The downtrend for US domestic sheet steel products has continued, sources note, and many are wondering where prices will eventually settle.
This week, US HRC prices are trending at approximately $69-$71 cwt. ($1,521-$1,565/mt or $1,380-$1,420/nt), FOB mill, against a range of $73-$75 cwt. ($1,609-$1,653/mt or $1,460-$1,500/nt), FOB mill, a week ago.
Additionally, US CRC prices are now being heard at $94-$96 cwt. ($2,072-$2,116/mt or $1,880-$1,920/nt), FOB mill, against a range of $99-$100 cwt. ($2,183-$2,205/mt or $1,980-$2,000/nt), FOB mill, a week ago. Deals below these ranges for both HRC and CRC have been heard throughout the marketplace.
HRC prices are down by almost $28 cwt. ($617/mt or $560/nt) from their peak in late September, whereas CRC prices are down by roughly $16 cwt. ($353/mt or $320/nt) during that same time period.
The big question is how far prices will fall before they finally settle. And while some think HRC prices are likely to stabilize around $50 cwt. ($1,102/mt or $1,000/nt), others firmly disagree with that prediction.
“The average price for HRC, between 2010 and 2019, was roughly $32 cwt. ($705/mt or $640/nt), and that includes the price spike of 2011, the 2015-2016 downturn, and the upside from Section 232,” a source said. “There was a lot of cyclicality in there, and even with the price swings, prices went up, or down, but eventually re-normalized. For this cycle, for prices to settle at $50 cwt. ($1,102/mt or $1,000/nt), which is $28 cwt. ($617/mt or $560/nt) higher than the previous average, without some fundamental change in demand, it just doesn’t add up.”
The source said he doesn’t believe steel demand is much higher than it was pre-pandemic now that the backlogs are cleared. “You also need to consider that meteors haven’t fallen out of the sky and destroyed blast furnaces,” he said. “Supply is at worst flat, and new mills are starting to come online. If prices are going to settle at 56% higher than the previous average, you’re going to need to convince me that demand is 56% higher than it was in 2019. Do I think prices will re-settle at $32 cwt? No, and I think we can make the argument that prices will be roughly 10% higher than they were. But I in no way see prices settling at up by more than 50% from the pre-pandemic average.”