Flat product prices in the US moved largely in line with our expectations in October, posting impressive gains across the product range, and slightly exceeding our forecasts for coil products.
Domestic hot-rolled coil prices averaged $722 per tonne in October, exceeding our forecast of $705 per tonne forecast price.
Although we originally forecast a modest downward correction for November, based on expected declines in scrap prices and a slowdown in buying activity while buyers replenished inventories over September/October, we now see upward pricing momentum continuing through the remainder of the fourth quarter of 2020 and into the first quarter of 2021.
Scrap prices are poised to move sideways to higher in November, while mill lead times continue to extend and both the start of new capacity and restarts of existing capacity are delayed.
Demand from steel-consuming manufacturers remains buoyant, with key manufacturing economic indicators continuing to indicate expansion. The key risk to this forecast, however, is uncertainty with regard to the outcome of the US election and the future development of the pandemic.
European HRC prices rose as we expected in October; restricted supply remains one of the main factors supporting the price uptrend. Delivery times from all main producers in the north of the region stretched into next year, in some cases as far as March.
With limited import opportunities, we expect that tight market conditions will continue to boost domestic prices while demand form end-users and distributors remains strong.
In October, European plate prices slipped below HRC, something that has not been seen since 2009. A reported lack of contract orders pushed more material into the spot market, with producers forced to accept lower prices.
Although a maintenance closure at one producer in Germany should help to tighten the market and push prices higher, we do not expect plate will return to being priced at a premium to HRC in the near months.
Chinese export and Eastern China HRC prices outperformed our expectations – they ticked down only by $1 or 3 yuan from the September level, averaging $513 and 3,712 yuan ($585) per tonne respectively.
At the same time, CRC prices moved up, leading to the highest price premiums since early 2019, with CRC priced above HRC by $90 in the export market and by 864 yuan ($128) in the domestic market.
Supported by strong demand from automotive and white goods manufacturers, we expect that CRC mills in China will be able to maintain strong premiums, prompting us to raise our CRC price forecasts for the coming months.
Turkish export rebar prices declined in October, averaging $450 per tonne against our forecast of $445 per tonne. Stronger demand in some markets in Asia and America helped Turkish steel producers to push through higher offers at the end of October; we expect to see further price increases in the coming months.
Healthy demand in the home market reduced availability of material for export, leading to upward revisions of our forecasts for the fourth quarter of 2020 and into the first quarter of 2021.
