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US HRC gets comfortable around $30 per cwt

Sep 24, 2020 | 05:37 PM | Chicago | Michael Cowden

Tags  hot-rolled coil, HRC index, flat-rolled steel, steel prices, lead times, steel, Michael Cowden


US hot-rolled coil prices continued to hold their ground around $30 per hundredweight ($600 per ton) amid chatter that another round of mill price hikes could be rolled out late this month or early next.

Fastmarkets daily steel hot-rolled coil index, fob mill US was calculated at $29.87 per cwt ($597.40 per ton) on Thursday September 24, up 0.3% from $29.79 per cwt on Wednesday and up 4.8% from $28.50 per cwt a week earlier on September 17.

US HRC prices have been steady around $30 per cwt this week, a trend that hasn’t happened since early March, before the Covid-19 pandemic and an energy price crash hammered steel demand.

Heard in the market
Inputs were received from $28-31 per cwt. The higher end of that range represented mill offers. Deals, both large and small, were recorded in a modestly narrower range: $28-30 per cwt.

Producers are insisting on minimum prices of $30 per cwt, with some already venturing to offer material for slightly more than that even in the absence of announced price hikes, sources said.

Lead times are between four to 10 weeks, or into December at some mills, according to market participants and mill estimates.

Lead times extending into late in the fourth quarter is especially notable at certain electric-arc furnace (EAF) producers that typically keep lead times short and some of which had lead times in early October just two weeks ago, sources said.

US HRC prices should at least stable be around $30 per cwt given such extended lead times, the potential for October scrap prices to settle higher, low customer inventories and limited spot availability, they said.

Solid automotive demand and indications that the energy sector might have hit bottom are also bolstering prices, sources said. Some predicted that another round of mill price hikes would be announced over the next week or two.

Other sources continued to worry about the sustainability of prices at or above $30 per cwt. They contend that, unless demand increases, prices are more likely than not to fall late in the fourth quarter and into 2021 on increased supply as new capacity comes online, as idled mills restart and when Brazil’s annual Section 232 slab quota is renewed at the beginning of next year.

Quote of the day
“I think it goes to the old saying, ‘The most expensive ton of steel is the next ton you need when you are out.’ The supply chain is very tight currently and with lead times out this far, it doesn’t take much for holes to form,” one midwestern service center source said.

Index calculation
Inputs were received across all three sub-indices: producer, distributor and end consumer. One input was collected via a data submitter agreement.

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