The previously seen sideways pricing trend for US domestic hot rolled coil has come to an end, sources say, adding that HRC prices have firmed slightly since our last report a week ago. The big question, however, is whether prices will continue to fluctuate in the weeks ahead. If prices do start to fluctuate, will they firm or will they soften, and if movement does occur, many wonder if the movement will be significant.
Current HRC prices are now being heard at $96-$98 cwt., ($2,116-$2,161/mt or $1,920-$1,960/nt) FOB mill, against a range of $95.00-$97.00 cwt. ($2,094-$2,138/mt or $1,900-$1,940/nt), FOB mill, a week ago.
CRC prices however, have remained relatively steady, and inputs are still being heard in the range of $106.00-$109.00 cwt. ($2,337-$2,403/mt or $2,120-$2,180/nt) FOB mill, reflecting no change since our last report on September 16.
“If mills keep pushing prices up they may think that customers will be less likely to ask for a discount,” a source said, noting that US import HRC is still being offered at $75.00 cwt. ($1,654/mt or $1,500/nt) DDP loaded truck in US Gulf ports, which is “significantly cheaper” than what domestic mills are offering.
Another service center source said he also believes that mills are “doing their best” to keep prices firm into contract season, adding that mills his company works with are trying to negotiate their upcoming contract at CRU+ pricing for the upcoming year, as opposed to CRU-, which has been the historical norm. Other sources, in recent weeks, had confirmed that mills were trying to hold their line at CRU-flat, as opposed to offering discounts.
“CRU+ is crazy,” another source said. “Never in my life did I imagine we’d see negotiations like this. Yes, supply-demand ratios still aren’t balanced, but the [domestic] mills capacity utilization rates are above 85%. None of this makes sense.”
Also, of note, is that scrap market sources say they believe that settled scrap prices in October for most grades are likely to hold at sideways during the upcoming buy cycle. Busheling scrap prices, however, are expected to soften by as much as $25-$30/gt, depending on the region.