The state of the flat rolled steel market is “mostly confusing,” sources note, adding that prices are “still a lot higher than they should be.”
The overall situation within the market is largely similar to what’s been reported for the past several months. Demand has rebounded faster than production rates, and customers’ unwillingness to restock at the still-high prices has “created a self-perpetuating cycle.” That cycle, sources note, drove US HRC prices up to a record high. And while prices have been mostly stable for the past two weeks, the big question is how long prices will hover at this level.
On the one hand, AISI this week reported that for the week ending February 6, steel production declined by 1.2% week-over-week. On the other hand, domestic HMS, P&S and shredded scrap prices all trended down this month due to a surplus in supply, which was spurred by high peddler prices.
“You have one camp that thinks that prices are about to start shifting downward, but there’s another group of guys that think prices could stay high through the second quarter,” a source said. “The problem is that both sides make a compelling argument.”
For now, although the average price ranges for US HRC and CRC are still consistent with what we reported a week ago, a growing number of transactions are taking place toward the top end of these ranges. As such, domestic HRC prices are still trending in the range of $54-$60 cwt. ($1,191-$1,323/mt or $1,080-$1,200/nt), FOB mill, whereas US CRC spot market prices are still being heard in the range of $65-$70 cwt. ($1,433-$1,543/mt or $1,300-$1,400/nt), FOB mill. Sources, however, have said that as of this week, most transactions are taking place toward the top end of those ranges.