US HRC: Increases partially starting to stick

The most aggressive deals for March production are dissipating in the US hot-rolled coil (HRC) market as some of the recent $40/st increases begin to stick and lead times extend slightly.

The Argus weekly domestic US HRC index rose by $10.50/st to $687/st ex-works Midwest on two deals and indications from 10 buy and sell-side sources.

The recent increase announcements have stopped prices free-falling, with some electric arc furnace-based sellers transacting smaller tonnages at $700/st ex-works and one integrated mill reporting prices rising as high as $750/st ex-works. Buyers are slowly returning to the table, either via spot buys or by upping their contractual uptake.

An integrated seller said South Korea's comparatively small tube quota, alongside higher oil prices and rig counts and general economic news, was perking up sentiment and demand.

Raw material costs are unquestionably rising for US mills, as with their global counterparts. Iron ore and coking coal costs have moved up in recent weeks, while scrap has been more resilient than expected and slab is also moving up on supply-side constraints in the CIS.

Prices from all major coil exporters in Asia, the CIS and Turkey have also marched higher in recent weeks. And one of the most competitive domestic players is reportedly having issues with its electric arc furnace. Some talked of the potential for further increase announcements within the US on the back of these factors.

The Chicago Mercantile Exchange forward curve reflected an uptick in sentiment, despite some prevailing uncertainty. March traded at $724/st at around 16:05 London time, up by $15/st, while April rose by $11/st to $736/st.

That said, cut sheet prices in the south — which has been an aggressive market of late in terms of mill prices — are somewhat bearish. A well-stocked service centre reported selling cut HR sheet at as low as $700/st, which equates to a loss against replacement costs. One buyer agreed the sheet market was "ugly".

Summary of market activity heard by Argus:

HRC, US: Tradeable value at $680/st ex-works Midwest, according to buyer

HRC, US: Tradeable value at $725/st ex-works Midwest, according to seller

HRC, US: Tradeable value at $700/st ex-works Midwest, according to buyer

HRC, US: Tradeable value at $680/st ex-works Midwest, according to buyer

HRC, US: Electric arc furnace-based mill transacting at $700/st for 1-300t cargoes, according to seller

HRC, US: Buyer purchased 200t at $670/st ex-works Midwest, according to buyer

HRC, US: Tradeable value at $675/st ex-works Midwest, according to trader

HRC, US: Some deals being done at $675/st ex-works Midwest, according to buyer

HRC, US: Tradeable value at $700/st ex-works Midwest, according to trader