US HRC: Prices discounted on smaller orders

US hot rolled coil (HRC) prices dropped by the largest amount since June 2022 as mills were more willing to discount for smaller tonnage spot deals.

The Argus weekly domestic US HRC Midwest fell by $76.75/short ton (st) to $1,023.25/st, while the US HRC southern assessment was down by $80/st to $1,020/st. Prices are on an ex-works basis.

US HRC prices were down by 15pc from their peak of $1,200/st in early April after posting their largest weekly drop since falling by $84/st in mid-June 2022.

Buyers continued to discuss larger deals well below $1,000/st but smaller tonnage orders remained more representative of repeatable market activity. The declining price environment left most buyers apprehensive to take positions even at large discounts to current spot levels.

In the Midwest, a buyer placed an order at $1,060/st for 200st but suspected mills would be willing to discount to $1,000/st for 500st. The buyer noted the lead times were approximately four weeks and the order would be flipped quickly to a customer after coming in, leaving them less exposed to falling prices.

One large spot buyer said spot prices have fallen below lagging discounted-contract pricing for the last month and spot prices could slip below $1,000/st soon. In addition, competitors were also starting to discount coil resale prices below price levels for the mills. "We're trying to get out of dodge with all of our steel," added the buyer.

He noted demand remained stable and was allowing him to keep steel flowing. Other buyers had similar sentiment around consistent demand which was helping to keep shipments steady.

Still, there was growing concern July could lead to a sharper price correction as the market enters the seasonally slower period around the Fourth of July holiday.

"At this point, mills are at that crossroad where they're asking — what is it going to take to get the next order?" claimed another buyer. Mills appeared to be attempting to wait out buyers who have cut inventory levels to low levels that were potentially unsustainable.

Lead times edged out slightly to 5-6 weeks from 4-5 weeks but were still down significantly from the peak of 8-10 weeks at the end of March.

While overall spot prices have weakened, the CME US HRC forward remained mostly flat, with July down by $4/st and prices for the rest of the year up from $3-12/st.

The weekly Argus US HRC import price was unchanged at $840/st on a ddp Houston basis. As domestic numbers remained under pressure there was limited appetite for imported tons with September deliveries.

Plate

The Argus weekly domestic US ex-works plate assessment was flat at $1,570/st, as the market waits to see what electric arc furnace (EAF) steelmaker Nucor decides to announce for July.

Lead times fell to 6-7 weeks from 7-8 weeks. Most plate makers have booked up their June tons and moved into July.

The Argus US delivered plate assessment increased by $15/st to $1,635/st as offers were in a wide range of $1,590-1,670/st, with most at or above $1,630/st.