US domestic scrap prices have settled up sharply during this month’s buy cycle, and, not surprisingly, domestic flat rolled steel prices have continued to rise. Today, HRC spot market prices are trending at $51-$54 cwt. ($1,124-$1,191/mt or $1,020-$1,080/nt), FOB mill, whereas US CRC prices are now being heard in the range of $61-$64 cwt. ($1,345-$1,411/mt or $1,220-$1,280/nt), FOB mill.
“I suspect that panic will run into January, but then prices will start to decline,” a source said. “Chinese prices peaked just before Christmas at almost 5000 RMB then dropped to 4500 RMB by January 2. European and North American prices have not peaked but buyers are already worrying that prices will drop in February and thus inventory will be devalued.”
Other sources believe that current market prices are “not aligned” with market fundamentals. For example, although US domestic scrap prices have continued to climb, flat steel prices are up by much more. At this point, some believe the market is at a breaking point—either capacity will need to be restarted, or buyers will start booking offshore.
Earlier this week, AISI reported that in the week ending January 2, the domestic capacity utilization rate was recorded at 74.6%. In contrast, during week ending Jan 2, 2020, the capacity utilization rate was recorded at 80.1%.
“The market is confusing, and prices are all over the map,” a source said. “No one is getting the same price, and the price you were quoted this morning could be $1.00 cwt. ($22/mt or $20/nt) higher by the time you turn your computer on tomorrow. Prices are nothing short of insane, and with the speed at which this thing took off, everyone is worried that when the bubble pops, the crash down will be just as swift.”