Short lead times and unexciting demand levels have increased US flat mills’ willingness to negotiate spot market prices for domestic HRC and CRC orders. Multiple SteelOrbis sources have said that current lead times, which are trending at approximately 6-7 weeks for domestic CRC, and 4-5 weeks for HRC, are not supportive of higher prices.
Sources are also concerned that mills’ announced plans to restart blast furnaces could “lead to more capacity than the market is ready to absorb, which may then lead to additional pricing pressure,” causing many buyers to take a more cautious stance.
“Demand is flat,” a source said. “There’s not a lot going on and overall, we’re not all that busy.”
Although most HRC contract buys are still taking place at $23-$24 cwt. ($507-$529/mt or $460-$480/nt), ex-mill, buyers who are looking to purchase limited tonnages are paying “closer to $25 cwt. ($551/mt or $500/nt) ex-mill as opposed to $25-$26 cwt. ($551-$573/mt or $500-$520/nt) ex-mill a week ago.”
And despite mills’ desire for a $37 cwt. ($816/mt or $740/nt) price point for domestic CRC, program buys are still taking place in the range of $32-$34 cwt. ($705-$750/mt or $640-$680/nt), ex-mill, with small spot market transactions are happening closer to $35 cwt. ($772/mt or $700/nt), ex-mill. However, deals are said to be available for both products.
Also of note, sources say, is the widespread expectation that domestic scrap prices are going to come down next month. This suspicion is also contributing to buyers’ wariness of making large buys in the short term. “None of us want to make a big buy today to find out that the price is $1.00 cwt. ($22/mt or $20/nt) less in two weeks,” a source concluded.