US HRC: Prices slip as concerns linger

The US sheet market was quiet after the long Thanksgiving weekend, but concerns about global steel prices and policy weighed on the minds of buyers.

Argus' weekly domestic US hot-rolled coil (HRC) index fell by $8.50/st to $775.50/st ex-works Midwest today, following three deals and indications from seven buy and sell-side sources.

Prior to the holiday, some mills had firmed up offers after reportedly filling their rolling programmes for the remainder of the year. One re-roller that had been offering competitively upped its offer to at least $760/st, having concluded deals at as much as $40/st below this level, sources said. The mill had a stronger order book for December than for November.

Many buyers also appeared to have met their fourth-quarter requirements, and there was an understanding that deals at around $720/st would not be available in the first quarter of next year.

One integrated seller said the December deals are "unsustainable" and mostly from re-rollers using "cheap imported slab", other then one electric arc furnace-based mill in Indiana also selling certain items at very competitive levels for December. These deals would disappear quickly, he said.

A service centre source reported an offer for 2,000t at $750/st, but it had not booked this and it was not dealing in the spot market. Another buyer said the lowest number he saw last week was $760/st.

Imports remained uninteresting to some, given the lowest priced domestic deals, especially as some traders were talking about March-April shipment. Buying so far forward in a market where policy could change overnight clearly carries risk.

Mexican material was heard at competitive levels of around $710/st ddp, particularly from one mill. Egyptian coil was closer to $730-740/st, according to one trader. The Argus assessment for imported HRC was $715/st ddp Houston today.

Vietnamese cold-rolled coil (CRC) transacted at $820/st ddp Houston, fob loaded truck, just before Thanksgiving.

The forward market was cautious, with the CME HRC curve dropping sharply as people sold in the belief that the 25pc tariff on Mexican and Canadian material would transition to quotas. The sell-off was also driven by concern about recently announced capacity expansions, as strong domestic output is deemed to have contributed to recent physical market weakness. And the softening in China, combined with General Motors' recent announcement, also fuelled cautious trading sentiment.

There was also talk of an imminent reduction in the US' Section 232 duty on Turkish imports back to the original 25pc.

At 16:20 in London, December had traded down by $13/st to $765/st, with January falling by $17/st to $753/st and February by $19/st to $754/st. March slipped by $20/st to $744/st.

Summary of market activity heard by Argus

• HRC-US: Integrated seller estimates tradeable value at $830/st plus
• HRC-US: Re-roller increases offer to $760-780/st
• HRC-US: trader estimates domestic material at $780/st
• HRC-US: Buyer estimates tradeable value at $790/st
• HRC-US: Buyer received offer for 2,000t at $750/st
• HRC-US: Material quoted at $760-780/st, according to one buyer
• HRC-US: Material from one mill still available at $700/st, according to one buyer