The most commonly reported ex-Midwest mill spot price transaction range for US domestic hot rolled coil (HRC) has firmed by approximately $1.00 cwt. ($33/mt or $30/nt) on the low end since our last report a week ago, bringing the current average spot market transaction range to $23.00-$25.00 cwt. ($507-$551/mt or $460-$500/nt).
Sources close to SteelOrbis, however, believe that additional price firming will take place on the lower end of that range in the upcoming days due to mills’ increased input costs. US domestic scrap prices shot up in most regions during the April buy cycle; prices in the Midwest were up by as much as $51/mt ($50/gt). On the East coast, US scrap prices also trended up between $41-$61/mt ($40-$60/gt) depending on the grade.
It's also worth noting that ArcelorMittal USA this week announced they will be charging a new minimum base price of $26.00 cwt. ($573/mt or $520/nt) for US domestic HRC effective immediately, with all new orders.
Many buyers, however have expressed concern that the current run-up on HRC spot market pricing will be short lived. “A lot of us think this thing could last for the next 60 days, with prices continuing to rise, but the general sentiment is that prices could start to correct during the summer,” one Midwest-based source said.
It is also worth noting that a number of players within the US domestic scrap market also feel that US scrap prices could level off, if not start to soften during this same time period; which has many buyers of downstream steel products concerned that similar corrections could be seen within their segments as well.
“The upticks in HRC prices definitely aren’t demand based,” another source said. “It’s all about mills’ increased input costs.”