Metal Prices Face Bearish Headwinds

• Nickel prices fell over 20% in Q1 of 2023, with industry experts predicting the market will remain volatile due to factors such as the strengthening U.S. economy and fears of a financial crisis.
• Hot-rolled coil prices dropped 13% from their peak in April, falling back to March levels, and steel demand in China decreased by 3.4% YoY in April.
• Despite these short-term downward trends, metal prices remain above their long-term average, although there's increasing bearish pressure among HRC markets.

Via AG Metal Miner

Metal prices demonstrated increasingly-bearish short-term movement over the past couple of weeks. HRC, for instance, continues to trend downward while nickel faces extensive bearish pressure. But while prices may continue to decline in the short-term, will the long-term trend continue?

Nickel in a Bearish Market

Nickel prices fell more than 20% in the first three months of 2023, and experts project that the sector will remain volatile. According to LME statistics, players continue to abandon the nickel market, a trend many traders expect to continue. And as more people negotiate nickel prices directly, markets will see even lower volumes and increased volatility, as with other metal prices.

Overall, nickel prices have remained unpredictable throughout 2023 due to factors such as U.S. strengthening and worries of a potential financial crisis. In fact, nickel price action recently breached short-term support levels, indicating a possible long-term downtrend continuation.

Metal Prices: HRC Prices Down in The Short-Term

Hot rolled coil prices recently fell back to March levels. Meanwhile, cold rolled coil and hot dipped galvanized prices fell even more sharply month over month. Altogether, HRC prices dropped 13% from their peak on April 14. Again, many metal fabricators and manufacturers expect the trend will continue.

Steel demand in China also fell 3.4% year on year in April, compared to an 8.7% increase in March. The move left steel rebar futures down nearly 17% since late March. Unfortunately, any potential recovery is still months away due to China entering its typically slow summer months in terms of production, which will impact metal prices accordingly.

Steel supply fears are largely gone, and the almost immediate recovery in Russia’s ore, scrap, and semi-finished exports means that there has been no significant steel production disruptions in Europe or North America. Meanwhile, steel prices continue to drop, but are still above their long-term average. Even so, many analysts expect further declines in the coming months.

Despite the short-term downtrend, prices still indicate the potential for further breakdowns. This signals that there is increasing bearish pressure among HRC markets. Therefore, prices need to reverse to support a bullish HRC market.

By the Metal Miner team

More Top Reads From Oilprice.com:

• Oil Prices Inch Higher In Cautious Response To Saudi And Russian Cuts
• IEA Warns Of A Spike In Energy Prices This Winter
• Trans Mountain Pipeline Unlikely To Ship Canadian Oil To Asia