US HRC: Weaker sentiment weighs

The US hot-rolled coil market fell for a seventh week as buyers aggressively pushed for discounts and mills remained willing to deal at lower prices amid sluggish demand.

The Argus weekly US hot-rolled coil (HRC) index fell by $14/st to $740/st ex-works midwest on two deals and indications from five buy- and sell-side sources.

Deals and indications on smaller tonnages remained in a wide $720-760/st range as some mills continue to show a willingness to discount amid seasonally slower demand. At least one larger producer was heard to still have December availability.

Orders of 1,000-2,000st were heard in the range of $700-720/st, unchanged from the prior week.

But activity was limited as pipe and tube buyers remain slow to pull the trigger on inquiries, while year-end and a lack of firmer sentiment drives service centers to continue to operate hand-to-mouth.

"Any inventory you have is too much in a falling market," a buyer suggested.

"I am very happy our inventory is as low as I can get it and I do not have to buy right now," another added.

Limited demand comes as healthy supply from several mill restarts and existing producers operating near full capacity also weighs on the market.

"The tipping point is not in the millions of tons, it's in the hundreds of thousands of tons," a producer said.

The potential for downside in January scrap prices in the US will also influence buyer sentiment, some suggested.

The drop in domestic HRC prices is driving expectations that demand for imports will remain muted in the first quarter amid a narrow spread with domestic material.

The Argus assessment of imported HRC remained unchanged on the week at $700/st ddp Houston.

Import tonnage licensed through 11 December remained in line with the prior month at 6,488 st/day, but higher than the 4,930 st/day imported in the same month a year earlier.

South Korea accounted for the highest share of volume in December at 38,350st, followed by Germany at 7,803st.

Mexico was the third largest source of licensed tonnage at 7,401st. A buyer suggested that Mexican producers have retreated from the aggressive offers seen in recent weeks amid concerns over anti-dumping suits from domestic producers.

Sluggish domestic market fundamentals have also largely wiped away expectations of a firmer market among buyers looking ahead to the first quarter.

"Logic tells me that things should slow down/stop falling, but I do not know what will cause that," a buyer said.