US HRC: Prices continue to fall on weak demand

Spot prices for flat-rolled steel in the US continued their downward trend as expectations for lower scrap prices drove sentiment down and many stayed out of the spot market.

The Argus weekly domestic US hot-rolled coil (HRC) index fell for a third week, moving down by $6.75/short ton (st) to $487.50/st ex-works Midwest on seven indications from sell- and buy-side sources.

Lead times were steady at 3-4 weeks.

The domestic US CRC assessment also fell by $5/st to $665/st, while the HDG coil assessment dropped by $20/st to $655/st. Lead times for both products were steady at 5-6 weeks.

Expectations are that prime ferrous scrap prices will fall by $20-$30/gross ton (gt) in the July trade, which is expected to begin next week, with prices for other grades falling by lower amounts. Steel demand has remained lower than expected, with capacity utilization only ticking up 0.8 percentage points to 55.4pc in the last week, with utilization rates remaining below 70pc since the beginning of May. Many market participants said steel leftover in the supply chain from when automakers suddenly shuttered in mid-March has yet to be consumed.

Integrated steelmaker US Steel announced today it is restarting its No 6 blast furnace at its Gary Works steel mill in Indiana. The 1.36mn st/yr blast furnace is the second one US Steel has brought online, after ramping up its No 1 blast furnace at Mon Valley works south of Pittsburgh.

The spread between #1 busheling scrap delivered US Midwest mills and HRC selling prices was $201.79/st, down by 3.4pc compared to the prior week, and fueling expectations for a cut in busheling prices in July. Year-over-year, the spread is 29pc lower than the $283.07/st recorded a year ago.

HRC import prices into Houston were flat at $470/st ddp.

Futures prices in the CME HRC futures market were mixed over the last week. August prices fell by $11/st to $507/st, while September futures prices slipped by $3/st to $521/st. October and November HRC futures both rose slightly by $1/st to $528/st. December prices increased by $1/st to $530/st. January HRC futures prices slipped by $1/st to $538/st.

Plate

The Argus weekly domestic US plate assessment fell by $15/st to $580/st amid weak demand.

Summary of market activity heard by Argus:

• HRC, US: Tradeable value at $500/st, ex-works Midwest, according to seller
• HRC, US: Tradeable value at $500/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $455/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $495/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $477.50/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $485/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $487.50/st, ex-works Midwest, according to buyer