RESEARCH: US HRC price forecasts upgraded for late-2020, early-2021

This month’s key North American steel forecast highlights:

• US domestic prices for hot-rolled coil (HRC) moved sharply higher in September, in line with our expectations, but the magnitude of the rise exceeded our predictions. Domestic HRC prices averaged $566 per ton in September, exceeding our $540 per ton forecast price.

• A concerted effort by domestic steelmakers to underpin prices and drive pricing higher, through a series of $40-50 per ton price increases in August and September, has proved largely successful, with domestic HRC prices rising to around $630 per ton in early October.

• While a solid recovery in key steel-consuming sectors – such as automotive, manufacturing and construction – initially helped to propel prices higher, rising scrap costs and a supply shortfall lent additional momentum to sheet steel prices. Domestic mill output has not increased at the same pace as consumption, reflecting both planned and unplanned outages, while steel demand has been exacerbated by restocking activity, with original equipment manufacturers (OEMs) and distributors replenishing inventories in advance of further price rises.

• With minimills operating at near-capacity, demand for prime ferrous scrap remains buoyant. Although manufacturing scrap generation is returning to more normal levels with the rebound in automotive production, strong demand from steelmakers is expected to keep prime scrap prices elevated in the near term.

• We have significantly upgraded our flat product price forecasts for the remainder of 2020 and into early 2021, to reflect maintained demand, insufficient near-term supply and elevated scrap costs. We remain cautious for the final months of the year, however, reflecting pandemic and political uncertainty, as well as the upcoming holiday season.

• US long steel product prices rose in September, supported by impressive scrap price gains. Fastmarkets expects long product prices to consolidate their September gains during October, to be reflected in higher average monthly prices for October. We believe that October will represent the pricing peak, however, with scrap prices expected to settle flat during the month before trending downward in November.

Fastmarkets’ flagship global steel event, Steel Success Strategies, is running as an online conference on October 26-28, 2020. Register today to hear directly from Fastmarkets’ pricing experts and analysts, as well from some of the most important chief executive officers in global steel.