Hot-rolled coil prices in the United States extended their new year's rally, establishing a new 12½-year high and derailing the prior idea that the first quarter will deliver pricing and volume relief to America's steel-consuming industries.
Fastmarkets’ daily steel hot-rolled coil index was calculated at $55.72 per hundredweight ($1,114.40 per short ton) on Tuesday January 12, an increase of 2.3% from $54.49 per cwt on Monday January 11 and a leap of 10.5% from $50.42 per cwt a week earlier on January 5.
Inputs were received in a range of $53.00-57.50 per cwt in the distributor and consumer sub-indices, representing deals, mill offers and assessments of current price levels. Two inputs - both deals - were carried over from the producer sub-index due to a lack of liquidity.
Heard in the market
Hot-roll pricing is rising sharply, extending a new year’s spike that already had lifted the index to its highest level since June 2008. Very little spot volume is expected to be released at mills for at least two months. Concern is intensifying that spot availability will remain tight not only through the first quarter but possibly deep into the second quarter, sources said.
Flashes of spot tonnage, usually consisting of small lots, are quietly offered at ever-higher prices and are sold almost instantaneously, sources said. A few spot tons have become available officially for March shipment. In truth, those shipments may not move until April, because some production sites are running three to four weeks behind the date originally appearing in some purchase orders.
Some sources said competing imports may not arrive until the second half of the year, and concern is growing that Section 232 tariffs and quotas may begin to degrade US national security. That is because private-sector industries such as automotive and home appliances are gobbling up so much of the limited domestic supply, but defense and public infrastructure jobs require domestically produced steel and cannot legally procure imports.
Quotes of the day
"The market has moved up," a southern distributor said. "Availability pops up in small tonnage very quietly, goes quickly."
"The mills promised pricing by this week, so we are awaiting their announcements," an East Coast distributor said. "Last week was our slowest week in months. Our customers are in shock. They did not listen to us nor the market. One assumes they are calling around to see what is available and at what price."
"I doubt relief will come until more capacity is added to the current market and depending on the new administration with Section 232 and quotas," said a midwestern distributor who does not believe pricing will fall before July shipments. "Some of the mills are into May lead times and importers are quoting August and September. I would think we may start to see some downward movement [in the] second half, beginning around June/July, but that is just a guess."