Spot market prices for US domestic hot rolled (HR) cold rolled coil (CRC) and hot dipped galvanized (HDG) coil have continued to soften since our last report a week ago, with all sources polled saying they believe that additional corrections are all but guaranteed.
Current HRC prices are trending at roughly $56-$57 cwt. ($1,235-$1,257/mt or $1,120-$1,140/nt), FOB mill, against $57.00-$58.50 cwt. ($1,257-$1,290/mt or $1,140-$1,170/nt), FOB mill, a week ago.
Domestic cold rolled coil prices are also down in the past seven days and are now being heard at $65-$66 cwt ($1,433-$1,455/mt or $1,300-$1,320/nt), FOB mill, against $67.00-$68.50 cwt. ($1,477-$1,510/mt or $1,340-$1,370/nt), FOB mill, a week ago.
Looking toward domestic HDG coil prices, this week’s average transaction range is being heard at roughly $65.50-$66.50 ($1,444-$1,466/mt or $1,310-$1,330/nt), FOB mill, against $66.50-$68.50 cwt. ($1,466-$1,510/mt or $1,330-$1,370/mt), FOB mill, on Friday April 28.
Similar to previous weeks, transactions slightly above and slightly below these ranges have been heard based on tonnage.
All sources polled said they believe that “the price slide isn’t over yet.” Numerous flat rolled contacts throughout the US think that US HRC prices could fall to a range of $40-$45 cwt. ($882-$992/mt or $800-$900/nt) by the end of Q4.
“Prices are going down and they’ll go down a lot over the course of the next few months,” one source said. “Of course, the mills are going to try to say that prices should stay steady or go up. They’re citing end-user demand, but demand is OK and not great. They say that supply is tight but that’s artificial due to restricted capacity utilization rates.”
Also of note, is that interest rates keep rising, which means the cost to borrow money is still going up. Earlier this week, the Federal Reserve raised its benchmark rate to approximately 5.1%, which puts current interest rates at a 16-year high.
“Interest rates going up is never good for steel consumption,” the source continued, adding that if Congress fails to raise the debt ceiling and the US defaults on its debt (which could happen in June should an agreement not be reached), the US will also be looking at a pretty steep recession in the second half of the year. This would negatively impact both demand and finished steel prices.
“The bottom line is that steel is overpriced and prices are going to come down,” the source concluded. “Because prices never should have gone up to where they are now to begin with.”