Long lead times coupled with an expectation that domestic scrap prices will remain stable—if not firm during the October buy cycle—has helped keep US flat rolled steel prices strong.
As with last week, domestic HRC prices continue to hold in the range of $28-$30 cwt. ($617-$661/mt or $560-$600/nt), ex-mill, whereas CRC prices are now trending in the range of $38-$40 cwt. ($838-$882/mt or $760-$800/nt), ex-mill, against $36.50-$40.00 cwt. ($804-$881/mt or $730-$800/nt) ex-mill a week ago.
Lead times for HRC continue to trend at 8-9 weeks, while CRC lead times are being heard at 10-11 weeks.
And while many market sources say they prefer higher prices, sources still question whether current price points can sustain amidst current low capacity utilization rates of 64.5%.
For example, during the same reporting period in 2019, HRC and CRC prices were trending in the ranges of $27-$28 cwt. ($595-$617/mt or $540-$560/nt), ex-mill, and to $35-$37 cwt. ($772-$816/mt or $700-$740/nt), ex-mill, respectively. However, capacity rates at the time were much higher; the American Iron and Steel Institute (AISI) reported that for week ending Sept. 21, 2019, the US mill capacity utilization rate was 77.7%.
“In the past, high prices always caused furnace restarts,” a source said. “This could be the one time where ‘this time it’s different,’ but Stelco and Big River Steel have already restarted and I expect [the other mini mills] will start operating at higher rates. So, at worst supply will be sufficient to allow a retreat in prices. More likely, supply inches into slight surplus by the start of 2021.”