US HRC: Prices fall, buyers hold out

US hot rolled coil (HRC) prices fell for a third time in the past four weeks as mills struggle to entice buyers with lower offers.

The Argus weekly domestic US HRC Midwest and southern assessments fell by $25/short ton (st) and $30/st, respectively, to $1,135/st. Prices are down by 5.4pc from their peak of $1,200/st in early April.

There were some HRC offers still as high as $1,200/st but the bulk of competitive offers were at $1,100-$1,170/st. Some buyers indicated the possibility of lower prices for larger tonnage inquiries but no buying activity could be confirmed at those levels.

A mill indicated selling prices for recent HRC transactions were at $1,150-1,170/st compared to $1,175-1,200/st last week. He noted the market remained slow with buyers still waiting to place new orders. Still, he did not think service center inventories were high enough to allow buyers to remain out of the market for much longer.

The reluctance to place new orders was amplified as service center sources pointed to growing uncertainty around end-use demand. One buyer said their demand remained off by more than 10pc from initial forecast with inquiries falling off dramatically.

US HRC lead times have stalled at 6-7 weeks as mills continue to look to finalize June orders, according to the latest Argus average data. Lead times are down from a peak of 8-10 weeks at the end of March.

Some buyers were heard to be fishing for lower prices on larger tonnage inquiries but there remained a large gap between buyers' potential bidding prices and where mills would be willing to sell. Another service center source said he had heard of the larger tonnage discussions but was still finding mills to be stubborn on initial offers of $1,140-1,160/st.

He did not know if the pipeline of new orders for mills was strong enough to maintain current lead times but was yet to see a major capitulation on pricing.

Another large service center agreed that mills still were not able to fill their books but remained in a standoff with buyers on new orders.

Weaker sentiment in the spot market continued to weight on the forward curve with the CME HRC Midwest futures market mostly down by double digits in the last week. The curve dropped by $7-21/st through November 2023.

Import prices were flat this week at $840/st on a DDP Houston basis on offers out of South Korea, as buyers refuse to entertain current pricing levels given lead times of August and September delivery.

Plate

The Argus weekly domestic US ex-works plate assessment was flat at $1,570/st, matching offer published levels from integrated steelmaker Cleveland-Cliffs and electric arc furnace (EAF) steelmaker Nucor.

Domestic mills were solid on pricing through the second quarter but with uncertainty around business activity in the second half of the year posed a potential headwind, according to one service center source.

Lead times were flat at 6-7 weeks, with Cliffs said to be around 5-6 weeks and Nucor and competitor SSAB said to be sold out through June.

The Argus US plate assessment was flat at $1,660/st on a delivered basis, with offers at $1,590-1,770/st.