US HRC: Steel prices rise as buyers try to stock up

US hot-rolled coil (HRC) spot prices rose this week as buyers tried to book ahead of further increases, filling contracts and putting pressure on lead times.

The Argus weekly domestic US HRC index rose by $19.75/st to $559.25/st ex-works Midwest today on six indications from buy- and sell-side sources.

Lead times rose to 5-6 weeks, with mills filling up as buyers restocked. Many buyers reported mills had stopped offering discounts as they held firm on previously announced price increases.

Steel prices have risen from a yearly low of $521.75/st for the week ending 25 June due to US steelmakers last week pushing for a second $40/st increase in as many weeks.

Steelmakers have stepped up effort in recent week to stabilize prices, which fell from highs of over $900/st in mid-2018.

Many market participants believe the price floor was found at the end of June. One buyer stocked up on three months worth of HRC just prior to the first price increase announcement. Another buyer said anyone who isn't buying their maximum contract allocation right now "should be fired."

One integrated mill said they were quoting $600/st for HRC, and added that they refused to sell below $560/st.

But economic and industry data show continuing slowdowns in the steel industry and in related economic indicators.

The Metals Service Center Institute said today steel shipments in the US decreased for the seventh consecutive month, with US service center steel shipments in June falling 11pc year-over-year.

In data released today, the Federal Reserve said industrial production was unchanged in June, and that for the second quarter as a whole, industrial production declined at an annual rate of 1.2pc, its second consecutive quarterly decrease.

Manufacturing output rose 0.4pc in June, with half of the increase driven by a nearly 3pc increase for motor vehicles and parts.

Capacity utilization for the industrial sector slipped 0.2 percentage points in June to 77.9 percent, which the Federal Reserve said is 1.9 percentage points below its long-run average, which spans 1972 through 2018.

Cold-rolled coil (CRC) and hot-dipped galvanized (HDG) prices were said to be around $710/st.

The CME HRC futures market for August rose by $32/st to $590/st yesterday. September prices jumped by $33/st to $590/st, while October prices increased $19/st to $616/st. Forward looking HRC prices for November are $619/st. Steel trader's expectations that HRC prices will increase above $600/st have moved up a month to September.

Summary of market activity heard by Argus

• HRC, US: Tradeable value at $560/st ex-works Midwest, according to seller
• HRC, US: Tradeable value at $560/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 $570/st ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $565/st ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $555/st ex-works Midwest, according to buyer