Steel prices near bottom: Stelco CEO

The chief executive of Canadian integrated steelmaker Stelco called the bottom of the sheet steel market, saying increasing raw material costs will eventually raise prices.

"We're going to see not huge increase in prices, I do think we'll see some increases in prices," Stelco chief executive Alan Kestenbaum said at the SMU Steel Summit in Atlanta.

Decreasing demand from automotive and construction are currently weighing on steel pricing, he said. The Argus US hot-rolled coil (HRC) Midwest ex-works assessment has fallen by 49pc since the beginning of the year to $815/short ton on 23 August. It has been flat for the last two weeks.

Part of what will lead to increasing prices will be rising costs both for raw materials and energy, according to Kestenbaum.

"We're going through a period now where scrap prices have been dropping largely because of a slowdown in demand from the mills as a result of their customers buying less," Kestenbaum said. "But the opposite side of this thingis coming in two or three months."

US prime scrap prices dropped below lower-yielding shredded scrap in August, with #1 busheling trading at $404/gt in the Midwest, a $16/gt discount to shred.

Lower steel mill consumption will lead to lower scrap flows, Kestenbaum estimated, leading to some price increases in the market. Scrap-heavy electric arc furnace (EAF) steelmakers, which make up the majority of the North American steel industry, will continue to be the driving force behind prices, with Kestenbaum pointing to the $50/st flat-rolled price increase announced by EAF steelmaker Nucor on 8 August.

Integrated US steelmaker Cleveland-Cliffs announced a $75/st flat-rolled price increase Thursday after the conference ended. That company's chief executive Lourenco Goncalves said in Atlanta that he does not expect any flat-rolled steel producers will cut production to support pricing.

By Rye Druzin