US flat steel markets were higher this week as mills increased prices in response to growing reports that pricing remains too low, imports of flat steel are down, and that supply could decline in the short term as maintenance-related outages begin earlier this year, further trimming supply, market insiders told SteelOrbis this week.
Industry reports indicate a total of as much 1.8 million short tons of mostly flat steel capacity could be idled between now and December as mills complete annual maintenance programs. Insiders said many of these scheduled outages could occur earlier than normal this year because an expected interest rate cut in mid-September and the November US presidential election could increase demand for finished steel products as economic conditions are likely to improve in the fourth quarter. An early exit from maintenance, insiders say, would allow US mills to sell into this higher priced steel market in the fourth quarter.
“The markets are trying to crawl back,” said one Texas-based steel market insider regarding reports of higher priced (hot-rolled coils). “I don’t think that prices are likely to decline much more as the mills want to push prices up gradually. We’ll see how it works out.”
“The mills said they were going to raise HRC prices to $34.00-$35.00/cwt. ($750-772/mt or $680-700/nt FOB mill) and they pretty much did it,” said another flat steel market insider. “We’re hearing that flat steel imports are not coming in like they were, however, a lack of substantial change in market fundamentals means pricing could go down again,” he cautioned. “Nobody’s really doing very much, and most are just trying to navigate their way through a down market.”
This week’s flat steel price assessment differs a bit from the week of August 12, when pricing was mixed but mostly down as new demand for finished steel products continued to languish and August scrap settled sideways to July values. Slightly higher HRC pricing offers from steelmaker Nucor this week on August 19, also added to recent price gains, insiders said.
This week’s SteelOrbis HRC assessment is at $675-700/nt ($744-772/mt), up $27.60/nt ($30.42/mt) from $655-665/nt ($722-733/mt) on a delivered to customer basis from the week of August 12. The weekly price spread between HRC and spot CRC which increased from $250/nt or $276/mt, August 5, to $275/nt or $303/mt the week of August 12, narrowed to $262/nt or $288/mt this week. The spread had been narrowing for the past several weeks as both HRC and CRC pricing moved lower together, though last week’s rising CRC and declining HRC pricing bucked the trend. Analysts interviewed by SteelOrbis in July said they expected the price spread between the two finished steel products to narrow to a more “historical” average of $200-$250/nt over the next several months, after exploding to nearly $300-$400/nt over the last several years as steel markets recovered from post COVID-19 steel price spikes.
On August 19, steel maker Nucor increased its Consumer Spot Price (CSP) -the price it charges for HRC across all of its mills- to $695/nt ($766/mt) FOB mill, up $5.00/nt ($5.51/mt) on the week. Since the first price increase on July 29 since May 20 to $675/nt ($744/mt), HRC pricing has risen $20/nt ($22/mt), even as demand for finished steel continued to wane across the US. Market insiders continue to tell SteelOrbis that recent price increases by Nucor are an attempt by the steel maker to establish a price floor under falling finished steel prices as demand still fails to impress. They also said Nucor CSP pricing below $650-670/nt ($717-739/mt) FOB mill was approaching the mills’ variable cost of doing business, therefore, selling at or below those levels could cause the mill to lose money.
In the CRC markets, pricing is discussed in thin trade at $945-$950/nt ($1,042-1,047/mt), delivered to customer, up from an average of ($915/nt or $1,009/mt) during the week of August 12.
In the HDG markets, traders report little new spot activity with prices flat to last week at $865-875/nt ($954-965/mt) delivered to customer.