US HRC: Spot prices flat, mills push increases

Market: Metals
29/11/22

US hot rolled coil (HRC) spot prices were flat this week as the market began to digest flat-rolled price increases announced by two steelmakers on Monday.

The Argus weekly domestic US HRC Midwest assessment was flat at $627.50/st, while the southern assessment slipped by $1.75/st to $626.75/st.

HRC lead times in the Midwest increased to 4-5 weeks from 3-4 weeks.

Steelmakers Cleveland-Cliffs and US Steel both increased prices by $60/st to start the week. US Steel was reported to be targeting base pricing of $680-700/st for HRC, and around $950/st for cold rolled coil (CRC) and hot dipped galvanized (HDG) coil products.

Offers for HRC were reported between $580-700/st, a wide range reflecting the uncertainty created by the two price announcements.

Many viewed the price announcements as an attempt by steelmakers to stop persistent price declines. Few expect buyers to resume purchasing given the slowdown expected in the market as the Christmas and New Year holidays approach.

Since the beginning of the year prices have fallen by 60pc amid oversupply. Market participants are concerned that oversupply will continue in 2023 and potentially worsen.

Only US Steel has made public announcements of idling production, taking down two blast furnaces, one each at its Indiana and Pennsylvania integrated steel mills.

Three more electric arc furnace (EAF) flat-rolled steelmakers are expected to ramp up production more in the coming months. In Kentucky, Nucor's Gallatin mill is expected to ramp up its now-3mn st/yr flat-rolled mill in the first quarter, a delay to previous expectations. That mill completed integration of a 1.4mn st/yr expansion in June.

In Texas, Steel Dynamics' Sinton 3mn st/yr flat-rolled mill is targeting an 80pc utilization rate in 2023, adding 2.4mn st of production, while in Ohio North Star BlueScope is working to ramp up its 937,000st/yr expansion at its flat-rolled mill, which now has a total production capacity of 3.25mn st/yr.

Initial reads of the December scrap trade are for pricing to be sideways compared to November levels. The #1 busheling scrap pricing has fallen the past seven consecutive months.

President Joe Biden has called on Congress to pass legislation that would impose a labor contract on railroads and labor unions, a move that would avert a possible strike on 9 December.

A strike could grind much of the US economy to a halt, including shipments of scrap into steel mills and finished steel out of them.

The Argus HRC import assessment into Houston rose by $30/st to $640/st ddp. It is unclear how possible price hikes in the US could lead to increased interest in import volumes.

The spread between #1 busheling scrap delivered US Midwest mills and HRC was flat at $340/st.

A year ago the spread was $1,251/st as HRC prices were beginning to decline from record-high levels.

The Argus weekly domestic US cold-rolled coil (CRC) assessment was flat at $850/st while the hot dipped galvanized (HDG) coil assessment was also flat at $848.75/st.

Lead times for CRC fell to 5-6 weeks from 5-7 weeks while HDG rose to 5-6 weeks from 5 weeks.

The CME HRC Midwest futures market was mostly up, with the futures prices remaining in contango. January prices rose by $10/st to $710/st, while February prices moved up by $14/st to $725/st. March prices edged up by $2/st to $727/st, while April prices increased by $10/st to $745/st. May prices rose by $5/st to $745/st, and June prices slipped by $3/st to $750/st.

Plate

The Argus weekly domestic US ex-works plate assessment was flat at $1,600/st.

Lead times fell to fiveweeks from 5-6 weeks.

The plate delivered assessment was flat at $1,650/st.

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