US HRC: Price slide as market searches for floor

The US steel market continued to seek a floor with prices down to their lowest levels in more than three years and as many sense that demand is set to pick up in the next few weeks.

The Argus weekly domestic US HRC index dropped by $5/st to $488/st ex-works Midwest today on six indications from buy- and sell-side sources. The price is the lowest since April 2016.

Electric arc furnace (EAF) steelmaker Nucor said today that it believes steel prices have bottomed, and market participants expect that a price increase will be announced in the next several weeks.

Lead times rose to six weeks as mill books showed some additional activity.

The rising optimism that prices will reverse stems from how low they have fallen. Low prices are bringing more buyers off the sidelines to take advantage of spot prices before mills get booked up and force a price increase. Many believe that any price increase announcement will be more to set a floor on pricing than to push it up significantly.

The market reacted positively on news that the United Automobile Workers (UAW) union and General Motors (GM) came to a tentative deal last week, which if ratified by the end of this week, could bring 48,000 union workers and thousands of nonunion GM employees back to the manufacturing lines. The automaker is the largest in the US and a major consumer of steel products.

HRC import prices into Houston stayed at $510/st ddp amid little trading amid low domestic prices.

Plate prices fell by $5/st to $665/st as the price standoff between service centers and mills continues.

The CME HRC futures market mostly rose in the last week, with December futures for HRC down slightly by $1/st to $513/st. January HRC prices rose by $11/st to $536/st, while February prices rose by $8/st to $543/st. Futures prices top out at a high of $560/st through all of 2020.

Summary of market activity heard by Argus

• HRC, US: Tradeable value at $490/st, ex-works Midwest, according to seller
• HRC, US: Tradeable value at $495/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $490/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $490/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $470/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $492.50/st, ex-works Midwest, according to buyer