US domestic HRC prices are still “mostly neutral” since our last report a week ago, as spot market prices are still trending in the range of $38-$40 cwt. ($837-$882/mt or $760-$800/nt), FOB mill.
“I think we are at the bottom for hot rolled prices,” one source said, adding that planned maintenance outages and lessened steel production are among the factors that may have prevented flat rolled steel prices from slipping further.
For example, earlier this week, the American Iron and Steel Institute (AISI) reported that for the week ending Sept. 10, 2022, domestic mills’ raw steel production was recorded at 1,723,000 net tons, which reflects a 6.3% decline from the same reporting period in 2021.
Also notable, is that US Steel has announced the temporary idling of its No. 8 Gary Works blast furnace due to “market conditions” and the “high levels of imported goods.” The now-idled furnace has an approximate raw steel production capacity of 1.5 million tons annually.
The mill has not said when they plan to bring the blast furnace back online.
The Pittsburgh-headquartered steelmaker has also announced that a planed 30-day outage of Blast Furnace #3 at Mon Valley Works has been moved up from October to September.
Other mills, including North Star BlueScope, SDI, Big River Steel, and NMLK USA, have pending outages on their books in October and November. Several Nucor mills are also offline this month for maintenance.
“Lead times are still short and demand isn’t great,” another source said, adding that lead times for HRC are trending at about 4-5 weeks, whereas lead times for CRC are holding at roughly 6-7 weeks. “I think the only thing that’s helping keep prices where they are is the fact that there’s a lot of capacity that’s offline right now.”
US CRC prices, on the other hand, have firmed by $1.00 cwt. ($22/mt or $20/nt) on the top end since our last report a week ago, and are now being heard at $55-$58 cwt. ($1,213-$1,279/mt or $1,100-$1,060/nt), FOB mill.
Numerous sources have said that few transactions are taking place at the top part of the above stated ranges, although “mills are pushing hard for it.”
“I think what we all need to keep in mind is that unless there’s some dramatic shift in demand, is that once the outages are over, the market could be supply heavy,” a final source said.
Another thing to keep an eye on relates to scrap prices. Scrap market sources throughout the US are already bracing for another downturn in October.
“Normally the spread between [busheling] and HR pricing FOB mill is about $15.00/cwt. ($331/mt or $300/nt), but the mills are currently getting about $21.00 cwt ($463/mt or $420/nt) over scrap,” a source said. “I think $40 cwt. ($882/mt or $800/nt) HRC is the ceiling, not the floor. I think if prices go above that it’s going to be a temporary blip.”