Chaos In Steel Market As Manufacturers Battered By Shortages, Soaring Prices

The virus pandemic has upended global supply chains and produced shortages of certain commodities, sending spot prices sky-high. The latest shortage is steel, where many US manufacturers are having difficulty procuring cold-rolled and hot-rolled steel from mills, reported Reuters

At the moment, steel shortages are sending spot prices through the roof. The latest round of disruptions in the steel industry is impacting America's manufacturing heartland, where aerospace parts maker in California struggles to find cold-rolled steel, while auto and appliance parts manufacturers in Indiana are having trouble securing hot-rolled steel.

 "Unfilled orders for steel in the last quarter were at the highest level in five years, while inventories were near a 3-1/2-year low," Reuters said. Spot prices for hot-rolled steel hit $1,176/ton this month, the highest in 13 years. 

US hot-rolled steel prices are rising the most versus the rest of the world. 

S&P GSCI Industrial Metals is exhibiting a multi-decade symmetrical triangle. 

One of the main reasons for the undersupply of steel in the first quarter is the slow restarts of mills, which were halted during the virus pandemic. Steel producers may not meet demand this quarter or next. 

Soaring steel prices have pinched margins of steel-consuming manufacturers. New calls from within the manufacturing industry want the Biden administration to end former President Trump's steel tariffs. 

Paul Nathanson, executive director at Coalition of American Metal Manufacturers and Users, said the current conditions are bad. 

"Our members have been reporting that they have never seen such chaos in the steel market," Nathanson said.

He requested the Biden administration to terminate Trump's metal tariffs to increase supply. 

Capacity utilization rates at steel mills are slowly increasing and have moved up to 75% after plunging to 56% in the second quarter of 2020 but is still under 82% observed right before the pandemic. 

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