US steel capacity utilization rate has remained at or above pre-pandemic levels of 80pc, according to the American Iron and Steel Institute (AISI). The higher utilization rate indicates that there is more steel available for buyers in a previously supply-constrained market. The unprecedented price rally–which has led prices to nearly quadruple since hitting a low of $450/st in mid-August 2020–has continued uninterrupted, and some wonder what it will take to stop it. Indiana-based electric arc furnace (EAF) minimill steelmaker Steel Dynamics (SDI) said today that it expects to post record profits in the second quarter and that continued demand and “historically low flat roll steel inventories” will lead to even stronger third quarter results.
Concerns have also grown that supply could get even tighter. North American automakers are in the fifth month of dealing with semiconductor-related production disruptions, which have cut volumes at some steel processors and made some steel available on the spot market. Recently some companies have taken steps to return idled auto production online, with Ford restarting production of its best-selling F-150 full-size pickup truck, while General Motors plans to ramp up its full-size truck production. The automakers are trying to make up for lost ground, with approximately 755,000 vehicles marked as unrecoverable by consultancy AutoForecast Solutions due to the semiconductor-related production cutbacks. New vehicle inventory coming into June sat at 1.78mn vehicles, or 35 days’ supply, a historically low level and down from the 2.24mn in inventories at the end of April, according to Cox Automotive. An increase in flat-rolled US imports should show up from June through August, as tons booked earlier in the year are unloaded. But few believe they will come in enough quantity–or at the right price–to fill the gaping inventory hole left by pandemic austerity and high-price anxiety.