United States
Domestic prices for hot-rolled coil (HRC) in the United States averaged $1,316 per tonne in February 2021, and Fastmarkets’ research team expects prices to maintain that momentum through March and April.

Flat steel product prices in the country continue to be supported by exceedingly tight supply, reflecting production discipline among mills as well as low inventories, long lead times and limited import availability.

With the market facing an extended supply shortage, a lack of inventories, and elevated demand from consumers, we expect flat product prices to show further gains through the rest of the first quarter and into the second quarter of 2021.

Steel buyers in the US may see some signs of a reprieve because we are beginning to see signs of imports returning to the US market, as well as expectations of rising domestic supply in the second quarter.

Europe
In Europe, flat steel prices moved up in line with Fastmarkets’ expectations in February, and HRC prices averaged €713 ($847) per tonne, compared with our forecast of €715 per tonne.

The market remains tight. Spot-market buyers struggle to secure material and mills’ lead times are shifting into the third quarter of the year.

In late February-early March, ArcelorMittal twice raised its offer prices, aiming for €800 per tonne for HRC and €900 per tonne for cold-rolled coil. Although we doubt that these targets will be achieved in full, buyers are likely to accept higher prices amid robust demand, still-low inventory levels and limited import opportunities.

But we believe that we are approaching the end of the uptrend that started in July 2020. More production facilities are coming online, which should eventually lead to shorter lead times and help to rebuild stock levels in the supply chain.

China
Chinese flat steel prices were largely stable in the first half of February, with market activity dwindling before the Lunar New Year holiday.

After the market returned on February 18, prices jumped, and export and domestic HRC prices in Eastern China rose month on month by 2.9% and 2.8% respectively.

Underlying demand in China remains strong, and a decline in flat steel stocks at producers immediately after the holiday suggested that distributors were in need of material, which pushed prices higher.

The issue of export rebates remains a major uncertainty for the Chinese export market. Many market participants expect rebates to be cut to 8-9% from the current 13%, which should result in higher export prices, and in turn could open more possibilities for competing suppliers in the seaborne market.

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