In today’s global market one expects little price divergence in steel prices in different corners of the world. Industry researcher MEPS reports a current reversal of this trend which the analysts believe is likely a result of inflated ocean freight rates, which is up by 75% since August

As a result of the divergence, MEPS is forecasting a surge of steel product imports into the US.

MEPS analysis shows that strip product prices in Europe are basically flat, while they are rising in North America and falling in Asia. Last month's values in these three regions were within about US$10 of each other. This month there is a range of almost US$100 per tonne between the lowest in Asia and the highest in North America.

Looking at average transaction prices for hot rolled coil, September values in the EU stand at just below US$500 per tonne, only a few dollars different from last month’s figure. EU prices have lost more than US$200 per tonne over the course of this year and continue to languish, pending a correction of the stock surplus, MEPS reports.

In Asia, the average hot rolled coil price this month is around US$480 per tonne, down by almost US$20 per tonne month-on-month and more than US$100 per tonne since the peak earlier this year. The price has been depressed by the continued build-up of additional production capacity in China, over-stocking and increasing Chinese exports, the researcher believes.

However, in North America, the September hot rolled coil price jumped by almost US$70 to US$580 per tonne. MEPS suggest this is partly because of increased raw material surcharges related to higher scrap prices. There are also signs of higher demand, as orders are being quickly placed for steel needed for reconstruction work post-hurricanes.

Raw material surcharges also look like increasing again in October because North American scrap costs have strengthened further. This, says MEPS, is partly because of disruption to supplies of scrap and other raw materials caused by the hurricanes.