US HRC: Prices continue to fall on weak demand

US hot-rolled coil (HRC) prices continued to fall this week as orders of 1,000st or more traded for less than $600/st.

The Argus domestic US HRC index fell by $22.50/st to $635/st ex-works Midwest today on three indications from buy-side sources.

Lead times stayed at 3-4 weeks, though some mills were reported to still have May availability.

One buyer said they purchased a couple thousand tons of HRC for $580/st, just a week after another buyer had made a similar HRC purchase at $10/st higher and struggled to find buyers. Multiple mills were said to be dealing at that price point for large orders. Despite this news large purchases still appear to be rare as many buyers remain outside of the spot market.

Weakness in the auto industry continued to weigh on the steel market with energy also slowing down. Nonresidential construction continues to be a bright spot in the economy. One buyer called HRC demand "tentative at best."

The price outlook continues to be weak, as many buyers feel prices still have a ways to fall.

The big question has been when inventories will deplete enough to require restocking. US service center shipments decreased by an average of 6.2pc per month in the first quarter of 2019, with March shipments down by 9.4pc, according to data from the Metals Service Center Institute.

Scrap prices continued to fall last week, with the US ferrous scrap market ending down $30/gt for most of the market, with primes down $40/gt. Turkish scrap continued its weeks-long slide today to $283.50/t, its lowest since late January.

Prices for HRC imports into Houston fell by $10/st to $620/st ddp.

Cold-rolled coil (CRC) and hot-dipped galvanized (HDG) steel have also faced price drops, falling to $750/st, a $30/st drop compared to 7 May. Lead times have stabilized for both products, with CRC lead times at seven weeks and HDG lead times at 8-9 weeks.

The CME forward curve for June fell by $11/st from 7 May to $620/st yesterday. July prices fell by $8/st to $625/st, while August prices dropped $3/st to $630/st. Steel traders now expect forward prices to remain at or below $640/st for the rest of 2019.

Summary of market activity heard by Argus

• HRC, US: Tradeable value at $680/st ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $635/st ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $590/st ex-works Midwest, according to buyer