC was trading at 119% above its 200 week moving average. Very stretched indeed.

The chart below shows you an immediate trendline that it should test. From there I’ll watch other factors to determine a change in trend and its strength along with other support and target levels.

Falling steel U.S. steel prices tells me that capacity is increasing slightly and demand may be softening. As prices fall and find some equilibrium, it should lower the input costs for the construction industry but don’t automatically assume it’ll improve their margins though, as labour costs won’t sympathetically decline.

Incidentally, stock prices of U.S. steel companies have performed very well lately.

October 27, 2021

by Rob Zdravevski

rob@karriasset.com.au

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