US HRC: Prices jump, market grows concerned

US domestic hot rolled coil (HRC) spot prices jumped this week as mills continued pushing steel price offers higher, but buyers grew more skeptical about how much longer the current run could last.

Rising offer prices drove the Argus weekly domestic US HRC Midwest and southern assessments up by $50/st to $850/st.

Steel mills continued to be successful in achieving higher flat steel prices after formally raising prices by $260/st through a series of increases since the end of November. The US Midwest spot assessment has increased by more than $220/st since then.

Steelmakers Cleveland-Cliffs and Nucor are targeting a minimum HRC price of $900/st after announcing $50/st price increases yesterday while US Steel increased prices by $50/st without setting a price minimum.

Offers were reported in a wide range between $780-900/st, while most were in a narrower range between $820-850/st.

Buyers were concerned that the rapid increase in prices — the latest announcement was only 10 days after the previous one — will deflate the market quickly. Many are opting to continue to buy at heavily discounted contract prices to mitigate their risk.

Contract discounts of 5-9pc to the current HRC assessment would be the equivalent of $43-77/st.

HRC lead times in the Midwest widened to 4-8 weeks from 5-6 weeks, with the market splitting on how available HRC is in the market.

Mills were said to be broadly well booked in March, but multiple sources felt confident they could receive HRC sooner in the month if they pushed for it.

The spread between #1 busheling scrap delivered US Midwest mills and HRC increased by 5.4pc from the prior week to $450/st and is at the highest level in nearly five months.

A year ago the spread was $683/st and was a few weeks away from bottoming out prior to the breakout of tensions in Europe.

The Argus HRC import assessment into Houston jumped by $80/st on reported pricing out of Vietnam. Higher domestic US prices have not yet translated into improved demand for foreign material, which continues to be seen as at a premium to the US, especially among tariffed countries. Long lead times and risk aversion in the US also weighs against foreign material.

The Argus weekly domestic US cold-rolled coil (CRC) and hot dipped galvanized (HDG) coil assessments both edged by $3.75/st to $1,000/st. Both prices rose on the back of higher offers from the mills. The galvanized market continues to reportedly be the weakest on the supply side, with material available but mills pushing prices higher.

Lead times for CRC edged up to 8 weeks from 7-8 weeks while HDG lead times increased to 6-8 weeks from 5-8 weeks.

The CME HRC Midwest futures market was up sharply in the last week, pushing up by double digits across the board though falling into backwardation from July onward. April prices jumped by $65/st to $875/st, while May prices rose sharply by $74/st to $870/s. June rose by $69/st to $850/st, while July prices moved up by $55/st to $840/st. August futures increased by $55/st to $830/st, while September prices were at $822/st.

Plate

The Argus weekly domestic US ex-works plate assessment was flat at $1,480/st, the current target price for Nucor. Some possible offers as low as $1,420/st were reported, with the mills said to be willing to sell at the slightly lower prices to keep orders given the wide spread between plate prices and raw material input costs.

Lead times rose to 6-7 weeks from 4-5 weeks.

The plate delivered assessment moved up by $7/st to $1,510/st.