It’s been a little more than 2 weeks since US flats mills announced they’d be raising prices on all sheet steel products by $3.00 cwt. ($66/mt or $20/nt). And while prices have firmed somewhat since that time, mills’ full desired amount has yet to be reached.
“Are prices up $3.00 cwt.? No,” a source said a week ago. “Are the deals gone? Yes.”
Sources also believed that a second increase was “likely on the horizon.” Suffice to say, no one was surprised when a second round of increase letters were sent out earlier this week. Cleveland-Cliffs once again led the charge, stating they would be raising prices by $2.50 cwt. ($55/mt or $50/nt) FOB, effective immediately. The other mills were quick to follow.
The big question, however, is whether HRC prices will reach mills’ desired price point of $37.50 cwt. ($827/mt or $750/nt). On one hand some believe that if scrap prices go up again in January, that HRC prices will need to rise in tandem so mills can maintain a $16-$17 cwt. ($353-$375/mt or $320-$340/nt) margin between busheling scrap and hot rolled prices.
On the other hand, increased input costs alone cannot carry the market. Low capacity utilization rates (which, according to AISI, were recorded at 77.3% for week ending Dec. 10, 2022, against 80.1% a year ago), coupled with less-than-exciting order activity, have others thinking that prices will probably cap out a $35 cwt. ($772/mt or $700/nt), FOB mill.
“The deep discounts are gone, that’s for certain,” a source said. “I also don’t think anyone believes that mills are going to get $37.50 cwt. for hot rolled. This is one of those situations where it looks as if they rolled out the second increase with the hopes that it would force the first one into acceptance.”
In terms of current prices, HRC has firmed by $0.50 cwt. since our last report a week ago, which brings HRC to an average range of $31-$34 cwt. ($683-$750/mt or $620-$680/nt), FOB mill. CRC prices are up by $1.00 cwt, and are now being heard at $42-$45 cwt. ($926-$992/mt or $840-$900/nt), FOB mill.
Despite the recent increases, both CRC and HRC prices are trending at their lowest levels in approximately 2 years.
