US flat steel prices continued lower this week, testing its lowest pricing levels since mid-February, amid reports indicating few buyers remain willing to restock inventory given continued low finished steel demand. A consistent sideways to lower outlook for October scrap also is not supportive for flat steel pricing, insiders told SteelOrbis.
And, even though many US mills are running at higher capacity levels to make up for reduced steel imports as a result of ongoing steel import tariffs, insiders said mills are more likely now to offer discounts, especially on larger orders, rather than reduce output at a time when many key production units remain offline for annual maintenance operations.
“Mills are desperately trying to hold the line on spot prices at $800 per ton,” said one US Gulf Coast-based flat steel insider. “They will have to shut down more capacity if they can’t hold the line on pricing.” He continued. “I would have thought that a lack of imports would have allowed them to firm pricing, but it looks like customers are still reluctant to restock inventories.”
Recent data from the American Iron and Steel Institute (AISI) shows for the week ended Sept. 20, US mills are running at about 77.4 percent of capacity, with year-to-date capacity utilization averaging 77 percent, up 5.9 percent from one year ago.
Another insider told SteelOrbis that following recent HRC price declines, he believes current pricing could be near a bottom, owing to reports of longer lead times amid ongoing maintenance.
“I believe that we should be near the bottom on pricing because lead times at some of the mills are extending and the maintenance schedules for mills could impact supply availability through the end of the year,” he said.
Scrap contacts told SteelOrbis uncertainty regarding current flat steel spot pricing trends remains high, given continuing low demand, even as imports continue to shrink.
“There’s just a lot of opinions out there right now,” the scrap insider said. “I really don’t quite know where (flat steel) prices are headed, other than they are unlikely to go up. Hopefully, we can maintain sideways numbers for all scrap grades during October, but obviously that remains to be seen.”
The SteelOrbis spot average price for hot-rolled coils on an FOB mill basis was reported on average $800/nt ($882/mt) or on average $40.00/cwt., off from $810/nt ($893/mt), or $40.50/cwt., one week earlier. SteelOrbis weekly spot price data shows current HRC prices are the lowest since the week of Feb 10, when talk about tariffs caused prices to spike 13.3 percent from an average $37.50/nt the prior week on a delivered to customer basis, to $42.50/nt.
In other flat steel markets, following this past week’s $30/nt decline as weekly demand slumped, spot CRC rebounded slightly, rising $5/nt to on average $1,015/nt ($1,119/mt), or $50.75/cwt., up from $1,010/nt ($1,113/mt), or $50.50/cwt., a week ago. Given a small rise in CRC values and further declines seen for HRC, the current spread between HRC and CRC stands at $215/nt ($237/mt) or $10.75/cwt., up from $200/nt ($220/mt) or $10/cwt. seven days earlier.
In the coated steel markets, spot HDG grade steel dipped $5/nt to on average $915/nt ($1,009/mt), or $45.75/cwt., on a delivered basis, off from on average $920/nt ($1,014/mt), or $46.00/cwt., a week ago.