US HRC nears $42/cwt, may be poised to test ’08 highs

Hot-rolled coil prices in the United States are testing highs not seen since the Section 232 market shock in 2018 and might soon be pushing up against highs last seen in 2008, in the heady days before the financial crisis.

Fastmarkets’ daily steel hot-rolled coil index, fob mill US was calculated at $41.98 per hundredweight ($839.60 per short ton) on Thursday November 3, up by 3.7% from $40.50 per cwt on Wednesday and by 7.6% from $39 per cwt before the Thanksgiving holiday last week.

US HRC prices are now at their highest point in nearly 27 months ago, since reaching $42.27 per cwt on September 6, 2018.

Heard in the market
New inputs were received in a wide range of $39.50-48 per cwt, a spread of $8.50 per cwt. Wide spreads sometimes indicate an inflection point in prices, and market participants almost unanimously expect prices to inflect upward.

Deals for smaller quantities, hundreds of tons, were reported at the lower or middle end of the range received. Most sources contacted by Fastmarkets agreed that prevailing spot prices, to the extent spot tons are available, are at approximately $42-43 per cwt.

Lead times are into January, February or even March at some mills. Other mills have closed January and not yet opened February, sources said.

The lack of spot tons has contributed to a growing sense of panic in the Great Lakes region, where unplanned outages and stricter contract terms have left some customers scrambling for material with price a secondary concern to availability, they said.

It was not immediately clear whether inputs significantly above $42 per cwt – $45 per cwt or more in some cases – were from electric-arc furnace (EAF) mills seeking a premium for tons they had held back for prompt delivery in late December or January or whether those mills might be testing out new, higher base prices after scrap settled up by a higher-than-expected $70-per-gross ton in the Detroit area, sources said.

Whatever the case, US HRC prices appear set to test a post-Section 232 high of $45.84 recorded on July 5, 2018. Prices have not been significantly above that level since before the 2008 financial crisis, according to Fastmarkets pricing archives.

Quote of the day
“The big unknown is what the incoming administration will do with Section 232 tariffs,” one Midwest service center source said. ”It doesn’t look like any changes in the near future, so the mills are going to try to milk it all the way to $50 per cwt.”

Index calculation
An offer at the higher end of the range received on Thursday was automatically discarded by the index’s outlier filter. The assessor carried over an input in the producer sub-index because he did not receive new data there. He also carried over an input in the consumer sub-index due to significant day-to-day volatility within that index.

What to read next
The global copper market has finally received the widely anticipated news that imports to the US will be tariffed from August 1. The finer details of the tariffs, including their scope, and whether key copper-exporting nations like Chile, Canada and Peru will be exempt, remain unclear.
Understand how recent tariff decisions are affecting the European pulp and paper industry and trade with the US market.
Mexico’s production and consumption of long steel fell year-on-year in May due to weakness in the country's construction sector, but posted a month on month gain, according to the latest data from the Mexican steel chamber, CANACERO.
Despite the current headwinds, strategic partnerships and continued investment in the right areas, coupled with the underlying strong long-term demand fundamentals, will pave the way for success for lithium producers, according to the participants of the executive panel during the Fastmarkets Lithium Supply and Battery Raw Materials Conference, which took place from June 23-26 in Las Vegas, Nevada.
The US and Europe must adopt long-term, consistent policies and should learn lessons from China, according to lithium industry experts speaking at Fastmarkets’ Lithium Supply and Battery Raw Materials Conference in Las Vegas, US, over June 22-25.
This consultation was done as an adhoc methodology review process, aiming to better reflect the physical market under indexation, considering its reduced liquidity linked to the combination of seasonal demand patterns and the implementation of cross-border import tariffs between the US and China. No feedback was received during the consultation period and therefore Fastmarkets will […]