Over my years of observing the steel market, there’s been a
recurring belief that current market disruptions in either the physical spot
market or steel futures are temporary anomalies, destined to fade, and that
normalcy will soon return. However, the events of the first few weeks of 2024
served as a stark reminder that this expectation seldom materializes, and that
the US steel market is still the most volatile steel market in the world.
In the
beginning of the year, the spot physical market and futures market were firmly
above $1,100 per short ton (st) for the second time in the previous 12 months.
Steel mills were full of optimism and vigor, announcing successive hikes and
pushing out lead times. However, enthusiasm was short lived as the futures
market experienced a sharp and sudden decline, catching many participants and
observers off guard. Futures prices plummeted through the psychologically
significant threshold of $1,000/st and periodically found support at $900,
giving the market a moment to digest what just happened.