US flat steel prices continued lower this week on scant mid-July demand for finished steel products, though market insiders cautioned that a price bottom could be nearing as current flat steel steel pricing on the US Gulf Coast is approaching mills’ variable cost of doing business.
This week’s flat steel market assessment differs little from last week when flat steel prices were reported lower again as a holiday-shortened Fourth of July week reduced market activity as many manufacturers closed their doors. Flat to lower July settled scrap prices in the US Midwest also weighed on finished steel price decline since early April, SteelOrbis contacts say the bottom for steel pricing could be approaching.
“The word in the marketplace is that we’re expecting a price increase from the mills within the next several weeks,” said Texas-based SteelOrbis market insider. “When you’re looking at pricing for HRC at $32.50/cwt. ($650/nt or $717/mt) that price is pretty close to many mills’ variable costs.”
The market insider added that market activity in Texas still remains in flux as the lingering effects of last week’s hurricane Beryl continued to affect steel sales.
“In Texas, we’re still feeling the effects of hurricane Beryl,” he said. “While some warehouses are still without power, most of the power is back, but some folks are having trouble invoicing their customers because (internet connections) remain out.”
On the spot market pricing front, domestic HRC prices are reported at $32.50-$33.00/cwt. FOB mill ($650-660/nt or $717-728/mt), off $15/nt from this past week’s $665-675/nt ($745-756/mt) FOB mill reported range. Lead times for delivery of spot HRC is last talked at 3-4 weeks, indicating markets are well supplied and mill inventories adequate heading through the third week of July, market insiders said.
In other flat steel grades, CRC is assessed at $47.00-$48.00/cwt. ($940-960/nt or $1,036-1,058/mt) compared with this past week’s $49.50-50.00/cwt. ($990-1,000/nt or $1,091-1,102/mt) range. In coated products, HDG is discussed in continued light trade at $43.25-43.50/cwt. ($865-870/nt or $954-959/mt), compared with this past week’s $875-885/st ($965-976/mt) range.
Market analysts contend the price of CRC in weekly spot markets could continue to be under pressure as the historic spread to HRC remains too high.
“The fly in the ointment continues to be the CRC premium (to HRC),” the analyst told SteelOrbis. “All the folks I’ve talked to agree that the cracks are in full movement, and (the price of) CRC will keep falling. There is still debate as to whether the normal $170-200 (per net ton premium) comes back or if it flattens at $200-250, but nobody seems worried anymore of $400 becoming a new normal.”
SteelOrbis data shows the current price spread between HRC and CRC is $295/nt or $14.75/cwt. ($325/mt).
The analyst added a “buyers’ market” situation continues to dominate weekly flat steel trade as demand remains slim, though he cautioned that now might be a good time to consider locking in pricing.
“I was out the first half of July, so I have only talked to a couple of buying companies,” he said. “Everyone on the calls seemed pretty serene, as if this is truly a buyers’ market. The questions are turning to, how long do the good times last? Should they be in a hurry to lock at a bottom, or is this something that will last through the end of the year? My opinion is that (current pricing) probably lasts through the end of the year, but it can’t fall much farther so if you get an opportunity to lock these levels, why not?”