Numerous US domestic flat rolled steel producers this week announced they’d be raising prices on US domestic HRC, CRC and HDG coil by $3.00 cwt. ($66/mt or $60/nt), effective with all new orders, however, sources close to SteelOrbis have said that spot market prices have yet to move upward.
Similar to Monday, prices for HRC are still trending at $30-$32 cwt. ($662-$705/mt or $600-$640/nt), FOB mill. Additionally, prices for CRC and HDG coil are also unchanged in the past several days, and remain at $41-$44 cwt. ($904-$970/mt or $820-$880/nt), and $40-$42 cwt. ($882-$926/mt or $800-$840/nt), respectively, both FOB mill.
“I don’t think anyone was surprised that mills put out an announcement, but I also don’t think that anyone takes the increase seriously,” one source said. “I think what we’re looking at is mills doing the same thing they have done in the past when prices are going down; announce a price increase with the hopes that this will prevent the market from slipping any lower.”
Other sources have largely agreed with that suspicion and believe that mills could potentially put out a second increase before the end of the month.
“We’ve all seen this before too,” a second source said. “Roll out two increases with the hopes that the second will force the first once into acceptance.”
On the other hand, AISI reports that for the week ending Nov. 26, the US domestic capacity utilization rate was recorded at 72.8% (which is a notable decline from the same reporting period in 2021, when the capacity utilization rate was recorded at 82.8%). Lead times for sheet products are also unexciting, at roughly 4-5 weeks for HRC, and 5-6 weeks for both CRC and HDG coil.
And while some economists believe that HRC prices could rebound sharply in Q1, to an average of $37 cwt. ($816/mt or $740/nt), FOB mill, or higher for the first quarter due to an anticipated uptick in seasonal demand, if upticks in demand do occur, and mills move to increase their production capacity in hopes of selling more steel, “the simple supply-demand economics of it all could keep prices mostly stagnant.”
What sources do agree on, however, is that current price points are likely at-or-close-to mills’ breakeven point, and that prices are unlikely to fall any further.