Hot-rolled coil prices in the United States hit another all-time high last week, exactly one year after the early shockwaves of the Covid-19 pandemic led prices to fall to one of the lowest points of 2020.
Fastmarkets’ daily steel hot-rolled coil index, fob mill US averaged $73.52 per hundredweight ($1,470.40 per short ton) for the week ended Friday April 30, up by 4.55% from $70.32 per cwt the previous week and more than triple the $22.78 per cwt average recorded in the same week last year. This is the highest weekly average recorded by Fastmarkets since 1960, overtaking the previous week’s record and marking the 14th week in a row of record-breaking highs.
Heard in the market
Steelmakers responded to last year's tumbling prices by halting production, which set in motion the dynamics now being realized in the market, market participants said. Since then, producers have been unable to ramp up fast enough to meet rising demand, they noted.
That dynamic is not expected to end soon, with the steel rally showing no signs of losing strength in the near term, sources said.
Few mills have been offering any spot tons for June production, sources said, and in response to inquiries those mills have started to raise their asking prices to levels above Fastmarkets' current index calculation. Some sources said the mills were increasing contract customers’ volume allocations for June to above May levels, indicating that spot availability might loosen up too by summer.
Sources noted a difference between northern and southern mills, indicating that due to automotive shutdowns caused by the semiconductor chip shortage, some northern mills have a little more capacity than the southern mills.
End users continue to seek ways to work around the spike in their coil costs, sources said, with customers simply suspending production of their downstream product until they change their own catalog selling prices and see if they can pass along the higher steel prices.
Most sources continue to believe that imports won’t be able to make up for the US shortfall. Import prices have climbed to record highs, with US buyers bidding against those elsewhere to purchase limited global supplies.
Quote of the week
“I don’t foresee prices retreating or topping out for a few more months,” one distributor source aid. “July-August would be my guess, but it could keep going longer still.”
Dom Yanchunas, Rijuta Dey Bera and Mark Shenk, all in New York, contributed to this report.