ArcelorMittal/Nippon Steel Calvert and NMLK USA have followed Cleveland-Cliffs in raising prices on US flat rolled steel products.
According to the mills’ announcements, both producers will be raising spot market prices for HRC, CRC, and HDG coil by a minimum of $2.50 cwt. ($55/mt or $50/nt) effective with all new orders. Market sources have indicated that Cleveland-Cliffs, which led the charge in the latest increase announcement, wants to firm HRC prices to roughly $37.50 cwt. ($904/mt or $820/nt), FOB mill.
“Busheling scrap prices in the Midwest are hovering around $380/gt and we believe that scrap will be up again in January,” a source said. “We also know that historically, HRC prices (FOB mill) are normally $14-$15 cwt. ($309-$331/mt or $280-$300/nt) higher than scrap, which as of today, should put hot rolled at about $31-$32 cwt. ($683-$705/mt or $620-$640/nt), FOB mill.”
He also acknowledged that factors such as fuel costs, energy costs, and inflation, could cause that spread to widen.
“The past three years with the pandemic, and Russia’s invasion of Ukraine, have thrown out most historic models, at least in the temporary sense,” he continued. “ There are now higher raw material, energy, labor, and transportation costs as a result of these events. Suffice to say, it would not be surprising if the new ‘normal spread’ between scrap and HRC adjusts to $16-$17 cwt. ($353-$375/mt or $320-$340/nt).”
According to his models, this would put US HRC at $33-$34 cwt. ($728-$750/mt or $660-$680/mt), FOB mill, which is where prices are currently trending.
Others agree with the synopsis, adding that if scrap does indeed go up again in January, that mills could have a good case to push prices up to Cleveland-Cliff’s desired level.