US HRC increase 'imminent': market participants

The US steel coil market's eagerly awaited first price increase announcement is imminent today, market participants said.

The country's largest steelmaker will soon increase prices by $40/st, customers and other sellers said. The customers had not yet received official notice, though one suggested this "meant nothing".

The Argus domestic US hot-rolled coil (HRC) index fell by $17.75/st to $828.75/st ex-Midwest yesterday, as some re-rollers and electric arc furnace-based producers continued to sell aggressively to fill their order books. The price was down from $896.75/st on 14 August.

Other mills have also been mulling increases for the past few weeks and will likely take the opportunity to firm offers. Scrap prices seem to have bottomed and some suggest activity will increase in the US sheet market over the rest of the fourth quarter. Around 900,000t of strip is likely to be impacted by planned outages over the rest of this quarter, which could tighten the supply and demand balance somewhat — although most mills typically amass slab/coil to prevent delivery disruption amid scheduled maintenance.

Demand has slowed since the summer break with buyers nervous over price direction and some — such as tubers — leaving the market. As a result, those with less contract exposure have pulled their spot pricing towards contractual levels — and below in some instances — to win business. The Chicago Mercantile Exchange has been firmly backwardated, suggesting lower pricing going forward.

Lead times at some producers have been reduced to as low as two weeks in recent months, compared with closer to 10 weeks when the market was at its peak. Hot-rolled prices rose to a high of around $930-940/st after Donald Trump removed the 232 exemptions for Canada, Mexico and the EU.

"It has been difficult to settle on prices with the market deteriorating, so hopefully this will stabilise the price and start a bit of a recovery," one trader said, suggesting tepid demand could stop prices surging.