US HRC prices hike as tight market and surging prices

This week, US domestic hot rolled coil (HRC) spot prices surged as mills once more raised offer prices, which fueled buyers’ heightened suspicion following another round of mill price increases this morning.

Rising prices this week among steelmakers and competitors

The weekly domestic US HRC assessments in the Midwest and the South both increased by $50/st to $900/st on Tuesday.

After formally raising prices by $260/st through a series of hikes from the end of November through early last week, steel mills continued to be successful in securing higher flat steel spot offers. Since then, the US Midwest spot assessment has gone up by more than $270/st.

The latest round of price hikes was headed this morning by electric arc furnace (EAF) steelmaker Nucor, who raised prices by $100/st to an HRC price minimum of $1,000/st. Cleveland-Cliffs, an integrated steelmaker and competitor, quickly followed on both counts, and US Steel also announced a price rise of $100/st without a minimum.

If consumers approve the most recent price increase, the HRC market would reach $1,000/st for the first time since June 28, 2022. At that time, the US market was hampered by uncertainty regarding the supply of raw materials, which had caused steel prices to rise in March and April.

Several service center contacts were outraged by Nucor’s price announcement; one called it “crazy,” another described it as “ambitious,” and one said it “smacks the market hard.”

The majority of the offers, which ranged in price from $800/st to $940/st, were reported.

In violation of Argus’ HRC methodology, one customer reported placing late last week multiple orders for HRC totaling several thousand tons each at a price of $800/st. Another service center made a request for a few thousand tons for delivery in the second quarter and received pricing quotes between $800/st and $900/st.

These prices are between 10 and 20 pc less than the intended spot price and 13 pc less than the spot evaluation from Argus.

What is happening to the market?

US steel producers have raised prices by $200/st over the past 20 days, citing rising raw material costs and longer lead times—arguments that many customers think are exaggerated.

With March appearing to be booked and the majority of mills also looking at the first week of April, HRC lead times in the Midwest increased to 6-7 weeks from 4-8 weeks.

The assessment for Argus iron ore fines 62pc Fe cfr Qingdao reached $132 per dry metric ton on Tuesday, which is the highest amount since June 2022.

The spread between #1 busheling scrap shipped to US Midwest mills and HRC grew by 11% from the previous week to $500/st, which is the widest spread since June 2022, when HRC prices were falling after a price rise brought on by a dispute.

Prior to the European conflict, the spread was at its lowest point, $583/st, a year ago.

The equivalent of $45-81/st would be the contract discounts of 5–9pc to the existing HRC evaluation.

According to reported pricing coming out of Mexico, the Argus HRC import assessment into Houston decreased by $20/st. High lead times from non-North American nations and high pricing still prevent imports for the time being.

As the tightest market, cold-rolled coil (CRC) assessments in the Argus weekly domestic US report increased by $60/st to $1,060/st, while hot-dipped galvanized (HDG) coil assessments increased by $20/st to $1,020/st.

Lead times for CRC increased slightly, going from 8 to 9 weeks, while lead times for HDG increased little, going from 6 to 8 weeks to 7-8 weeks.

At what prices is HRC trading?

A month earlier than last week, the CME HRC Midwest futures market was up again last week, pushing up by double digits across the board but going into backwardation from June onward, showing that there is little expectation that this surge will continue into the second half of the year. 

Prices for April increased by $30/st to $905/st, while prices for May increased by $36/st to $906/st. Prices increased by $36/st in June to $886/st, and by $20/st in July to $860/st. Prices for September grew by $17/st to $839/st whereas August prices jumped by $14/st to $844/st.

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