Prices for hot-rolled coil in the United States fell slightly on Wednesday March 11 as fears about the impact of the novel coronavirus (2019-nCoV) on global economies deepened, market participants said.
Fastmarkets’ daily steel hot-rolled coil index, fob mill US finished the day at $28.81 per hundredweight ($576.2 per short ton), down 0.3% from $28.89 per cwt a day ago, and down 4.2% from $30.08 per cwt one week earlier.
Inputs were received in a wide range of $26-31 per cwt, as buyers are being quoted a variety of price levels depending on the mill.
Heard in the market
But in general, hot band prices in the United States have continued to drop amid fears caused by the escalating spread of Covid-19 outside China – where the outbreak first started.
The World Health Organization has declared it a pandemic, as the virus has killed more than 4,500 people worldwide and infected over 120,000.
Today’s market conditions share some similarities with the 2015 steel market downturn, including inflated China steel inventories, weakened demand from steel end markets due to an economic slowdown, and a sharp drop in energy costs, according to a UBS research note from equities analyst Andreas Bokkenheuser dated March 10.
As a result, some sources said that spot market prices might come down in order to generate interest from buyers. Not long ago, domestic flat-rolled mills tried to hike prices by at least $2 per cwt ($40 per short ton), but they have failed to gain any traction, market participants said.
At the same time, not everyone agreed that coronavirus-related impacts have impacted the domestic steel industry, as some market participants cited strong steel shipment numbers for their companies. Others also hinted that the market has been overreacting to the virus, driven by media coverage.
Lead times at some mills are into May, indicating order books are healthy.
Quotes of the day
“[An HRC price] below $28/cwt is necessary in order to sell because you need to generate customers’ motivation to buy, right?” one Midwest trader source said.
"My belief is that if we were going to the marketplace with reasonable tons, we could cut our current numbers," one East Coast service center source said. "However, we are staying out of the market, for we are overstocked and it is time to cut the inventory further."
"The truth is lead times are strong and if [the] market’s confidence can build this month, the mills won’t have to cave on the price," one Southern distributor source said.