Cleveland-Cliffs hikes flat steel prices; market unsure if increase will stick

Cleveland-Cliffs has increased its flat steel spot market base prices for the second time in just over two weeks, and participants think the market can absorb some of this increase, but not necessarily in full

The steelmaker is increasing all carbon hot-rolled, cold-rolled and coated prices by a minimum of $50 per short ton ($2.50 per hundredweight), it announced on Tuesday, December 13.

“Cliffs’ minimum base price for hot-rolled steel is now $750 per net ton,” it specified. “This additional price increase is in response to market feedback following the company’s November price increase, as well as improving dynamics in the raw materials and distribution markets.”

Rising scrap prices — which went up in December for the first time since April and may increase further in January — may support this new steel increase announcement, but not necessarily in full, according to market participants.

“I don’t think it will fully stick,” a distributor source said. An increase of $30 per gross ton ($33.60 per short ton) — the amount prime scrap prices increased in December — could be absorbed by the market, rather than the full $50 per short ton that Cleveland-Cliffs announced, he added.

Fastmarkets’ steel scrap No1 busheling, index, delivered Midwest mill was calculated at $389.61 per gross ton on Monday, December 12, up by 8.31% from $359.72 per gross ton in November.

The November price increase mentioned in today’s Cleveland-Cliffs announcement raised the same group of flat steel prices by a minimum of $60 per short ton on November 28, just two weeks and a day before this latest announcement.

That increase was followed by other major steel producers, and while it did not necessarily jolt the sluggish market back into action, sources have said that the mills are standing by the higher prices whether buyers are biting on these higher-priced offers or not.

Recent market chatter suggested that a mid-month hot band price increase may be coming, and that if it did, it could simply be intended to legitimize the November 28 rise.

However, with the November 28 increase seeming to stand on its own, that may not be the likeliest motivator, according to a consumer source.

“I do not think it was needed to enforce the first increase,” the consumer source said. “I think that they are moving lead times into February and did not want to open up without another increase.”

“Scrap going up again in January will most likely lead mini-mills to the same conclusion, [and I’m not] seeing imports as a disruptor at this number,” he added.

While the December 13 announcement specified a minimum increase of $50 per ton, the $750 per ton base price mentioned for hot-rolled coil is $65 per ton higher than recent market prices.

Fastmarkets’ daily steel hot-rolled coil index, fob mill US was calculated at $34.25 per cwt ($685 per ton) on Monday December 12, up by 0.74% from $34.00 per cwt on December 9 and by 0.29% from $34.15 per cwt one week earlier.

Before November’s price hike, Cleveland-Cliffs most recently raised the same group of prices by $75 per ton on August 24, which did not appear to set a new price floor and put an end to months-long slides at the time.

What to read next
Fastmarkets confirms the amendment of five of its steel products assessments and steel billet index originated from the Black Sea.
The US steel industry’s preponderance of electric-arc furnace (EAF) capacity may be a double-edged sword when it comes to collecting green steel premiums, market sources have told Fastmarkets
Fastmarkets proposes to amend the payment terms and quantities of three hot- and cold-rolled coil import price assessments for the United Arab Emirates and Saudi Arabia.
Key talking points from the meeting of steel distributors’ association Eurometal, held in Zurich, Switzerland, on Thursday May 16
Collecting a premium for green flat-rolled steel in the US will be a long, bottom-up process for an industry already regarded as one of the world’s cleanest, market sources recently told Fastmarkets
Fastmarkets invited feedback from the industry on the pricing methodology for its steel hot-rolled coil index, domestic, exw Northern Europe, € per tonne (MB-STE-0028) and steel hot-rolled coil index, fob mill US Midwest, $ per cwt (MB-STE-0184), via an open consultation process between March 26 and April 29, 2024.