US HRC: Prices drop as mills look to fill holes

US hot rolled coil prices remained under pressure this week as a number of mills looked to fill holes in their rolling programmes.

The Argus weekly US domestic HRC index slipped by $12.50/st to $820.25/st ex-works Midwest today, on two deals and indications from five buy and sell-side sources.

The market remained two-tiered, with large tonnages heard to be transacting significantly below $800/st from a range of mills, particularly re-rollers. Some sources said $720/st and below was being done for big cargoes. But smaller tonnages were still largely seen in the $800-820/st range, with some sellers claiming they were still achieving $850-860/st for small volumes.

In the past few weeks most participants have shifted their focus to contractual negotiations, which were being hotly contested given the steep rise in prices over the year, and the quick fall in recent months.

Some buyers were opting out of locking in contracts in favour of negotiating spot prices monthly. Those in negotiations were requesting steep discounts and fewer tonnes to protect themselves against lagging index values, should prices fall.

"Increased freight, higher material costs and market uncertainty are leaving a lot of contracts unsigned at this point", one large buyer said.

"If you were just accepting a roll on your contract terms from last year you've probably already... finished", another buyer said, suggesting his suppliers had been willing to rollover. Where he was trying to get a better deal, negotiations were hard and ongoing.

Buyers needed to finalise their programmes soon, or they would put their business in jeopardy next year, one integrated seller suggested.

Import offers were competitive despite the drop in domestic pricing, with traders suggesting they could books tonnes in a $720-740/st range, from Mexico, Korea and Egypt, among others. There was a Turkish offer still on the table from a Marmara-based mill, contingent upon the Section 232 duty being reduced to 25pc. The offer was at $730/st DDP Houston, one trader said.

Argus' inaugural DDP Houston assessment was $730/st today.

Mexican producers boosted hot-rolled shipments to the US in October after slipping in September. Licensed US import tonnage for hot-rolled sheets from Mexico climbed to 16,481t in October from 11,370t in September, according to data from the US Commerce Department.

Hot-rolled import volumes licensed for November were 41,797t until 6 November, or 6,966t/day. This is in line with shipments of 6,966t/day in October.

The Netherlands was the largest supplier in the first week of November at 14,392t licensed, followed by South Korea at 9,244t and Canada at 6,877t.

Summary of market activity heard by Argus

• HRC-US: A buyer estimated tradable value at $820/st
• HRC-US: A buyer estimated tradable value at $800/st
• HRC-US: A buyer bought 150t of pickled and oiled at $810/st
• HRC-US A seller estimated tradable value at $850-$860/st for small tonnages
• HRC-US: A buyer estimated tradable value at $820/st
• HRC-US: A buyer purchased 8,500t at $730/st
• HRC-US: A buyer purchased 2,000t at $720/st
• HRC-US: A buyer estimated tradable value at $820/st
• HRC-US import: A buyer estimated tradeable value at $720/st
• HRC-US import: A trader estimated tradeable value at $740/st for February-March arrival
• HRC-US import: A trader estimated tradeable value at $730/st
• HRC-US import: A trade bought 2,000t of Mexican material at $730/st ddp Houston for December shipment