Let’s go back to the summer of 2021—around August. Steel prices were amid a historic run-up, sitting above $1,900/ton. During this time, both Chinese and European steel prices were at a vast discount in comparison.

Fast forward to today, hot-rolled prices have fallen below $660/ton, their lowest level since Q4 2020. And the pricing spread across the global steel market looks much different than it did in the summer of 2021 (see below).


Perhaps it’s no coincidence that import shipments of carbon sheet have fallen to their lowest level in 18 months, down 25% from a year ago.

And while some might be asking how low can domestic prices go, perhaps the more relevant question at this point is: who is moving the floor?

One such thing could be production levels. Over the past few months, utilization rates at domestic steel mills have dipped lower.

As of November 5, steel production across the United States was down 4.8% year-to-date compared with last year, according to the American Iron and Steel Institute. Capacity utilization rates slipped to 78.9% that week, signaling their lowest levels in roughly two years.

“Over the past few months, you can see that capacity utilization rates are moving lower at a rapid rate,” says Nick Webb, Ryerson’s director of risk management, commodity hedging. “So, that could mean that steel mills are doing their best to better balance supply-demand conditions. If you take that into consideration along with the fact that scrap prices are beginning to stabilize, it is possible that we could see a bit of a trough effect on the price of steel in the coming months.”

The U.S. Dollar vs. Metal Prices 

On January 3, the U.S. Dollar Index was at $96.21. Since that time, it has surged more than 16% with its high point coming around mid-September when it traded above $114.

But that surge came to a halt on November 10. That day the index fell sharply to around $108 on the heels of consumer pricing numbers that came in lower than expectations.

The October consumer price index rose 0.4%, according to the Labor Department. Some experts had predicted a number closer to 0.6%.

So, what does this mean for the price of commodities? As a rule of thumb, the U.S. dollar is an inverse indicator to the price of commodities. Up until this point, this has been a headwind to the price of commodities.

For example, the price of aluminum, after being around $1.85/lb. earlier this year, recently came back down to around $1/lb. However, prices start to tick up slightly at the beginning of November.

While it is too early to say that the price of aluminum will begin to rise in correlation with some slight weakness in the dollar, it will be interesting to watch the trend across all metals should the dollar continue to trend in the opposite direction.

A Tale of 2 Nickels

If you look solely at inventories on the LME (London Metals Exchange) you might say the global supply of nickel is at risk. However, what you would be seeing is only one side of the story.

More than 300 million pounds of nickel are available in the world today. Only about 55% of that supply is traded on the LME. This is called class 1 nickel.

Inventories of class 1 nickel are indeed tight. This is one of the reasons we saw a squeeze on it earlier in the year that caused prices to rise 250% to over $50/lb. in the matter of hours, subsequently leading to a suspension of trading by the LME.

But how about the remaining 45% of that available nickel in the world? That is class 2 nickel, which is not traded on the LME. These nickel products commonly have a lower nickel content and, according to the Nickel Institute, are used in stainless steel production as producers can take advantage of the iron content.

As of early November, the price of class 2 was roughly $2.50/metric ton cheaper than that of class 1. And it looks as if there is ample supply of class 2. So, upon closer look it seems that the global supply of nickel isn't so scarce after all.