US HRC: Prices continue to fall on low demand

US hot-rolled coil (HRC) spot prices continued to fall this week on weakness in demand and outlook.

The Argus weekly domestic US HRC index declined by $9.25/st to $566.25/st ex-works Midwest today on four indications from buy- and sell-side sources.

Lead times slipped slightly to four weeks from 4-5 weeks due to a lack of market activity.

One integrated mill said buyers are preferring to purchase steel on contract, with prices in the mid-$530s/st for contract HRC for October.

The Metals Service Center Institute (MSCI) said today that steel shipments declined for the 10th consecutive month in the US and for the 13th consecutive month in Canada. US service center steel shipments in August fell by 13pc from August 2018.

Market participants are watching closely as the United Automobile Workers (UAW) continues to strike against General Motors (GM) in the US, shutting down production and steel consumption at GM's manufacturing plants.

Some worry that a prolonged strike of a few weeks could send a flood of steel - from HRC to cold-rolled to galvanized - into the spot market and depress prices. Others doubt the strike will last long, citing the last time the UAW undertook a nationwide strike against GM, which lasted just two days.

On Monday, US electric arc furnace (EAF) steelmaker Nucor said it expects its third quarter profits to fall compared to the same period of 2018 due to lower prices for flat-rolled and plate products in its steel mill segment and lower demand from automotive, agricultural products and power transmission markets.

Nucor also expects lower profits in its raw materials segment compared with the second quarter because of the shutdown of its 2.5mn t/yr direct-reduced iron (DRI) plant in Louisiana. The facility closed last week for maintenance, later than originally expected, with the shutdown expected to last until mid-November.

The Association of Equipment Manufacturers (AEM) said total farm tractor sales were up 2.1pc in August to 20,120 units. Year-to-date total sales were 170,531 units, a 3.4pc increase over the same period of 2018.

The CME HRC futures market rose slightly, with November prices increasing by $9/st to $544/st while December futures for HRC rose by $1/st to $544/st. January HRC prices are expected to be $552/st, with little price movement expected in 2020.

Summary of market activity heard by Argus

• HRC, US: Tradeable value at $575/st, ex-works Midwest, according to seller
• HRC, US: Tradeable value at $560/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $580/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $550/st, ex-works Midwest, according to buyer