US hot-rolled coil's (HRC) discount to rebar deepened this week as demand for the two products diverged.
Argus-assessed HRC prices have been under pressure since early July because lackluster demand and manageable lead times kept buyers on the sidelines through much of the summer. US rebar prices, conversely, strengthened this year as supply tightened and after an 11-month decline in 2024. Although US demand for steel more broadly is depressed — and rebar fabricators are reporting weak downstream shipments — demand for rebar is being bolstered by those same fabricators.
Fabricators and mill buyers are stocking rebar as they worked down inventories acquired before the US's imposition of 25pc steel import tariffs on 12 March and to get ahead of potential future price increases. Rebar mills with the capacity to do so have also reported turning to more profitable grades of long steel, causing some slight supply tightness in certain markets.
The slow consumption of HRC over recent months also meant inventories that were built to get ahead of tariffs have taken longer to draw down, also easing buyer needs for fresh spot purchases.
As a higher-value product, HRC historically traded at a premium to rebar.
HRC ex-works US domestic pricewas assessed by Argus at $881.50/short ton (st) in the first week of July. Prices gradually — but steadily — have declined since then, landing at $841.75/st on 19 August. US rebar pricing has averaged $900/st since 25 July, when it surpassed US HRC.
Domestic rebar producers in January and February pushed through price increases that were absorbed by the market after the imposition of the 25pc tariffs. Those 12 March tariffs erased exemptions to section 232 steel import tariffs in place since 2019 and were later doubled to 50pc on 4 June, essentially pricing out import volumes.
HRC buyers, in turn, said uncertainty around trade policies and the broader economy was hampering business planning for many end users, further blunting steel demand on top of the historical summer lull. Several HRC buyers reported they are managing inventories on a short-term basis until President Donald Trump's trade policy takes shape more fully.
HRC buyers throughout the summer have been content with relying on contract volumes while they slowly worked through inventories.
Buyers also had the flexibility to hold off on buying fresh tons because of low lead times for much of the summer.
Lead times for HRC ranged from 3.5-4.4 weeks since early July, reaching the low end of the range just two weeks ago. Buyers do not feel pressure to stock up on volume when such short delivery windows meant any quick changes in demand could be readily accommodated by suppliers.
Still, some buyers said this week that the HRC price may be nearing its bottom in terms of demand and price. Purchases reported to Argus reached its highest point since early June last week at over 7,000st, and lead times have increased for two straight weeks with planned maintenance at various mills looming later in the autumn.
Rebar prices are expected to remain rangebound in the near term as mills and buyers appear to have found an equilibrium of sorts and fundamentals are expected to remain unchanged.
