US flat rolled steel prices have continued to climb since our last report a week ago, although multiple sources close to SteelOrbis are speculating that the market is at or near its ceiling.
“Everyone keeps talking about the fact that service center inventories are painfully low, but to that same caveat, there’s a bunch of steel that’s on order and about to be delivered,” a source said.
Another source agreed that the run up on pricing is unlikely to have long-term sticking power
“Inventories were thinned out; mills reduced their capacity utilization rates [due to COVID] and the supply got squeezed. And then, in August, when everyone rushed out to buy, lead times went out and prices went through the roof,” the source said. “This is all cyclical and we’ve seen this happen before.”
There’s also skepticism that mills are selling large volumes at current levels. “I don’t think anyone is booking large tons at today’s prices. Small tons? Sure, and that’s the market that mills are using to keep prices up,” the source continued.
Also of note is recent happenings in the domestic scrap market.
For the current month’s buy-cycle, prices settled at “mostly sideways” across the board, although a number of transactions took place at down $10/gt. Earlier this week, some scrap dealers were already starting to talk about a potential downtrend in November, and that sentiment was further underscored today, when it was reported that East coast exporters sold 36,000 mt of HMS I/II 80:20 scrap at $283/mt CFR. In the previous booking from the US disclosed yesterday, the benchmark HMS I/II 80:20 scrap price was at $285/mt CFR, for October shipment.
“We know that hot rolled pricing tends to follow scrap, so the question is whether [HRC] prices will start to soften before or after the end of the month. I think we’ll start to see some corrections before the end of October,” a source noted.
For now, prices remain strong. This week’s US HRC pricing is being heard at $30-$31 cwt. ($661-$683/mt or $600-$620/nt), ex-mill, against $28-$30 cwt. ($617-$661/mt or $560-$600/nt), ex-mill, a week ago. US CRC prices are now trending at $40-$41 cwt. ($882-$904/mt or $800-$820/nt), against $38-$40 cwt. ($838-$882/mt or $760-$800/nt), ex-mill.