Approaching US holiday weekend offers no vacation from HRC and CRC spot softening

Spot transaction pricing for both HRC and CRC has softened by approximately $1.00 cwt. ($22/mt or $20/nt) since our last report a week ago, with the majority of US domestic HRC now being reported in the approximate range of $30.00 cwt. to $31.00 cwt. ($661/mt to $683/mt or $600/nt to $620/nt) and CRC in the approximate range of $35.00 cwt. to $36.00 cwt. ($771/mt to $794/mt or $700/nt to $720/nt), both ex-Midwest mills.  Further deals are on the horizon for both products and there are already rumors of HRC being available for below the $30.00 cwt. ($661/mt or $600/nt) threshold, and as one buyer put it, "everything is negotiable these days". Expect domestic HRC and CRC prices to fall further in the coming weeks.

Also of note, is the $1.50 cwt. ($33/mt or $30/nt) softening in Russian offers for both products, bringing Russian HRC offers to the approximate range of $30.00 cwt. to $31.00 cwt. ($661/mt to $683/mt or $600/nt to $620/nt) and Russian CRC just $0.50 cwt. ($11/mt or $10/nt) above domestic offerings, at $35.50 cwt. to $36.50 cwt. ($783/mt to $805/mt or $710/nt to $730/nt), FOB loaded truck US Gulf ports.

While import offers out of Russia are starting to become more aggressive, US domestic buyers are far too hesitant to place the gamble on these future arrivals, especially considering the fourth-quarter arrival time.  "It's just too big a risk," commented a trader in the South. "No one knows what the market will be in late November and taking a blind jump off that cliff is just crazy."  Meaning, that for now at least, domestic buyers are leaning more toward purchasing lesser tons, at a higher price, in order to manage inventories and "play it safe".   In terms of activity, there's not a lot to speak of, noted another trader in the Northeast.  "Inventories have been built and there's no longer an urgent need to get steel in the door."  Lead times remain on par with those reported last week (2-3 weeks for HRC, 3-4 weeks for CRC), and cautious decision making has sustained its trend.

The bottom line is that until production levels begin to curb, prices will sustain a path of softening.   And until the apparent end of the slide is visibly apparent, domestic buyers are likely to remain skittish in terms of placing orders beyond what is immediately required.

South of the border, HRC and CRC offerings into the US from Mexico have also softened, by $1.00 cwt. ($22/mt or $20/nt) and $2.00 cwt. ($44/mt or $40/nt), respectively.  Mexico is pretty much tracking US domestic offers, give or take $1.00 cwt. ($22/mt or $20/nt), with HRC out of Mexico currently being reported at $30.00 cwt. to $31.00 cwt. ($661/mt to $683/mt or $600/nt to $620/nt), and CRC being reported in the approximate range of $35.00 cwt. to $36.00 cwt. ($771/mt to $794/mt or $700/nt to $720/nt), both FOB loaded truck to US border states. China, too, is still offering CRC to the US, although their pricing has trended sideways since last week.  Chinese offerings of this product continue to be seen in the approximate range $38.00 cwt. to $39.00 cwt. ($838/mt to $882/mt or $760/nt to $800/nt), FOB loaded truck US Gulf ports.