US domestic flat rolled steel mills may have tried to push prices up to $57.50 cwt. ($1,268/mt or $1,150/nt), FOB mill, during the first week of January, but both market players and economists believe that prices will continue their downtrend.
This week’s prices are down from levels seen last week, with “official” HRC prices ticking down by $2.00 cwt. ($44/mt or $40/nt) to an average of $50-$52 cwt. ($1,102-$1,146/mt or $1,000-$1,040/nt), FOB mill.
CRC and HDG prices are also down by at least $1.00 cwt. ($22/mt or $20/nt) in the past seven days and are now being heard at roughly $63-$65 cwt. ($1,389-$1,433/mt or $1,260-$1,300/nt), FOB mill.
Sources throughout the US say they’re aware of deals for all three products that are taking place “well below” the most commonly heard ranges. Several market players have indicated they’ve heard rumors of HRC spot market sales that have transacted at approximately $45 cwt. ($992/mt or $900/nt), FOB mill.
If true, discounts at that level, for the time being, would be the exception, not the rule.
“The prices we’re seeing are rounding the top of this cycle. Mills are negotiating more, inventories are not low, production is rising, and lead times are falling,” said Josh Spoores, Principal Consultant, North American Steel Analyst at CRU, at the Tampa Bay Steel Conference earlier this week, adding that demand for steel in the top 3 steel intensive durable goods sectors are down, whereas iron and steel production is going up.
“Sheet prices are forecast to fall for a historic third consecutive year, falling still from the high point of the pandemic, and [recovering] from some of the volatility that was spurred by the war in Ukraine.”
He believes that the average price for HRC for the current year will trend at approximately $40 cwt. ($882/mt or $800/nt).
Timna Tanners, Metals and Mining Equity Research Analyst at Wolfe Research, agrees with that price prediction.
“In 2023, sheet supply was flat despite new capacity,” she said. “For 2024, the price cadence could look similar to what we saw for the past 2 years. A strong H1 compared to H2, and [new capacity / new steel mills] ramping up should drive oversupply, with demand looking flat.”
A final source said he believes that $40-$42 cwt. ($881-$926/mt or $800-$840/nt) is the most likely scenario.
“It’s just a matter of how fast we get there,” he said.