US HRC: Prices fall on market uncertainty

US hot-rolled coil (HRC) prices fell this week amid continued uncertainty and slow spot trading.

The Argus weekly domestic US HRC index fell by $8.25/st to $696/st ex-works Midwest today on five indications from buy and sell-side sources.

Lead times for deliveries held steady at 5-6 weeks as customers continued to take advantage of lower contract prices and avoided the spot market.

Buyers are still hesitant to build inventory as many expect prices to fall further. One buyer said they had begun to see gaps open up in their order books over the next few months, indicating potential demand weakness in the future.

US mill utilisation rates remain at 82.3pc — levels not seen since 2008, and up from 76.4pc a year earlier. Year-to-date production to the week ending 13 April was 28.1mn st, up by 6.8pc from the same period in 2018.

Multiple outages are impacting production, with a blast furnace at US Steel's Mon Valley works down since 8 April, and not expected to restart until 22 April

. And NorthStar BlueScope's 2mn st/yr mill will have a three-day outage from 22-24 April for maintenance.

Prices for HRC imports into Houston fell by $20/st to $650/st ddp, with most of the drop owing to weakening prices for South Korean product.

Cold-rolled coil (CRC) and hot-dipped galvanised (HDG) prices slipped by $5/st to $840/st with CRC lead times of 8-9 weeks and HDG at 9-10 weeks.

The Chicago Mercantile Exchange forward curve for May dropped by $14/st from 9 April to $675/st yesterday. June prices also fell, dropping by $12/st to $677/st from the previous week, while July prices fell by $13/st to $675/st. Traders now expect steel forward prices to remain below $680/st for the rest of 2019.

Summary of market activity heard by Argus

• HRC, US: Tradeable value at $690/st ex-works Midwest, according to seller
• HRC, US: Tradeable value at $690/st ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $685/st ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $735/st ex-works Midwest, according to seller
• HRC, US: Tradeable value at $680/st ex-works Midwest, according to buyer