US hot-rolled coil (HRC) prices fell again this week as mills attempt to draw a pricing line at $800/short ton (st).
The Argus weekly domestic US HRC Midwest and southern assessments fell by $24.50/st and $25.25/st, respectively, to $821.75/st. Since mid-April, when HRC prices peaked at $1,500/st, the assessments have fallen by 45pc.
HRC lead times in the Midwest fell to 3-4 weeks from 3-5 weeks, as August tons were still reported to be available.
Market sentiment appears to be splitting between those who think pricing is reaching a floor and those who expect pricing to continue to fall. Even among those expecting a floor, few believe prices will rise back up, with many expecting a period of flat prices in the near future.
Steel mills appeared intent on holding the line at $800/st for 1,000st sized lots, still purchases below that level have been reported for multi-thousand short ton orders. The bar for sub-$800/st transactions appears to be rising, with more tons reportedly being needed in order to drop below the $800/st mark.
Some mills have reported setting their bottom at $900/st for sub-100st orders.
An uptick in buying is being attributed to low inventory levels, with many buyers having cut purchases since late March or early April as prices peaked. Inventories have been worked down to the point where some service centers have lost business from a lack of steel in their warehouses.
But economic pessimism is still keeping some buyers at bay, with the US posting two consecutive quarters of declining gross domestic product, the technical mark that the economy is in recession. A strong labor market and consumer spending appear to be holding off a worse downturn.
The Argus HRC import assessment into Houston was flat at $820/st ddp on no trades or offers.
The spread between #1 busheling scrap delivered US Midwest mills and HRC selling prices fell by 5.7pc to $399/st. The spread is the lowest since October 2020, when US steel prices were emerging from their Covid-19-induced low point.
A year ago the spread was $1,276/st and was weeks from hitting the peak spread of $1,441/st reached in mid-September.
The Argus weekly domestic US cold-rolled coil (CRC) assessment plunged by $107.50/st to $1,136.50/st, while the hot dipped galvanized (HDG) coil assessment dropped by $81.25/st to $1,154/st. Value-add prices still have some way to drop as market participants continue to note that prices are still out of sync with historic spreads.
Lead times for CRC rose to 5-6 weeks from 4-6 weeks while HDG lead times were flat at 4-6 weeks.
Unlike the HRC market, the CRC and HDG markets appear to be less active.
The CME HRC Midwest futures market increased this week, with prices remaining in contango for the second consecutive week. September futures edged up by $4/st to $854/st, while October prices rose by $10/st to $870/st. November prices increased by $20/st to $880/st, while December price were up by $110/st to $875/st. January prices increased by $15/st to $900/st, and February futures prices jumped by $33 to $903/st.
Plate
The Argus weekly domestic US ex-works plate assessment plunged by $120/st to $1,740/st as both Cleveland-Cliffs and Nucor reduced their price offers. Lead times shrank to 3-6 weeks from 4-6 weeks.
The plate delivered assessment dropped by $134/st to $1,798/st.
