US flat steel markets were flat to marginally less this week amid unremarkable mid-month May demand and early predictions for flat to lower scrap pricing during the June buy cycle, market insiders told SteelOrbis this week.
“Prices continue to soften as sluggishness in the market remains,” one market insider commented to SteelOrbis at mid-week. “You have to go back to October of last year since the market was this soft.”
Domestic spot HRC prices are now assessed marginally lower at $38.00-$40.00 cwt, ($838-$882/mt or $760-$800/nt) versus last week’s $38.00-$40.50 cwt. ($838-$893/mt or $760-$810/nt) FOB mill. Lead times for HRC were last discussed about 4 weeks.
CRC is assessed slightly less at $55.00-$56.00 ($1,212-$1,235/mt or $1,110-$1,120/nt) versus last week’s $55.80 cwt average ($1,230/mt or $1,116/nt). And, even as CRC declined, the spread between it and HRC remains problematic, sources say. It is last assessed at $16.50 cwt, or $330/nt.
“My belief is that CRC is simply overpriced, and it will come down,” one market insider told SteelOrbis later in the week. “The premium has been $170 to $200 (per net ton) and there is zero reason it should be higher now.” He continued, “One pricing source shows CRC as more expensive than galvanized. The technical economic term for that is looney tunes,” he said. “And it isn’t the case that galvanized is underpriced, it is that CRC is overpriced.”
In other grades, HDG was the biggest loser, falling nearly 5 percent on the week from an average $55.95 cwt ($1,233/mt or $1,119/nt) to $53.00-$53.50 cwt ($1,168-$1,179/mt or $1,060-$1,070/nt) FOB mill. Spot contracts for CRC and HDG products require 4-8 weeks lead time at last report.
In the absence of real demand, or sizable supply disruptions in the form of mill outages, scrap traders lamented that prices were likely to remain flat to lower in the foreseeable future.
“It’s still a bit early but (scrap) pricing isn’t looking promising,” said one SteelOrbis scrap contact. “It seems we are in for a soft sideways market depending on grade and region.”
Another contact was more optimistic about June scrap pricing, noting that some (sellers) might try to hold back supply given recent price declines. “I would guess sideways for next month as of now. Mills want to push scrap down, but don’t want to erode their pricing on the other end.”
And, since demand isn’t overly strong, he continued, “Mills that are marginally profitable or those with deep pockets may pull back production. Others who view themselves as low-cost producers may push on through. It should be rather interesting.”
Declining spot market assessments also come amid a continuation of low monthly offers from producing mills, who have steadily reduced prices to drum up sales since the beginning of April.
Nucor’s weekly Consumer Spot Price (CSP) for HRC, remained unchanged for a second week at $760/nt or $38.00 cwt after falling sharply three weeks ago. Since the initial Nucor announcement April 8, the CSP -a measure of Nucor’s base price for all of its producing mills- has declined nearly 8.5 percent from its initial offer at $830/nt or $41.50 cwt.