US hot rolled coil (HRC) prices paused their recent decline this week after a raft of price increase announcements from mills.
The Argus weekly domestic US HRC Midwest and southern assessments were both flat this week at $880/short ton (st) on an ex-works basis, still down by 27pc since the peak of $1,200/st in April.
The market was thrown into confusion in the last week after most major steelmakers published price increases. ArcelorMittal, Cleveland-Cliffs, Nucor, US Steel and Stelco all issued $50/st price increases between 14-20 June. Nucor set a minimum HRC spot price of $900/st, while ArcelorMittal and Cliffs raised their minimum HRC spot prices to $950/st.
Mills cited dropping service center inventories as justification for the price hikes, according to participants. While inventories remain low at service centers, few of them reported feeling pressure to enter the market without customer orders driving purchases.
This has led to a divergence in reported spot prices. One large service center buyer reported paying $820/st for 800st of HRC out of Midwest mills at four week lead times, far below published minimum prices.
Most repeatable offers were between $860-900/st.
A number of large service centers reported buying tens of thousands of tons of HRC, taking advantage of below-market pricing last week and this week. The buyers are confident that they will be able to sell the steel as they receive it over the coming months.
Electric arc furnace (EAF) steelmaker Steel Dynamics (SDI) said it expects the destocking trend in the market to abate, according to comments in its 16 June earnings guidance.
Most buyers remained skeptical that buying will resume as business remains under pressure. Multiple buyers reported demand being down between 10-35pc from their customers, and steel mills continue to produce at above 75pc utilization rates since mid-April.
Mills that expanded production such as North Star BlueScope in Ohio, Nucor Gallatin in Kentucky and SDI Sinton in Texas all were all reported to continue improving their production rates.
The weekly Argus US HRC lead time average was flat at 2-4 weeks as a handful of buyers reported that June was still available, with most mills said to be into July.
The automotive industry, which has increased its production and steel consumption this year compared to previous ones, is shaping up to be a potential market disruptor as the United Auto Workers (UAW) union squares up for a potential contract dispute with the Big 3 US automakers Ford, General Motors, and Stellantis in the third quarter.
Lead times have shrunk noticeably since a peak of 8-10 weeks at the end of March.
The weekly Argus US HRC import price fell by $45/st to $700/st on a ddp Houston basis on lower indicated values. Some offers were heard as low as $660-700/st ddp Houston from South Korea and Europe and continued to be heard at $900/st from countries with 25pc Section 232 tariffs on their imports.
One buyer reported paying $770/st for HRC fob Houston from South Korea for 900st arriving in October. A regional steelmaker reported that HRC was sold from European mills into the US in the last week, setting up a potential uptick in imports in the coming months.
Plate
The Argus weekly domestic US ex-works plate assessment remained flat at $1,570/st as the market remained quiet. Few expect HRC prices to influence plate, though the market is split with some expecting plate prices to fall and others expecting them to remain firm.
Lead times were flat at 6-7 weeks.
The Argus US delivered plate assessment was flat at $1,600/st.
