US steel prices to remain stable in 3Q: bank

US steel prices should remain stable in the third quarter before softening slightly in October-December, Morgan Stanley said in a note today, after hosting a dinner with steel executives.

Demand is strong from most end-users and stock levels are low, while imports will remain constrained by the 25pc Section 232 tariff, the bank said. Guests at the dinner said hot-rolled coil could end the year in the "low" $800s/st, compared with around $920/st at present.

Imports will probably risein the coming months, especially from August, because the US has a structural requirement to import to satisfy demand.

At current prices, traders can also make $60-80/st margins on imports, even when paying the tariff, the bank said. A trade lawyer at the dinner said Congressional pressure to remove the tariffs might increase, but only after the mid-term elections.

Given high prices, some buyers are managing inventories ahead of an expected further decline, but demand in general remains robust, Morgan Stanley said. Demand is strongest for wire rod, heavy plate and structural tubing, while mills are being disciplined on rebar pricing to avoid opening import arbitrages.

Scrap prices should trend down, given high inflows, while one executive at the dinner said US mills will continue to source tariff-free imported scrap; northeastern UK material was reportedly loading for the US on Wednesday, with a cargo containing 30,000t of shred and busheling.