There’s more spring in the step of the steel industry in March, but can it last?

Ardent observers of the steel trade press might have concluded the month of March came in like a lion after reading the top headlines of Tuesday’s Platts SBB Global Briefing.

Of the top five stories, four were pricing stories and all were positive, a noticeable change from many previous steel market headlines containing such phrases as “gloom” and “doom.”

The positive news for steel that launched March had an international flair: Asia rebar prices on the rise; US sheet prices going up $30/st; European rebar prices possibly at the bottom (nowhere to go but up!); China’s plate export prices on an upward trend.

There were 15 other pricing stories in the March 1 edition and 10 of those — a full two-thirds — were about price increases, including a formal $30/st plate price hike announcement in the US.

What to make of this? There could be several reasons for the relatively cheery headlines snapshot, and maybe all of them have converged to usher in the final month of the first quarter:

• Q1 is often the steel industry’s most optimistic — perhaps belatedly this year — prompting manufacturers, distributors and constructors to revive their steel purchasing.
• Duties or anticipated duties from US and other countries’ unfair trade cases are starting to bite, creating floors from which prices can rise.
• Scrap, iron and semi-finished steel prices are rising, providing the raw material cost impetus that is so often needed for steelmakers to successfully raise prices.
• China, which makes half the world’s steel, is planning capacity cuts that will require the retraining of 500,000 steelworkers as 100 million to 150 million metric tons of capacity are expected to be eliminated over the next five years. The anticipated tightening of global steel supply may be having at least a psychological effect on pricing.
• Spring-like weather is returning in the Northern Hemisphere, ushering in construction projects.
• And finally, markets around the globe have been lackluster for so long, price increases — some from historically low levels — are long overdue. Weak business has allowed steel buyers to let inventories run down and some replenishment (maybe lots of it) is now in order.

Unfortunately for steel, the impact of these positive trends may be only temporary and steel buyers need to be pretty sure price increases can be sustained before they take the plunge and make substantial orders at the higher prices. This is especially true for service centers and distributors who must wait for their steel — with mill delivery lead times often stretching a month or more — and then hope that the price strength is still there and growing so they can make a resale profit.

In other words, if March goes out like a lamb, any rites-of-spring exuberance could be punished. Beware the Ides of March!