US HRC price approaching $45/cwt on thin spot activity

Hot-rolled coil prices have surged to their highest point in more than 28 months on thin spot volumes and growing fears of supply shortages, market participants said.

Fastmarkets’ daily steel hot-rolled coil index, fob mill US was calculated at $44.89 per hundredweight ($897.80 per short ton) on Thursday December 10, up by 2% from $44 per cwt on Wednesday and by 6.9% from $41.98 per cwt a week earlier.

US HRC prices now stand at their highest level since reaching $45.46 per cwt on July 26, 2018 – around the height of a post-Section 232 market frenzy.

Heard in the market
Lead times are averaging eight to 12 weeks – or into March at some mills, market participants said.

And other mills have yet to reveal February prices, they added.

Current lead times are double or even triple the four to six weeks that characterize a normal market.

Inputs were received from $41-48 per cwt. An input was carried over in the mill sub-index because no new data were received there. The high end of the range represents recent mill offers. And some sources said spot prices might soon move to or above $50 per cwt – a figure not seen in the market since early September 2008.

The problem is that spot volumes remain extremely limited, with some sources struggling to secure as little as two truckloads from domestic mills and others unable to obtain any spot tons at all, or even a price for spot material.

The result is that buyers are increasingly worried about a potentially severe supply shortage developing over the next month. Some also noted that steel prices rarely hold above $45-50 per cwt for long and expressed concern that current high prices could unwind quickly, especially given that they are underpinned by very limited spot transaction volumes.

What remained unclear on Thursday was when the current cycle will reverse and what might cause it to cycle downward again.

Quote of the day
“I wonder what [spot] tons they are selling… I don’t care about the prices so much as are there tons available or not? And I have not been able to get a straight answer from the mills,” a Midwest service center source said.