Hot-rolled coil prices in the United States could see volatile movement in the coming months thanks to potentially uneven demand, especially from the automotive sector, in addition to a series of planned mill outages.
Fastmarkets’ daily steel hot-rolled coil index, fob mill US averaged $96.46 per hundredweight ($1,929.20 per short ton) for the week ended Friday August 27, up by 0.33% from $96.14 per cwt the previous week and nearly quadruple the $24.62 per cwt recorded in the equivalent week in 2020.
This is the highest weekly average recorded by Fastmarkets since 1960, overtaking the previous week’s record and the 31st week in a row of record-breaking highs.
Heard in the market
Lead times were said mostly into October for HRC shipments, with a bit more tonnage expected to open up for spot buyers.
Sources said prices flattened for a few days because order books are mostly closed at southern mills until producers gauge their true production volumes and, therefore, how much material they can release to the spot market this fall.
Market participants were split on when the price rally would end. Some said they expect prices to settle into a range soon that will last for several months before falling, given that the automotive sector has not sprung back with the strength that was expected a few months ago.
But others are projecting further price increases, citing robust demand and a spate of planned mill closures for maintenance that will reduce material availability in the coming months.
Most contract buyers remain on limited allocations, a condition suggesting that coil supply is still not keeping up with demand from US manufacturers, they said. This market tightness and the resulting rally could last into the first quarter of 2022, some sources said.
Quote of the week
“We are seeing little pockets [of spot supply] open up because of the chip shortage,” a Great Lakes distributor said. “This could set us up for whiplash when the chip shortage is resolved. If the chips come back, things could get a lot worse, and there’s a lot of scheduled maintenance in the next few months.”
Dom Yanchunas, Rijuta Dey Bera and Mark Shenk, all in New York, contributed to this report.