US HRC: Prices, demand slip after price increase

US hot-rolled coil (HRC) prices fell slightly this week as market participants returned from the 4 July holiday and the domestic market works to figure out whether recent price increases have set a price floor.

The Argus weekly domestic US HRC index fell by $2/st to $539.50/st ex-works Midwest today on six indications from buy- and sell-side sources.

Lead times fell to four weeks, with one electric arc-furnace (EAF) mill saying orders had fallen off after a rush in the last two weeks.

Many buyers had tried to secure orders after across-the-board price increases of $40/st two weeks ago by US steelmakers in an attempt to stabilize declining prices.

The Argus HRC assessment rose last week for the first time in three months to $541.50/st. Prices fell to $521.75/st for the week ending 25 June, a $218.25/st drop since the beginning of the year.

Jobs data last week helped allay some fears about the strength of the economy, with 224,000 nonfarm jobs being created in June, a better than expected number coming after weak growth in May, when only 72,000 jobs were created.

The stabilization of HRC prices has also spread to the ferrous scrap market. In trading that began last week, scrap prices have been sideways to down $10/gt in July, while scrap dealers expect prices to increase in August.

Prices for HRC imports into Houston stayed flat at $540/st ddp. With 25pc tariffs remaining on many steel imports, importers continue to struggle to compete with domestic prices. May steel imports into the US were 1.88mn t (2.07mn st) compared to 2.66mn t in May 2018, according to US Department of Commerce Data. Preliminary June data shows 2.45mn t of import licenses, up 8.5pc compared to 2.26mn t in June 2018.

The CME HRC futures market for August slipped by $2/st to $558/st yesterday. September prices fell by $8/st to $577/st, while October prices fell $2/st to $597/st. Steel traders still expect forward prices to rise above $600/st after October.

Summary of market activity heard by Argus

• HRC, US: Tradeable value at $542/st ex-works Midwest, according to seller
• HRC, US: Tradeable value at $545/st ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $550/st ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $530/st ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $550/st ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $520/st ex-works Midwest, according to buyer