Steel prices drop early in year, will rise in '04
Construction steel prices fell from August to March in a weak investment environment, as new supply appeared from previously shuttered capacity and from imports. Prices are now rising, with much of recent decline expected to be reversed by later this year. Prices will top the peak 2002 prices by late 2004. Rebar prices will rise the least, from about $280 a ton in early April to $290 around year-end, to $300 at the end of 2004. Beam and plate prices will move from just over $300 a ton recently to $335-340 at year-end. The beam prices will go up $20 during 2004, while plate prices will be steady. The 2004 forecast assumes only a modest spending increase in the new Federal highway bill.
The turn to rising steel prices results initially from buying for inventory, as buyers try to get ahead of growing demand in industrial and structural markets. The initial bump in prices will be sluggish if motor vehicle demand remains slack so that mill capacity utilization only rises slowly from the recent sub-par 85%. However, steel prices will pick up more quickly if auto manufacturers return to aggressive price discounting.