Sources close to SteelOrbis are reporting that despite mills’ recent price increase announcement, they’re skeptical that market conditions can support higher prices.
In the past 10 days, US Steel, Nucor, AM Calvert, and Cleveland Cliffs all announced plans to raise US HRC prices effective with all new orders. US Steel did not establish a new minimum base prices (and instead, said they’d be implementing a $2.50 cwt. ($55/mt or $50/nt) effective with all new orders), Nucor announced HRC base pricing at $45 cwt. ($992/mt or $900/nt), whereas AM Calvert and Cleveland Cliffs came out at $47.50 cwt. ($1,047/mt or $950/nt).
Yet despite mills’ desire to push prices up, spot market prices have continued to soften.
Current HRC prices are being heard at roughly $39-$42 cwt. ($860-$926/mt or $780-$840/nt) FOB mill, against $43-$46 cwt. ($948-$1,014/mt or $860-$920/nt), FOB mill. Cold rolled and Galvanized prices are also down $2.00 cwt. week-over-week and are now trending at approximately $48-$52 cwt. ($1,058-$1,146/mt or $960-$1,040/nt) FOB mill, for both products.
“I think we could see a small upward blip in pricing as soon as next week, which, if it happens, would be reflective of some buyers booking a few extra tons if they had some concerns that prices before the increase were the bottom of the market,” a source said. “Any bump would relate to buyer panic, but I don’t think anyone is panicking and if prices do blip up, I don’t think it will last.”
For example, S&P Global has reported that the US Manufacturing PMI fell to 46.3% in the current month, against 48.4% for the month of May. This is the lowest the US PMI has been in the current calendar year. “Anything over 50% reflects expansion, whereas anything below that suggests contraction,” a source said. “Considering what’s been going on with inflation, this isn’t all that surprising.”
Also of note, is mills’ still-climbing capacity utilization rates. According to the most recent data from AISI, for the week ending June 17, 2023, the capacity utilization rate was recorded at 77.5%, against 73.1% in mid-January.
“Nothing about market fundamentals have changed,” a source said. “Inflation is high, manufacturing appears to be declining, and capacity rates are up. None of this supports higher prices.”