US steel market divided on impact of Nucor’s sheet price hike

Participants in the US steel market were divided on the impact of a price increase from Nucor’s sheet mill group this week, with some suggesting hot-rolled coil prices could fall further while others were optimistic that announcement could halt - or even reverse — the recent downtrend

August 9, 2022

By Rijuta Dey

Rather than reverse the trend of declining hot band prices, the Charlotte, North Carolina-based steelmaker’s $50-per-short-ton ($2.50-per-hundredweight) increase – its first such announcement since March 16 – could help the market find a floor, some sources said.

According to a buyer source, Nucor’s new target price after the increase is reportedly $850 per ton ($42.50 per cwt).

“We are hovering around a [price] bottom, and the Nucor increase probably helps solidify that for buyers,” the buyer told Fastmarkets.

A distributor source agreed, saying: “We have received the information on Nucor, and let’s hope the others follow.”

Fastmarkets’ daily steel hot-rolled coil index, fob mill US was calculated at $39.58 per cwt ($791.60 per ton) on Tuesday August 9, down by 4.51% from $41.45 per cwt a week earlier and by 47.68% from a recent high of $75.65 per cwt on April 8.

Even if a price floor is found around $40 per cwt, which is roughly half the 2021 index average of $80.62 per cwt, that level is historically high. Between 2010 and 2020, the lowest yearly average was $22.54 per cwt in 2015 and the highest was $41.37 per cwt in 2018.

Still, other market participants seemed were unsure about the possibility of a price uptrend, citing a less-than-robust demand outlook.

“I’m not sure how much traction this increase will get considering that supply dynamics don’t really support it,” a second distributor said.

“I think this is a typical move by a mill in a falling market to try and slow the pace of decline or stop it altogether,” the second distributor added. “I’m curious to see if other mills follow up on Nucor’s announcement and if lead times increase as a result.”

HRC lead times stood at three to four weeks for most of the summer and have recently extended to about four weeks, according to sources.

“With busheling dropping $70 per [gross] ton, the only thing right now on the horizon in my opinion that could solidify increases is a possible strike at one or more… mills as a result of the union negotiations,” the second distributor continued.

A third distributor also was skeptical about a potential rebound.