Prices have jumped sharply in April. Rising iron ore and coal prices have added around $150/tonne to the cost of production for strip products from integrated mills and scrap prices too have jumped by a similar amount in the last 6 weeks. Mills are seeking to pass this through to consumers (and have successfully done so), and there is also some re-stocking as buyers make purchases to avoid even higher costs further forward. With forward slab and HR coil prices rising, we expect to see further short-term gains through May and June as lead times for regionally-traded material is now out 8-10 weeks. We are more cautious for the second half of the year as raw material prices may fade after the current re-stocking spike and higher steel output and availability could depress coil prices too.
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