US HRC price dips below $34 per cwt; noise or new trend?

Hot-rolled coil prices in the United States have slipped for the first time in almost two weeks, but whether the dip represents the start of a new trend or just noise amid a chorus of optimism about stronger demand in 2021 remains unclear.

Fastmarkets daily steel hot-rolled coil index, fob mill US was calculated at $33.89 per hundredweight ($677.80 per short ton) on Tuesday October 27, down by 0.6% from $34.10 per cwt on Monday but up by 1% from $33.54 per cwt on October 20.

The day-on-day decline marks the first since October 14.

Heard in the market
Inputs received ranged from $32.50-38 per cwt. The high end of that range, representative of a mill charging a premium for material available on short lead times, was automatically discarded by the index’s outlier filter. Data was also carried over in the consumer sub-index due to a lack of new inputs there.

The resulting range, once the outlier was removed, was $32.50-35 per cwt, with the lower end representing transactions and the higher end mill offer prices.

Spot market activity has thinned due, in part, to long lead times and a lack of spot tonnage at several producers. Lead times are as short as four weeks for customers willing to pay significantly more for prompt delivery, sources said, but on average are closer to eight or nine weeks.

Also holding back activity are concerns among some buyers that current prices will not be sustainable into 2021. These sources fear that next year will bring import competition back into the market, once new capacity ramps up and idled integrated capacity is restarted - something that could lead to a swift downward correction.

But that opinion was hardly unanimous. Other sources said that their order books are strong for the balance of 2020 and into at least the first quarter of 2021 despite the Covid-19 pandemic and the economic turmoil it has caused.

And some said that, given extremely low inventory in the supply chain, they are becoming more concerned about availability than about price, especially if bullish forecasts by some downstream consumers prove accurate.

Quote of the day
“It seems like a lifetime away,” one Midwest service center source said of a summer price plunge. “My customers that were talking about survivability are telling me how rock solid their 2021 forecasts are. I hope they’re right. Because we’re making decisions on that.”

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