Sources close to SteelOrbis have confirmed that US domestic flat rolled steel prices have continued to soften since our last report a week ago.
For example, current US HRC prices are now being heard at roughly $38-$40 cwt. ($838-$882/mt or $760-$800/nt) FOB mill, which reflects a $1.00 cwt. ($22/mt or $20/nt) dip since our last report a week ago.
CRC and base price HDG prices are also down by $1.00 cwt. ($22/mt or $20/nt) week-over-week and are now trending at $49-$52 ($1,080-$1,146/mt or $980-$1,040/nt) and $47-$49 cwt. ($1,036-$1,080/mt or $940-$980/nt) FOB mill, respectively.
Lead times for HRC are trending at 4-5 weeks, whereas lead times for both CRC and HDG coil are being heard at approximately 7-8 weeks.
Earlier this week, SteelOrbis reported that Steel Summit speakers Josh Spores, Timna Tanners, and John Anton believed the market did not have any immediate upsides. Whereas Spores, principal steel analyst at CRU described 2023 as being a “year to forget,” Tanners, managing director of Wolfe Research said the potential UAW strike, which Wolf Research believes has a 95% probability of happening, is the biggest risk to sheet steel pricing in the short term.
Should that strike happen, it has the potential to add roughly 90,000 metric tons of excess flat rolled steel to the market every month for as long as the strike goes on.
When asked how the potential length of a strike could impact supply and demand, Spores pointed out it’s possible that the union would strike at all three US automakers. “Maybe they cycle between them,” he noted. Tanners added that a possible strike could place additional downward pressure on the spot market.
Anton, director of S&P Global Market Intelligence, said that he believes that the ultimate HRC pricing floor is somewhere between $760–$780/nt ($838-$860/mt), although “mills would still be profitable at $720/nt ($794/mt). Tanners believes that HRC is likely to trend at $750-$800/nt ($827-$882/mt).
“The only upside risk to the market would be a massive stimulus package in China or a supply disruption,” he said.