The US flat steel market finished mixed this week as late-week trading saw lower pricing for HRC grades, while more finished steel products saw prices rise amid a perceived supply tightness, as buyers flocked to the market last minute to meet contract obligations prior to the end of the month.
This past week, the combination of sagging US Gross Domestic Product (GDP) data, and continuing upticks in energy prices did little to spur steel buyer interest, causing prices to remain steady for a second straight week. This week however, the conclusion of several steel industry conferences and the approach of May, brought hesitant buyers back into the spot market to fulfill last minute orders for April, contacts said.
One market insider just back from several steel conferences summed up the current market thus. “I was on the road all last week, with conferences in Houston then in Chicago. The vibe I picked up was, neutral”, he continued, “business ain’t bad but it ain’t booming.”
US domestic spot HRC prices ranged $40.25-$41.50/cwt, ($887-$915/mt or $805-$830/nt) FOB mill, down $0.62/cwt or $13.67/mt, with lead times for HRC have settling mid-range at about 4 weeks, from a previous estimates of 3-7 weeks. Spot contracts for CRC and HDG products required on average 4-8 weeks lead time, down from previous 6-10-week assessments, contacts said.
“Demand appears to be fairly soft and service center inventory levels have improved,” one HRC buyer commented to SteelOrbis at midweek. “The market moves over the past few weeks have been extremely modest.”
As to steel prices looking forward, another HRC contact expected a continuation of flat pricing seen recently, with perhaps a bit lower pricing if buyers “shopped around”.
On the flipside, market insiders told SteelOrbis galvanized markets remained “a bit tight” as some sellers preferred to hold off on quick sales early on, in case prices rose during the last week of April. CRC settled the week at $56.50-$58.50/cwt ($1,246-$1,290/mt or $1,130-$1,170/nt), up $2.50/cwt ($55/mt or $50/nt), while HDG settled at $57.00-$58.00/cwt ($1,257-$1,279/mt or $1,140-$1,160/nt), up $4.50/cwt ($99.21/mt or $90/nt).
The average spread between HRC and HDG is last reported at $16.62/cwt, up from $13.50/cwt a week earlier. While the spread widened this week on supply tightness in CRC and HDG grades versus falling HRC prices, many contacts expect the spread to move towards $10/cwt over the next several months as additional mini-mill steel capacity comes online in the southern US, and economic activity potentially improves later in 2024 and early 2025 following the November presidential election.
One SteelOrbis contact just back from an industry conference had this to say about the ongoing tenuous situation with regard to flats and galvanized products. “A question posed by two different clients was, when will CRC fall like HRC did, and when will HDG come down?” he said. “My response was they always lag, but they always eventually follow. Both seemed satisfied with the answer,” he said, [and] “it does, however, show a pain point in the sheet market.”
As for May scrap, market surveys indicate a consensus for “soft-sideways,” with perhaps a bit higher pricing possible depending on how much mills seek to replenish their depleted inventories during the May buy cycle which starts next week.
“There is always the possibility that as the buy cycle starts, the mills will want to buy heavy, as it does feel like the bottom of the market,” one scrap buyer told SteelOrbis. “If that’s the case, he said, “a modest bump of $10-$20/gt for all grades is not out of the question, but it would depend on how much inventory mills are currently sitting on.”