US HRC: Prices drift lower, scrap weighs

US prices for hot-rolled coil (HRC) fell this week, with some trading activity reported below $600/short ton (st) as many in the market noted a disconnect between offers and buyer expectations.

The Argus weekly domestic US HRC index fell by $14.25/st to $603.25/st ex-works Midwest today on 11 indications from buy- and sell-side sources.

Lead times slipped to 5-7 weeks from 6-8 weeks, with many mills booked through March but some near-term availability reported.

With the February domestic scrap buy just starting, many expect scrap prices to fall by $20-$30/gross ton (gt). Service centers expect spot HRC prices to fall on the lower scrap prices, and are preferring to buy on contract, where prices hover in the high-$500s/st.

The spread between ferrous scrap #1 busheling scrap delivered US Midwest consumer and HRC is currently $347.41/st, flat compared to a year ago.

HRC import prices into Houston fell by $25/st to $635/st ddp as demand for imported HRC remains muted amid lower domestic prices and long import lead times.

Plate prices fell by $15/st to $680/st as buyers and sellers remain at a standoff. Mills are trying to receive higher prices for plate, while buyers have kept inventories low among weak demand and short lead times of 4-5 weeks.

There is little optimism that a $760bn infrastructure bill unveiled by Democrats last week will gain any traction.

The CME HRC futures market fell compared to last week, with March HRC prices down by $18/st to $550/st while April future prices dropped by $14/st to $545/st. May and June prices both fell by $7/st to $549/st. July futures prices are at $549/st, while August HRC future prices are at $552/st.

Summary of market activity heard by Argus

• HRC, US: Tradeable value at $635/st, ex-works Midwest, according to seller
• HRC, US: Tradeable value at $610/st, ex-works Midwest, according to seller
• HRC, US: Tradeable value at $590/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $595/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $590/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $600/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $610/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $600/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $605/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $600/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $600/st, ex-works Midwest, according to buyer