US HRC: Price slide continues amid limited buys

US hot-rolled coil (HRC) prices continued to fall this week as service centers bought small loads, while scrap prices sharply declined.

The Argus domestic US HRC index fell by $12.50/st to $657.50/st ex-works Midwest today on four indications from sell and buy-side sources.

Lead times fell to 3-4 weeks. One buyer said customers have a "wait and see attitude" on expectations that prices will continue to fall. An electric-arc furnace said customers are hesitant to make big purchases because of the price uncertainty and weakness in the auto industry.

One service center bought a multi-thousand ton load of HRC from a midwest mill for just under $600/st but said it was difficult to find buyers.

Prices for HRC imports into Houston fell by $5/st to $630/st ddp.

Cold-rolled coil (CRC) and hot-dipped galvanized (HDG) steel have also faced price drops, falling to $780/st, a $60/st drop since mid-April's $840/st. Lead times have slipped for both products, with CRC lead times at 6-7 weeks and HDG lead times at 7-8 weeks on slipping demand.

In April the seasonally adjusted sales for light trucks and automobiles fell to 16.4mn, down from the 17.4mn rate recorded in March. Not seasonally adjusted vehicle sales through April are at 5.49mn, down by 2pc from the 5.59mn vehicles sold in the same period of 2018.

The US ferrous scrap market fell again in May, helping mills maintain margins amid sliding HRC prices. Prime grade scrap in Detroit dropped by $40/gt, the largest month-over-month decline for #1 busheling since October 2017. The decrease brought the Argus #1 busheling assessment to $315/gt delivered mill, the lowest since January 2017 and down by $60/gt since the start of 2019.

The CME forward curve for June fell by $18/st from 30 April to $631/st yesterday. July prices fell by $18/st to $633/st, while August prices dropped $19/st to $633/st. Steel traders now expect forward prices to remain below $645/st for the rest of 2019.

Summary of market activity heard by Argus

• HRC, US: Tradeable value at $650/st ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $660/st ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $650/st ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $670/st ex-works Midwest, according to seller