US HRC: Prices plunge on falling demand

Market: Metals
31/03/20

Domestic US hot-rolled coil (HRC) spot prices plunged this week as the steel market digested a slew of closures from automakers, parts manufacturers and steel mills due to the coronavirus pandemic in the US.

The Argus weekly domestic US HRC index fell by $40.50/short ton (st) to $539.50/st ex-works Midwest on seven indications from buy-side sources.

Lead times fell by a week to five weeks as no mills reported booking new orders.

Prices struck a wide range this week, with mills saying they saw no reason to chase business due to the fall off in demand and buyers reporting having multiple mills bidding prices down on an order.

Many market participants reported order cancellations and customers closing their businesses due to the shutdown of automakers in the US and the original equipment manufacturers (OEMs) that supply them.

One service center said orders worth thousands of tons had been canceled, and many market participants are still reviewing their orders and inventories to figure out what projects will be fulfilled.

Many expressed increased concern at what would come in May, when demand is expected to plummet. Earlier this week, President Donald Trump extended social distancing guidelines in the US through to 30 April.

April ferrous scrap prices are expected to fall between $30-$50/gross ton (gt), depending on quality and region. Deep uncertainty has gripped the scrap market, as many have shut down peddler flows as part of government orders and to protect their staff, and flows of prime material has dried up with the closures of auto plants.

Today automaker Ford became the latest in the US to extend its shutdowns. The company had originally planned to restart some US plants on 14 April, and it has delayed those plans indefinitely.

Fiat-Chrysler Automobiles (FCA) announced last week it was extending its shutdowns, as did Japanese automaker Toyota's US operations.

Last week integrated steelmaker Cleveland-Cliffs, which recently purchased AK Steel, and US Steel announced the closures of multiple blast furnaces. Cleveland-Cliffs idled the 2.2mn Dearborn Works in Detroit, which primarily served the auto industry, while US Steel announced the idling of its 1.5mn st/yr No 4 blast furnace at its Gary Works mill in Indiana. The blast furnace had been scheduled to be taken down for maintenance, but will be idled until market conditions improve.

US Steel also took down the more than 1mn st/yr blast furnace A at its Granite City works in southern Illinois. The idling may have been due to the previous decision by the steelmaker to idle its tubular mills, according to a market participant.

Including previous idlings by ArcelorMittal at its Indiana Harbor West mill, more than 5mn st/yr of flat-rolled steelmaking capacity in the US has been taken offline. ArcelorMittal also idled a blast furnace at its Dofasco mill in Canada.

Gerdau last week idled 1mn st/yr of melting operations at its special steel mills, as a result of the auto shutdowns.

HRC import prices into Houston dropped by $50/st to $580/st ddp as no domestic buyers picked up lower international offers.

After plunging in the prior week futures prices in the CME HRC futures market recovered somewhat over the last week, with May prices rising by $9/st to $495/st. June futures prices increased by $11/st to $485/st, while July prices rose by $11/st to $485/st. August prices increased by $18/st to $496/st, and September futures prices jumped by $30/st to $510/st. October HRC futures prices rose by $28/st to $518/st, while November prices settled up by $23/st to $518/st. December HRC prices are at $519/st.

Summary of market activity heard by Argus:

HRC, US: Tradeable value at $534/st, ex-works Midwest, according to buyer
HRC, US: Tradeable value at $577.50/st, ex-works Midwest, according to buyer
HRC, US: Tradeable value at $560/st, ex-works Midwest, according to buyer
HRC, US: Tradeable value at $500/st, ex-works Midwest, according to buyer
HRC, US: Tradeable value at $550/st, ex-works Midwest, according to buyer
HRC, US: Tradeable value at $525/st, ex-works Midwest, according to buyer
HRC, US: Tradeable value at $530/st, ex-works Midwest, according to buyer

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24/12/24

Viewpoint: US tariffs, new EAFs may alter scrap flows

Pittsburgh, 24 December (Argus) — A wave of new electric arc furnace steel mills coming on line next year could transform scrap flows in North America, while looming US import tariffs could stunt cross-border trade. Six steel mills in the US and Canada, accounting for about 9.9mn short tons (st)/yr of electric arc furnace (EAF) production, are ramping up from late this year or scheduled to start up in 2025. The new EAFs, mostly along the Mississippi River and in Ontario, could be magnets for scrap and reshape flows across the southeast, Midwest and Canada, as scrap-fed EAF steelmakers continue to expand their role in North America, which was historically dominated by coal and iron ore-fed blast furnaces. Although some scrap dealers are optimistic about markets in the new year, market participants are carefully monitoring the effect president-elect Donald Trump's hawkish trade policies could have on scrap trading. Trump has pledged to impose 25pc tariffs on US imports from Canada and Mexico that could further shift North American scrap flows. Canada is the largest shipper of ferrous scrap into the US at an average of 3mn metric tonnes (t)/yr since 2021. Prime scrap imports between January and October this year averaged 47,000t/month, while shred imports averaged 70,000t/month, US customs data shows. The import tax would drive up the cost of Canadian scrap for US buyers and potentially reduce supply available to steel mills in the Midwest. Scrap traders noted that Trump can be unpredictable and may be using the threat of tariffs as leverage. "I'm pretty tepid on the first quarter," one Midwest dealer said. "People are trying to figure out how serious Trump is on tariffs." New EAFs to drive scrap demand The new scrap-fed EAFs in North America include Algoma Steel in Ontario, Hybar in Arkansas, and Nippon Steel's and ArcelorMittal's joint venture in Alabama. US Steel's Big River Steel began melting scrap at its second Arkansas EAF in October. EAF steelmaker Hybar plans to open its 630,000 st/yr reinforcing bar mill in northeast Arkansas in the summer of 2025. Hybar, along with Big River Steel and three Nucor mills already in the region, could further bolster the lower Mississippi River basin as a major scrap market. "I'm looking forward to next year because of the increased competition," a Midwestern scrap dealer said. "It's always good to have options." The new consumption could position northeast Arkansas and Tennessee as perhaps the top scrap consuming region, making it an industry barometer in 2025. Chicago has historically held that position and has been the benchmark region in contracts. Shifting flows in Canada Algoma Steel plans to begin ramping up two new EAFs in Sault Ste Marie, Ontario, in March next year to continue making hot-rolled coil and steel plate. The EAFs could eventually bring that facility's maximum steel production levels to 3.7mn st/yr once they fully replace Algoma's blast furnaces. The steelmaker will likely focus on low-copper shred and prime scrap grades to keep up the iron content in its melt mix as it transitions to EAF steelmaking, one Canadian scrap consumer said. Algoma may also continue to rely on raw inputs like direct reduced iron and hot briquetted iron as it ramps up its scrap buying to feed the EAFs. Market participants in Canada expect the mill to buy scrap from the prairies west of Sault Ste Marie, as well as from the greater Toronto area to the mill's east, though Algoma will face competition to pull scrap from the latter region. Scrap dealers in the upper Midwest are also keen to supply Algoma Steel because buyers in that region are scarce. A Midwest dealer noted that Algoma may ship in scrap from US ports on the Great Lakes. Algoma did not respond to requests for comment on its raw material plans. In 2021, the company set up a joint venture with Triple M Metal, a Canadian scrap dealer with 45 yards, that will likely supply scrap for Algoma Steel in Sault Ste Marie. By James Marshall and Brad MacAulay US steel mill capacity additions Million short tons/yr Company Location Product type Capacity added Start date US Steel/Big River Steel Osceola, AR Sheet 3.00 RAMPING ArcelorMittal/Nippon Steel Calvert, AL Sheet 1.65 2H 2024 Algoma Steel Sault Ste. Marie, ON Sheet 3.70 1Q 2025 Nucor Lexington, NC Bar 0.43 1Q 2025 Hybar Osceola, AR Bar 0.63 2Q 2025 CMC Berkeley, WV Bar 0.50 4Q 2025 Total 9.91 Argus reporting & public statements Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Viewpoint: FeV demand may grow next year

24/12/24

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24/12/24

Viewpoint: FeV demand may grow next year

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Viewpoint: US steel glut may dampen prices, profit

23/12/24

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23/12/24

Viewpoint: US steel glut may dampen prices, profit

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Viewpoint: China SiMn prices face pressure in 2025

23/12/24

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23/12/24

Viewpoint: China SiMn prices face pressure in 2025

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Viewpoint: Asia scrap set to face uncertainty in 2025

23/12/24

News

23/12/24

Viewpoint: Asia scrap set to face uncertainty in 2025

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