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US flat product prices outperformed our expectations over the past month. In an attempt to lend the market confidence that sheet prices had reached a floor, US steel mills announced price increases of $50-60 per ton at the end of April. In the announcement, mills cited the expectation of higher scrap prices, tight domestic supply, and the resumption of business activity as states begin to gradually reopen.Given the reopening of numerous states in early May, together with scrap price gains this month, we now believe flat product prices will find a floor this month, an adjustment from our previous forecast where we tagged June as the likely time for a market bottom. We have also significantly raised our average monthly domestic hot-rolled coil floor price, in large part due to raw material cost pressures triggered by prime scrap shortages. Although this remains an incredibly difficult sector to forecast, we suspect the Covid-19 pandemic prompted pricing downturn will prove relatively shallow as compared to past downcycles, though with considerable risk of further volatility in the coming months, and with a shallower price recovery as well.When automotive lines restart during May, prime scrap supplies will rise, and we would expect to see scrap prices decline as we move into the second half of the year. Lower scrap prices will help protect mill margins and enable mills to more comfortably discount sheet prices to secure volumes amid a fragile demand recovery. The potential combination of declining raw material costs, increasing domestic mill production and a lackluster demand recovery could lead to a second sheet pricing downturn in the second half of 2020.US long product prices slipped in April, and showed further declines in early May despite scrap price gains. Price declines came as even private non-residential construction, which has been more resilient than other sectors, was affected by moves aimed at containing the virus at the same time as scrap prices tumbled. Even with the gradual reopening of US business and with scrap settling higher than expected in May, we believe, given all the caution in the market, that long product prices more likely to stabilize at or near current levels than recover much of the ground lost last month.Click here to view the North American Steel Market Tracker in full. If you are not a subscriber but would like see a free sample report, please click here.