It’s been a little over a week since US flats mills started announcing price increases, and prices are already reflecting a strong uptrend. Sources say they’re not surprised the increase went through, adding that due to short lead times and low prices, many service centers had taken their inventory levels “razor thin” levels.
“When people realized that September scrap prices were about to jump up, buyers rushed out and booked everything they could, at prices at or as close to the bottom of the market they could get,” a source said. “Not only has this helped extend lead times, it’s helped support mill price increases.”
In the past seven days, HRC lead times have risen from 5-6 weeks to 7-8 weeks. CRC lead times, which were previously around 6-8 weeks, are now hovering at 9-10 weeks.
Not surprisingly, HRC spot market prices have firmed week-over-week, from $23-$24 cwt. ($507-$529/mt or $460-$480/nt) ex-mill, to $24-$26 cwt. ($529-$573/mt or $480-$520/nt) ex-mill. CRC prices have also firmed, from $32-$34 cwt. ($705-$750/mt or $640-$680/nt), to $34-$36 cwt. ($750-$794/mt or $680-$720/nt) ex-mill.
Yet despite some market excitement about prices inching upward, not everyone is convinced that higher prices are here to stay.
“When people start getting the piles of steel they all ran out to buy, that’s going to send buyers back to the sidelines for a bit. This is the same cycle we’ve seen a million times,” another source said.
Another source added an alternate perspective. “What we’re concerned about, is that the mills might take this as a sign to ramp up production, but with the market going the way it is, the mills aren’t going to have anywhere to put it,” he said. “That could also place downward pressure on the market.”