Yesterday, US-based steelmaker Cleveland Cliffs announced they’d be raising prices on all flat rolled steel products by $2.50 cwt. ($55/mt or $50/nt), effective with all new orders. Today, three other US flats producers announced similar increases of their own.
This is the fourth series of price increases that mills have announced since late-November.
Of greatest note with today’s increase announcements, is that NMLK USA has established a new HRC base price of $43.75 cwt. ($965/mt or $875/nt), FOB mill. This is $1.25 cwt. ($28/mt or $25/nt) higher than Cleveland Cliff’s new announced base price of $42.50 cwt. ($937/mt or $850/nt), FOB mill.
Current HRC prices are trending at $37.00-$39.50 cwt. ($815-$871/mt or $740-$790/nt), FOB mill, whereas CRC and HDG base prices are both trending at $47.50-$50.50 cwt. ($1,047-$1,113/mt or $950-$1,010/nt), FOB mill.
“Preliminarily, a lot of buyers I’ve talked to have said no, they’re not paying $42.50 cwt. for hot rolled, and a lot of them have said they’re not interested in paying $40.00 cwt. for hot rolled. They’re not in a mood to accept this,” once source said. “I don’t know anyone who need steel immediately, and at this pricing, I think you’re going to see a lot of people sit back for a bit.”
Others agree.
“I think we could be on the verge of seeing another buyer’s strike,” another source said. “Market fundamentals haven’t changed a whole lot from when prices were at their low point and today. Like I said a couple of weeks ago, there wasn’t any real reason for prices to go back down, but there isn’t any real market-driven reason that prices should keep going up either.”
For example, earlier this week, AISI reported that for week ending January 28, 2023, the domestic capacity utilization rate was recorded at 73.1%, compared to 79.8% during the same reporting period in 2022.
Additionally, lead times for US HRC are trending at 4-6 weeks, whereas lead times for CRC and HDG coil are being heard at 7-8 weeks and 6-7 weeks respectively.
“Did prices need to come up, yes,” a final source said. “But when you look at market conditions, lead times, and the capacity utilization rate, is there any reason that HRC should climb to $42.50? No.”