US domestic flat rolled steel prices have continued to climb in the past week, although sources close to SteelOrbis say they believe a market peak is imminent.
As of today, US HRC prices are trending at approximately $55-$57 cwt. ($1,213-$1,257/mt or $1,100-$1,140/nt), FOB mill, against $53.50-$55.50 cwt. ($1,179-$1,224/mt or $1,070-$1,110/nt), FOB mill, a week ago.
US domestic CRC prices are now trending at $66.50-$68.50 cwt. ($1,466-$1,510/mt or $1,330-$1,370/nt), FOB mill, against $63-$64 cwt. ($1,389-$1,411/mt or $1,260-$1,280/nt), FOB mill, a week ago.
Transactions slightly above these ranges for small-tonnage orders have been heard within the marketplace.
Numerous sources close to SteelOrbis have indicated they believe that the market is nearing its peak, adding that it’s just a matter of time before “the artificial bubble finally pops.” Part of the rationale for this suspicion relates to the pending renewed steel output from Mexican steelmaker Altos Hornos de Mexico (AHMSA), which has been offline since late-November of last year after the nation’s power company cut the mill’s power supply for non-payment.
Earlier this month, SteelOrbis reported that foreign investors had inked an agreement to buy AHMSA, which included a capital injection of $200 million to reactivate mill operations.
“I think what you’re going to see is that prices will continue to trend up for a couple of more weeks before they plateau and start to trend back down,” a source said. “I also think that once we’re at the point where AHMSA is about to start shipping steel into the US again, that the domestic mills will start to ramp up their capacity in attempt to maintain their market share, which will bring prices back to a more sensible level.”
Others agree that the “bloom is about to fall off the rose,” noting that “there is absolutely no one who is stocking inventory at these [pricing] levels.