US HRC price dips, but market senses another spike

Fastmarkets’ daily steel hot-rolled coil index, fob mill US was calculated at $43.72 per hundredweight ($874.40 per short ton) on Tuesday December 8, down by 0.4% from $43.89 per cwt on Monday but up by 8.1% from $40.44 per cwt one week earlier.

Inputs were received in a range of $42-48 per cwt. This reflects mill offers and assessments of spot market prices. Multiple mill-offer inputs at the top end of the range were discarded by the assessor due to no evidence of customers submitting purchase orders at those levels.

Heard in the market
Lead times are mostly out to late February and early March, with some occasional spot availability still opening up briefly for late January, sources said.

The major factor driving current US HRC pricing is limited spot output at domestic mills for at least the next couple of months, while steel-consuming industries are busy and desire material to keep manufacturing lines running. To make matters worse for customers, service centers are caught with flat-rolled inventories that are dreadfully low, sources said.

Upstream, raw material costs have jumped, evidenced by ferrous scrap deals that have now seen December settlements move $70-80 per gross ton higher than last month.

Some coil buyers said they are bracing for $50-per-cwt domestic hot-rolled prices as early as this month, with scant import tonnage arriving at US docks for the foreseeable future. Buyers further fear not only that an additional price increase might be pending, but also that there could be a historic price crash in 2021 after service centers eventually replenish their inventories.

Quotes of the day
“Two weeks ago we wondered if we would ever reach $45 [per cwt]. Now we believe the next threshold is $50 hot-roll, which may happen by January… I cringe thinking about the summer price crash. It’s not going to be pretty. In the short term, even poorly run mills can make money,” a midwestern distributor source said.

“This is very possibly the worst shape I have seen inventories in at any point in my career,” one HRC consumer source said. “Knowing that, we continue to hear from so many customers that they would like to increase orders in [the first quarter]. Crazy times.”