US HRC: Prices drop as offers move lower

US hot-rolled coil (HRC) prices have fallen as lower offers and sales pushed prices down in the largest drop since February.

The Argus weekly domestic US HRC Midwest assessment fell by $25/short ton (st), the largest drop since 2 February, when prices fell by $37/st. The southern HRC assessment dropped by $35/st to $1,915/st on even lower offers, with some reports that steelmakers are willing to drop as low as $1,880/st.

Lead times in the Midwest shrank to 4-5 weeks from 5-6 weeks.

One steelmaker sold HRC spot tons for $1,940/st, but many offers had received or cut their own offers as low as $1,900/st, with two southern offers listed at the $1,880/st level.

The price fall was the third decline over the last five weeks, and many buyers have pulled further onto the sidelines as expectations grow that pricing will continue to fall, potentially sharply. One service center said they had the opportunity to buy to their maximum on contracts and were keeping their purchasing to the minimum contract levels.

Some service centers began to limit buying to reduce inventories and to meet year-end targets. Coupled with declining demand and pricing uncertainty, consumers are less likely now to be buying extra steel than during most of 2021.

Electric arc furnace (EAF) steelmaker Steel Dynamics (SDI) lowered its production expectations for its Sinton, Texas flat-rolled steel mill. The company now expects to start melting at the end of November or early December of 2021, and to make 2mn-2.2mn st of flat-rolled products in 2022, a decline of 200,000st from its previous estimates.

SDI also bought a minority 45pc stake in service center New Process Steel.

HRC import prices into Houston were flat at $1,500/st ddp. Multiple service center contacts reported that HRC is available in Houston at prices $100/st or less than where domestic producers are offering.

The spread between #1 busheling scrap delivered US Midwest mills and HRC selling prices fell by $25/st to $1,414/st. The spread is over three times as wide as the $412/st from a year ago.

The Argus weekly domestic US cold-rolled coil (CRC) assessment fell by $25/st to $2,175/st while the hot-dipped galvanized (HDG) assessment declined by $35/st to $2,185/st.

Lead times for CRC rose to 7-8 weeks from 5-8 weeks while HDG lead times increased to 8-9 weeks from 7-8 weeks.

Most of the CME HRC Midwest futures market was relatively flat in the last week. December pricing was flat at $1,635/st, while the January futures price increased by $6/st to $1,505/st. February pricing increased by $7/st to $1,380/st, while March pricing rose by $10/st to $1,285/st. April pricing is at $1,260/st.

Plate

The Argus weekly domestic US plate assessment fell by $40/st to $1,800/st delivered. Lead times fell by 5-7 weeks from 5-10 weeks.