Domestic US hot-rolled coil (HRC) spot prices rose for the second week in a row as mills were able to book tons at elevated price levels less than two weeks after formal price increases.
The Argus weekly domestic US HRC index rose by $4/short ton (st) to $491.75/st ex-works Midwest on 10 indications from sell- and buy-side sources.
Lead times stayed flat at 3-4 weeks as mills have been working on June order books.
Integrated steelmaker ArcelorMittal was reported to be setting price minimums for contract tons, while other steelmakers like Nucor, Steel Dynamics and US Steel were said to be requesting that contract customers buy at most the average amount of tons purchased in the last two months in an attempt to force more buying into the higher-priced spot market.
As Covid-19-related closures rippled across the US economy, forcing automakers and other manufacturers to shut down plants in mid-March, many steel buyers reportedly stopped taking orders or cancelled what they could.
Many buyers continued to stay on the sidelines, with few of their customers looking to buy tons. One buyer bought 300 tons of HRC on the spot market in the last week at $490/st.
The market is looking for signs from the automotive industry, which has begun to restart in North America. Honda and Toyota are restarting their plants this week, with the Big 3 US-based automakers - Fiat- Chrysler, Ford and General Motors - expected to start up next week.
Mexico - which supplies many parts to Canadian and US auto plants - has not announced an official time frame for when it will allow auto manufacturing and other manufacturers to restart. Mexican president Andrés Manuel López Obrador will be giving a speech tomorrow where he is expected to lay out plans for reopening the country's economy, which could include giving guidance on the auto industry, which has yet to be deemed essential.
Any reopening of the auto industry would likely drive up steel demand, especially after more than 15.5mn st/yr of flat rolled capacity was idled in the last six weeks due to combined demand drops in automotive and energy, which has been undergoing its own dramatic downturn.
In the May scrap trade that concluded last week, US prime ferrous scrap rose by $36/gross ton (gt) on average, while obsolete grades rose by $20-30/gt, depending on grade. The increase is expected to help support mill's push for higher prices. The spread between #1 busheling scrap delivered US Midwest mills and HRC selling prices was $214.96/st, much narrower than the spread of $371.79/st a year ago.
HRC import prices into Houston were flat at $507.50/st ddp.
Futures prices in the CME HRC futures market strengthened in the near term, and weakened further out. June futures prices rose by $20/st to $522/st, while July prices were up by $12/st to $522/st. August prices rose by $5/st to $520/st, and September futures prices slipped by $1/st to $520/st. October HRC futures prices dropped by $12/st to $520/st, while November prices fell by $7/st to $525/st. December HRC prices fell by $8/st to $526/st.
Summary of market activity heard by Argus:
- HRC, US: Tradeable value at $500/st, ex-works Midwest, according to seller
- HRC, US: Purchased at $500/st, ex-works Midwest, according to buyer
- HRC, US: Tradeable value at $490/st, ex-works Midwest, according to buyer
- HRC, US: Tradeable value at $490/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 $500/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 $490/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 $500/st, ex-works Midwest, according to buyer
