The upward trajectory for US domestic HRC and CRC pricing has continued since our last report a week ago, although sources close to SteelOrbis are split on their projections for the market. For example, some sources polled remain concerned that once the totality of still-pending new capacity is fully online, supply-and-demand rebalances, and prices reach their peak (which is unlikely to happen until “at least the second half of the year”), that a price correction could come fast and swift.
“Historically, once inventory tips from deficit to surplus, prices did not ease. Prices fell sharply as users who had double bought go on strike while they use up their excess tonnage, and sellers run out of space to put the stuff that everyone suddenly isn’t buying,” a source said. “And of course, by then, the insane price differentials [between domestic and import] will be causing a flood of imports. There’s a name for this. It’s called self-inflicted damage.”
Others, on the other hand, believe that elevated flat rolled steel pricing “will become the new normal,” however, it’s worth noting that no one polled believes that $70 cwt. ($1,543/mt or $1,400/nt) FOB mill for HRC, or even $60 cwt. ($1,323/mt or $1,200/nt), will be the new floor.
“There’s still a lot of pent-up demand, and from the customers we sell to, they can’t get their hands on enough steel, and even if they could, they couldn’t make enough of what they make to meet the demand from their customers,” a source said, adding that if Congress passes President Biden’s proposed infrastructure plan, “that will absolutely help keep prices from falling off a cliff. Do I think hot rolled will stay at $70 cwt.? No. But even if it settles at $50 cwt. ($1,102/mt or $1,000/nt), that’s still a pretty substantial drop.”
For now, domestic HRC and CRC prices are up, once again, week-over-week. Current HRC prices are trending at $70-$73+ cwt. ($1,543-$1,609/mt or $1,400-$1,460/nt), FOB mill, against a range of $68-$69+ cwt. ($1,499-$1,521/mt or $1,360-$1,380/nt), FOB mill, a week ago.
Current CRC prices, which were trending at $78-$79+ cwt. ($1,720-$1,742/mt or $1,560-$1,580/nt), FOB mill, are now being heard at $80-$83 cwt. ($1,764-$1,830/mt or $1,600-$1,660/nt), FOB mill.
Sources also say they’re keeping a close eye on iron ore and scrap pricing, as higher prices within the raw materials sector will likely impact flats pricing in the near future.