US HRC: Prices rise, buyers skeptical

US prices for hot-rolled coil (HRC) continued to rise this week as mills try to push more buyers into the spot market and service centers voice doubts over the longevity of the price increases.

The Argus weekly domestic US HRC index rose by $13.25/st to $619.50/st ex-works Midwest today on 12 indications from buy and sell-side sources.

Lead times have slipped to 8 weeks from 8-9 weeks as many mills remain booked through February, with some beginning to book into March. Market participants said at least one electric arc furnace (EAF) steelmaker was keeping lead times short to take advantage of rising spot prices.

Mills are reported to be pushing service centers to buy the minimum of their contract amounts in an attempt to push them onto the spot market.

ArcelorMittal announced last week that it was ramping up production at its Indiana Harbor East No 4 basic oxygen furnace (BOF), which was taken offline after an explosion on 27 December. Some in the market had hoped the outage would tighten supply and help prop up prices.

Some service centers are wary of the recent price push, driven by five price increases by major steelmakers like Nucor and ArcelorMittal and rising scrap prices, which increased by $30/gross ton (gt) in January. Scrap prices have risen by around $90/gt since October.

A large service center said Nucor's push for a fifth round of increases was premature and that the price rally, which has added $131.50/st to the Argus index since the low of $488/st in October, could fizzle out in the next month due to a lack of end user demand. Market participants indicate that buying may slow as expectations grow that prices will fall.

HRC import prices into Houston rose by $6.75/st to $666.75/st ddp as international steel prices continue to rise and demand for imported HRC remains muted amid lower domestic prices and long international lead times.

Plate prices fell by $7.50/st to $680/st on weak demand.

The CME HRC futures market rose slightly compared to last week, with March HRC prices flat at $586/st while April future prices fell by $5/st to $582/st. May prices fell by $8/st to $579/st, while June HRC futures fell by $9/st to $576/st. Futures prices for February are at $604/st just two weeks before the start of the month, while futures prices for the rest of 2020 top out at the $586/st mark in March, down by $1/st compared to last week's high of $587/st. After May futures prices dip below the $580/st mark through the rest of the year.

Summary of market activity heard by Argus

• HRC, US: Tradeable value at $610/st, ex-works Midwest, according to seller
• HRC, US: Tradeable value at $635/st, ex-works Midwest, according to seller
• HRC, US: Tradeable value at $620/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $610/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $600/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $620/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $620/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $620/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $635/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $625/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $610/st, ex-works Midwest, according to buyer
• HRC, US: Tradeable value at $630/st, ex-works Midwest, according to buyer