US HRC price still rising as lead times push into 2021

US hot-rolled coil prices remain at their highest level in a year following a wave of price hikes and amid long lead times at domestic mills, market participants said.

Fastmarkets’ daily steel hot-rolled coil index, fob mill US, was calculated at $31.65 per hundredweight ($633 per ton) on Tuesday October 6, up 0.3% from $31.55 per cwt on Monday and up 4.9% from $30.17 per cwt a week ago on September 29.

Tuesday’s price was also 11.9% above a September monthly average of $28.28 per cwt.

Heard in the market
New inputs were received in a narrow range from $31-33 per cwt. The higher end of the range results from an extremely tight spot market and mills in some cases receiving more than published base prices of $32.50 per cwt, sources said.

Spot tons are limited largely because of mill extended lead times, market participants said.

West Coast steel supplier California Steel Industries is already sold out for the balance of 2020. Lead times at mills east of the Rocky Mountains are generally into late November or December – or approximately seven to nine weeks. And some of those mills are effectively sold out for the balance of the year once outages, holidays and pending contract tons are considered, sources said.

The result: Buyers have little choice but to pay more should they need to enter the spot market – for the time being. Weighing on the market are uncertainty about the outcome of the presidential election in November and the state of 2021 demand, they said.

Leading indicators such as scrap prices and Chinese HRC prices have moderated. And additional supply is expected to come back into the market next year once Brazil’s Section 232 quota resets, as new capacity starts up, as idled capacity is restarted, and should domestic buyers – eyeing high prices and long lead times at US mills – opt to place more orders abroad, some said.

Quote of the day
“The increases have been fast and furious. It’s reminiscent of many past cycles where prices go up, the mills bring on more/new capacity, import makes more sense, and the supply-demand ratio gets out of whack again. Q1 should see some market softening, in my opinion,” a steel trader source said.

Index calculation
Inputs were carried over in the consumer sub-index because of a lack of new data there.

Patrick Fitzgerald in New York contributed to this article.

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