US hot-rolled coil index climbs higher on tightening supply

Hot-rolled coil prices in the United States have continued to move higher, supported by tightening supply brought on by rising demand in face of still-constrained domestic production.

Fastmarkets’ daily steel hot-rolled coil index, fob mill US was calculated at $33.39 per hundredweight ($667.80 per short ton) on Monday October 19, up by 0.7% from $33.17 per cwt on Friday October 16 and 3.2% higher than $32.35 per cwt a week earlier on October 12.

Inputs were received in a range from $32-35 per cwt – a spread of $3 per cwt.

Heard in the market
Market participants continue to expect prices to push higher while demand rises and mills keep supply constrained. Lead times ranged between five and 10 weeks, depending on the mill, with the longest lead times at integrated mills, sources said.

The further out lead times extend out, the higher the price pressure, sources said.

“One mill is telling people the new base price is 35 cents [per lb, equivalent to $35 per cwt,] and they don’t have any steel to sell,” a southern distributor said.

Service centers reportedly have resorted to buying the other service centers’ floor stock, because they have been unable to get orders from mills in a timely manner, sources said. Indeed, nearly all mills have closed out their order books through December, and consumers have been struggling to secure material for immediate delivery.

Some service centers also said that they have lost potential orders that require near-term delivery due to a lack of inventory and availability.

“We are only quoting on orders where we have material or confirmation that it is coming,” one Midwest service center source said.

Supply remains constrained because of the ongoing strike at NLMK USA’s plant in Farrell, Pennsylvania; idled blast furnaces at the ArcelorMittal USA facilities that Cleveland-Cliffs recently acquired; and the idled electric-arc furnace at JSW Steel USA’s mill in Mingo Junction, Ohio. Market participants do not expect planned new capacity – such as that from Big River Steel – to come online and to significantly affect supply of steel until the first quarter of 2021.

Quotes of the day
“The deal is that there is no steel to buy. From what we’re hearing, there are no spot tons available,” the southern distributor said.

“Yikes, this could last for awhile,” a steel consumer said. “We are hearing situations of customers having to take time off in November because they do not have steel to run.” 

Index calculation
The assessor carried over data from Friday’s pricing session in all three sub-indices – for producers, distributors and consumers – due to a lack of fresh transaction data and a preponderance of speculative offers at the high end of the pricing range.

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 CEOs in global steel.

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