US HRC: Prices up, mills push further

Market: Metals
07/03/23

US domestic hot rolled coil (HRC) spot prices increased for the fifth consecutive week as mills continued to push spot market offers higher, while price increases late last week continue to be digested by the market.

The Argus weekly domestic US HRC Midwest and southern assessments both increased by $100/st to $1,100/st, the highest levels since mid-June 2022.

Multiple steel mills reported selling HRC at $1,100/st since the last assessment. The price offer range was $1,000-1,200/st, with most in the $1,100-1,200/st range.

The $1,100/st base price was initially set by integrated steelmaker Cleveland-Cliffs on 27 February, and was reported to have been received by multiple steelmakers. Electric arc furnace (EAF) competitor Nucor followed on 3 March with a $150/st price increase, setting its minimum HRC price to $1,150/st. EAF steelmaker and reroller NLMK USA pushed its minimum HRC price to $1,200/st, with a 40-day outage at its Portage, Indiana, mill driving the move.

One steelmaker told Argus that they are booking slightly more than their production capacity, indicating they may have late deliveries through May.

HRC lead times in the Midwest rose to eight weeks from 6-8 weeks, with most mills said to be full or almost full for April. More mills have become booked into May and some are reportedly holding off booking more.

Steel mills have continued to be successful in receiving higher flat steel spot offers after formally raising prices by $460-510/st through a series of increases since the end of November through 21 February. The Argus US Midwest and south spot assessments have increased by $473/st since then, an increase of 75pc over the low point in November.

The price increases are being driven by a combination of smaller factors, with steel mill utilization rates below 75pc since mid-October, less supply from Canada and Mexico, tight service center inventories, a stronger-than-expected US economy and elevated raw material prices have put pressure on finished steel prices.

Contract discounts of 5-9pc to the current Argus HRC assessment would be the equivalent of $55-99/st.

The spread between #1 busheling scrap delivered US Midwest mills and HRC jumped by 17pc from the prior week to $700/st and is at the highest level since 24 May 2022. The spread is poised to contract once the March domestic ferrous scrap trade finalizes, but busheling prices are widely expected to not keep pace with monthly HRC price gains.

The Argus HRC import assessment into Houston fell by $25/st to $860/st. One buyer reported paying that price for a couple barges of HRC out of South Korea into the US Gulf Coast for July delivery. The transaction is outside of Argus' methodology but is a strong indicator of where the import market is. For countries subject to the 25pc Section 232 tariffs prices were reported between $900-1,040/st. Long lead times from non-North American countries and elevated prices continue to keep most imports at bay for now.

The Argus weekly domestic US cold rolled coil (CRC) assessment was flat at $1,200/st, while the hot dipped galvanized (HDG) coil assessment jumped by $100/st to $1,200/st.

NLMK USA increased its CRC and HDG offer prices to a range of $1,300-1,400/st last week, while buyers in the market has noted that HRC prices have increased so rapidly that its been hard to track where value-add prices have risen.

Lead times for CRC slipped to 9-10 weeks from 10 weeks while HDG lead times were flat at 8-9 weeks.

The CME HRC Midwest futures market jumped in the last week albeit at a slower rate than the prior week, pushing up by triple digits through June but with contango retreating a month through to July. April prices skyrocketed by $135/st to $1,270/st, while May prices also rose sharply by $118/st to $1,230/st. June futures prices jumped by $110/st to $1,198/st, while July prices rose by $81/st to $1,099/st. August futures increased by $27/st to $1,037/st, while September prices rose by $16/st to $1,010/st.

Plate

The Argus weekly domestic US ex-works plate assessment was flat at $1,480/st, the current target price for Nucor, while there were unconfirmed reports of higher ex-works prices from other suppliers such as SSAB Americas.

Lead times increased to 7-8 weeks from 6-7 weeks as more of April was reported to be booked.

The plate delivered assessment increased by $10/st to $1,600/st on higher reported delivered prices.

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