US HRC price dips, but no signs of wavering yet

Hot-rolled coil prices in the United States dipped on Wednesday but held above the $54-per-hundredweight level due to ongoing tight supply.

Fastmarkets’ daily steel hot-rolled coil index, fob mill US was calculated at $54.38 per cwt ($1,087.60 per short ton) on Wednesday January 13, down by 2.4% from $55.72 per cwt a day earlier but up by 5.5% from $51.54 per cwt on January 6.

Inputs were collected in a range of $52-58 per cwt across all three sub-indices, with the low end representing offers from mills and reported by mills and buyers, and the high end representing deals heard.

Heard in the market
Demand is strong and customers are willing to pay prevailing market prices to secure tons, market participants said. Some end users reportedly are buying tons for March production without knowing the price, they said.

Some mills are short on slab supply, which is delaying their ability to fill spot ton orders, some sources said. But others noted that mills now seem to be catching up on open orders, which could loosen up supply in the coming weeks.

Others warned that credit could become an issue for some buyers with prices at these elevated levels, limiting their ability to buy material. Buyers on the sidelines could weaken prices, but it also is limiting their ability to maintain or increase inventory levels, which could sustain this price rally longer since stocks still remain low, they said.

Given recent industry consolidation - namely Cleveland-Cliffs’ acquisition of ArcelorMittal USA and AK Steel, and U.S. Steel Corp’s purchase of Big River Steel - prices might never be as low as they once were, some sources noted. This price rally will fall apart at some point, but won’t dip as low as in past crashes, they added.

Quote of the day

“We had a customer who wanted four truckloads, but we’d only sell two because we couldn’t replace it in a timely manner and we’d have to replace it for $1,200 [per ton, or $60 per cwt] or above,” a midwestern distributor source said.

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