US flat steel markets continued higher this week as ongoing planned mill outages for September is prompting those with the ability, to increase plant utilization rates to meet market demand, market insiders told SteelOrbis this week.
“We’re hearing that Big River has brought on additional hot strip capacity at its 1.5 million ton per year electric arc furnace (EAF) facility at Sinton, Texas.” said one Gulf Coast steel market insider. “While the markets are still pretty flat, pricing is trying to drift up a bit.”
The source added that US Steel’s Big River facility, located in Northeast Arkansas, which includes a sizable galvanized line, will be offline for 5 days in October for scheduled maintenance. The unit has been operational for about 18 months and is close to key logistics capabilities, US steel said on its website.
Other market insiders added that the plant utilization rate was also being increased at North Star Blue Scope’s 2 million ton-plus Delta, Ohio hot-strip mill.
“Hot-rolled capacity is being ramped up at North Star Blue Scope’s facility,” the insider said. “The markets, however, remain quiet, and we’re not hearing too much about price strength or market tightness.”
Spot hot rolled coil prices increased an average of $5/nt, ($5.51/mt) this week to $700-720/nt ($772-794/mt) or $35-36/cwt., versus last week’s $690-720/nt ($761-794/mt) or $34.50-$36.00/cwt., delivered to customer range.
On the mill side, steelmaker Nucor announced on Sept. 16 that the price of its hot rolled coils would remain flat for a second week at $720/nt, ($794/mt) or $36.00/cwt. Cleveland Cliffs, a key competitor of Nucor, announced the price of its HR coils would be $750/nt “effective immediately,” the steelmaker said Sept. 17 letter to its customers, citing “ongoing market developments.”
On the steel finance side, SteelOrbis contacts said the Sept. 18 Federal Reserve half point interest rate cut could have a positive affect on flat steel prices as more money is likely invested in construction-related structural steel beginning in the fourth quarter.
“People are talking steel a little higher because of the lower interest rates announced by the Fed this week,” said another SteelOrbis market insider. “October could potentially be an up month for scrap.”
Recent conversations in steel industry circles indicate a strong sideways to higher outlook for October scrap pricing, as many mills will have completed planned outages and will require more scrap for normal operations, they said. Many scrap sellers continue to say that scrap inventories on the ground remain low because of recent low recovery prices paid to peddlers and reduced prime output from key manufacturers.
In the cold rolled market, the average price of CRC is assessed about $2.50/nt ($2.76/mt) higher at $945-955/nt, ($1,042-1,053/mt), or $47.75-47.75/cwt, compared with $940-950/nt ($1,036-1,047/mt) delivered to customer, seven days ago. The current spread between HRC and CRC is assessed $2.50/nt less at $240/nt ($265/mt), off from $242.50/nt ($267/mt) the week of Sept. 9. Analysts told SteelOrbis recently that they expect the spread - which had ballooned to nearly $400/nt($441/mt) in recent years- to decline to average $200-$250/nt in the near term as the spread between steel products returns to more “historical norms.”
In the HDG markets, traders report improved spot activity with prices up sharply at $860-900/nt, ($948-992/mt), or $43-45.00/cwt., up from last week’s $865-870/nt ($954-959/mt), or $43.25-43.50/cwt. delivered to customer range.