US domestic flat rolled steel prices continue to inch higher, sources note, adding that mills have said they have limited spot tons available for December. “Supply is still tight and that’s helping keep prices up,” a source said, adding that early rumors that scrap prices could jump substantially next month has led some to wonder if prices will remain firm through the first part next year.
“Mill capacity utilization is over 71%, but it’s still down about 7 points in the past year,” a source said. “Between that and fairly quiet activity when it comes to import arrivals, [the domestic mills] still have the upper hand.”
On the other hand, some question whether this might be mills’ “last hurrah,” as a significant amount of new capacity is about to come online. For example, Big River will start rolling steel at its expansion project later this month, and Nucor and Steel Dynamics are expected to complete their flat rolled mill expansion projects by mid-2021. BlueScope’s expansion is projected to start rolling steel in late 2022. The pending glut of mini-mill capacity, and the question of how much of an impact this will have on market dynamics, has yet to be determined.
“It’s something we all need to be mindful of, but I think we’ll start to see cracks in pricing well before all that new capacity comes online,” another source added.
For now, prices continue to firm. Current HRC prices have risen by approximately $0.50 cwt. ($11/mt or $10/nt) in the past week, and are now being heard in the range of $32.50-$35.50 cwt. ($717-$783/mt or $650-$710/nt) ex-mill, whereas CRC prices have risen by $1.00 cwt. ($22/mt or $20/nt) to a new range of $43-$45 cwt. ($948-$992/mt or $860-$900/nt), ex-mill.
“You need to remember this-- the tightness in supply isn’t going to last forever,” one source said. “Planned maintenance outages don’t last forever. That, and I think we’ll start to see a jump in import arrivals after the new year. With the market going the way it is now, when pricing does start to shift back in the other direction, I worry it’s going to feel like a sharp left turn.”