Yesterday, SteelOrbis reported that US-based EAF steelmakers Nucor and Cleveland Cliffs announced new minimum base pricing for domestic hot rolled coil. Per their correspondence, both companies indicated they’d be raising base HRC prices to a minimum of $40 cwt. ($882/mt or $800/nt), effective with all new orders.
Current HRC prices have risen by about $2.50 cwt. ($55/mt or $50/nt) in the past seven days, sources note, to an average spot market price of approximately $37.50 cwt. ($826/mt or $750/nt), although sources close to SteelOrbis have indicated that deals up to $2.00 cwt. ($44/mt or $40/nt) below that price point have been heard based on volume.
Sources also continue to report widespread belief that mills will roll out subsequent price increases “the very second the UAW strike comes to an end,” and many believe that mills will try to take the market up to $50 cwt. ($1,102/mt or $1,000/nt).
“Do I think price indexes could hit $50 cwt? Yes, I do,” a source said. “If the mills squeeze the spot market for a bit, they can get that number to tick up, just like they did back in April.”
In early-April, mills were successful in pushing HRC prices up to approximately $60 cwt. ($1,323/mt or $1,200/nt), before the spot market started to reverse course.
“[Only a small number of buyers actually] paid that, but driving the indexes up helped them get higher prices for contract tons, which is what they’re after.”
Order activity has also started to extend out, the source continued, which has helped enhance mills’ pricing power.
“Lead times are extending out and mills are squeezing [customers] hard on price, at least for the short term,” he added. “Mills are indicating they’re pretty much booked through December, which is unusual for this time of year, especially with the UAW strike.”
Another source said he’s “flummoxed” by the current state of the market.
“My logical brain thinks it’s all smoke and mirrors, because there’s not near enough demand to validate big swings upward like these,” he said. “My emotional side says the market has changed so much since COVID, that these swings are the new normal.”
He thinks that mills will be successful in driving HRC prices up to $40 cwt., but he’s skeptical that the market will reach $50 cwt. “I’m not that emotional,” he added.
A final source also thinks that the market can accept $40 cwt. for HRC, based on the fact that service center inventories are very low and because imports remain a non-factor. He also believes that mills will attempt to push the market to $50 cwt., but “[I] believe it [will] be a real stretch [for the mills] to obtain $50 cwt.”
In terms of CRC and HDG prices, both products are now trending in an average spot market price transaction range of $46-$47 cwt. ($1,014-$1,036/mt or $940-$960/nt), FOB mill. Sources also believe that prices for these products will continue to rise as well.