The most commonly heard spot market price transaction range for US domestic HRC has softened by $1.00 cwt. ($22/mt or $20/nt) on the top end since our last report a week ago, which brings the current average range to $93-$95 cwt. ($2,050-$2,094/mt or $1,860-$1,900/nt), FOB mill.
CRC prices, however, are still trending at $106-$110 cwt. ($2,337-$2,425/mt or $2,120-$2,200/nt), FOB mill, reflecting no change since our last report a week ago.
The big question on the minds of steel buyers this week is how the suspension of Section 232 tariffs for EU steelmakers in favor of a tariff-rate quota (TRQ) that will allow duty-free importation of steel and aluminum from the EU at a historical-based volumes will impact domestic prices. According to details released by the Department of Commerce, the TRQ will be allocated by product and EU member states and will be further broken down into 54 product categories. Starting in 2022, the total quota arrangement will be set at 3.3 million metric tons per year.
Current US import HRC prices, with the 25% tariff, are hovering at approximately +/- $70 cwt. ($1,543/mt or $1,400/nt), DDP loaded truck in US Gulf coast ports.
“We’re not going to be looking at a flood of European steel, but what we will be looking at is offers out of the EU that could potentially come in at 25% less than where they are now,” a source said, adding that if this happens, he expects to see import HRC offers out of the EU at +/-$54 cwt. ($1,191/mt or $1,080/nt), FOB mill. “This would be a stark contrast to where domestic prices are, and I can’t imagine that a roughly $40 cwt. ($882/mt or $800/nt) price differential wouldn't have some sort of psychological impact on the market.”
On the other hand, production at US automakers appears to be coming back, and other sources speculate this could help reverse the course for domestic HRC prices. Also of note is this month’s settled US scrap prices, which are up by as much as $20-$60/gt depending on the grade and the region.
“I think you have a lot of buyers who are concerned that hot rolled will keep coming down, and I can’t blame them,” a final source added. “There’s also another camp of buyers who think that there are some positive signs in the market, which will help keep prices strong through the end of Q1 2022. How this is going to shake out is really anyone’s guess.”