US HRC: Prices jump after second producer hike

Prices in the US hot-rolled coil (HRC) market jumped this week after a second round of $40/st increases from steelmakers.

The Argus weekly domestic US HRC index rose by $25.25/st to $530.75/st ex-works Midwest today on three offers and four indications from buy- and sell-side sources. The week-to-week increase is the largest since April 2018, when US steel prices rocketed up after President Donald Trump imposed the 25pc Section 232 steel tariff on imports.

Prices have increased by 7.7pc in the last three weeks since hitting a yearly low of $488/st in October.

Lead times rose to seven to eight weeks, with many mills reporting that they are booked into January, though some had availability in late-December.

ArcelorMittal announced yesterday that it was shutting down a blast furnace at its Indiana Harbor integrated steel mill, which had a production capacity of 4,500 t/day (4,960 st/day) of pig iron.

While prices have risen, the increase is mostly in the offered prices by mills, which have little spare capacity to offer through the rest of 2019. Many steel buyers are comfortable with the tons they have booked, and are not in a rush to book more steel given stagnated demand. With lead times pushed into January it will be hard, if not impossible, for those who have not yet ordered new steel that they need to find placement at the mills.

HRC import prices into Houston jumped $40/st to $560/st ddp due to improving conditions on the global market. With domestic prices remaining low, few traders expect HRC imports to pick up.

Plate prices fell by $33.50/st to $626.50/st on three indications despite reports that multiple mills, including Evraz and Nucor, pushed for price increases last week. Buyers were baffled by the price increases in a market that has seen little pickup in demand.

The CME HRC futures market increased in the last week, with January futures for HRC up by $16/st to $564/st, while February prices rose by $14/st to $566/st. March HRC prices rose by $13/st to $553/st. Futures prices now top out at a high of $580/st through all of 2020, up by $5/st compared to the previous week.

Summary of market activity heard by Argus

• HRC, US: Tradeable value at $535/st, ex-works Midwest, according to seller
• HRC, US: Tradeable value at $540/st, ex-works Midwest, according to seller
• HRC, US: Tradeable value at $540/st, ex-works Midwest, according to seller
• HRC, US: Tradeable value at $515/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $515/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $530/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $540/st, ex-works Midwest, according to buyer