Price firmness within the US domestic flat rolled steel markets has sustained, sources note, and market players are questioning whether prices could climb further if scrap settles up next month. “If scrap bounces back next month, I don’t think any of us would be surprised to see $70 cwt. ($1,543/mt or $1,400/nt) hot rolled,” a source said. “Not surprised one bit.”
Other sources have pointed out that the still-strong demand is notable, especially considering US automakers’ current production slowdowns; earlier this week, Ford and General Motors announced plans to cut production at several of their North American plants due to the ongoing semiconductor chip shortage. Ford said they plan to keep plants in Illinois and Missouri offline through next week and temporarily shutter a plan in Michigan. GM announced plans to close their Tennessee plant on Saturday and does not plan to restart production until April 23.
Yet despite the blip in auto production, which may be contributing to a temporary lessened demand for steel (but is surely adding to backlogged demand for new cars and trucks, which will have a positive impact on steel demand in the future), overall sheet steel demand in the US has rebounded to 2019 levels.
“The only place steel demand isn’t strong is construction,” another source added. “If you look at everything else, including consumer durables, such appliances, demand is at or only slightly below pre-Covid levels.”
What hasn’t fully rebounded, other sources note, is steel production. For example, earlier this week, AISI reported that for week ending April 10, domestic mills’ capacity utilization rate was recorded at 77.6%, against a capacity utilization rate of 82.5% in mid-January 2020.
Numerous sources close to SteelOrbis continue to report that spot market tonnage is limited, at best. They’re also not getting their deliveries on time. “Everything is still backlogged, and the mills are being strategic with planned maintenance and outages to keep the market tight,” a third source added. “They’re essentially printing their own money right now and they’re fine with that.”
And despite that fact that there’s a significant amount of new capacity that’s set to come online within the next year, any pending surplus (which, as another source put it, “has the potential to unleash unholy price pressure which could knock this whole house of cards down to the ground), is still months off. Also notable is that others believe that while it’s likely that flat rolled steel prices will “come down from their record highs,” that new-normal pricing could settle “well above where the market has been in the past.”
For now, however, prices remain strong, and it’s largely held that prices will remain strong, if not trend stronger, into the second half of the year.
Today’s US domestic HRC prices (during week 2 of Q2) are trending in the range of $67-$68 cwt. ($1,477-$1,499/mt or $1,340-$1,360/nt), FOB mill, compared to a range of $54-$59 cwt. ($1,191-$1,301/mt or $1,080-$1,180/nt), FOB mill, during the second week of Q1.
Current domestic CRC prices (during week 2 of Q2) are now trending in the range of $77-$78 cwt ($1,698-$1,720/mt or $1,540-$1,560/nt), FOB mill, against a range of $61-$65 cwt. ($1,345-$1,433/mt or $1,220-$1,300/nt), FOB mill during the second week of Q1.