US hot-rolled coil price climbs past $40/cwt on eve of 232 tariffs

Hot-rolled coil prices in the United States have risen beyond $40 per hundredweight ($800 per ton), with deals recorded at that level even before major Section 232 tariffs were announced, market participants said.

American Metal Market’s hot-rolled coil index clocked in at $40.03 per cwt ($800.60 per ton) on Thursday March 1, up 3.57% from $38.65 per cwt ($773 per ton) previously and the index’s highest point since it was launched in July 2017.

Hot-rolled prices were last above $40 per cwt in May 2011, according to American Metal Market’s price archives.

Prior to President Donald Trump’s 25% tariff announcement, $40 per cwt was commonly quoted from integrated mills, while $39 per cwt could “possibly” be obtained from mini-mill producers, one mill source said early on March 1.

Before the news of the tariffs was released, the steel industry had anticipated an update on the 232 case, but market chatter also indicated Trump might wait to make his decision. Market participants who spoke with American Metal Market were optimistic that the price increase followed from market strength overall - and not the strength of the impending duties.

Still, buyers were hesitant to buy at those prices, the mill source said. Lead times were out about eight weeks at one southern mill he’d inquired at, with rollings now into May, he said.

“Not many people are active right now. And domestic mills seem to be holding prices, trying to get that $40 per cwt,” he said, speaking before news of the tariffs broke.

“I don’t think people are willing to buy at $40 per cwt unless they have to [to fill orders] or unless they have no contract they can exercise,” he continued. “Still, pretty much most of the hot band importers have withdrawn from the market.”

He reported hearing of an import offer from Mexico at $38 per cwt delivered into Houston, for A36 hot-rolled, but that required the buyer to pay any 232 duty that may land in the interim, he noted.

Even on Monday February 26, mills were quoting hot-rolled at $40 per cwt, especially at integrated mills, according to one distributor source.

“Spot availability is very limited, and most are quoting purchase orders very high due to lack of availability or controlled order entry,” he said on February 26.

The price for hot-rolled is $40 per cwt even without the 232, a second mill source agreed. “But with the 232, I don’t know where prices will go,” he said.

Speaking ahead of Trump’s announcement, he said that supply could be tight if 232 trade actions were implemented. But if domestic prices increase alongside rising import costs, exporters arguably could ship to the US even under 24% tariffs, such as those recommended by Commerce. US steel prices already are comparatively high, versus the rest of the world, this source noted.

“Imports for sure will not just go away,” this second mill source said. “We could go from $40 to $50 per cwt, if there’s a 232. Why not? The only problem is prices can fall equally fast.”

Still, even at $40 per cwt, material is selling, although volume is “minuscule,” at least from certain mills outside the Midwest and the South, he said. Buyers still believe in the short term that prices will go up, but between high domestic prices and Section 232 uncertainty, some have hesitated to load up on inventory, he said.

After the 232 announcement, two mills suspended price quotations until Monday March 5, one midwestern distributor said, citing conversations with a major national distributor on March 1.

A third distributor, speaking on February 26, said that there are “no true foreign offers on [hot-rolled coil].”

“Hooks are in the water, but [foreign] offers are made based on if they can get enough tons ordered to place an order,” the third distributor said.

Key import arrivals in February included 52,986 tonnes of hot-rolled coil from Canada, 19,968 tonnes from Japan, 12,340 tonnes from South Korea and 11,835 tonnes from Mexico, according to preliminary license data from the Commerce’s Enforcement and Compliance division, last updated on February 27. These arrivals likely represent tonnages ordered in late 2017, with the exclusion of Canadian and Mexican volumes.

Michael Cowden, Chicago; and Grace Lavigne and Millicent Dent, both in New York, contributed to this report.

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