The US flat steel market finished lower this week across all grades as buyers sought to make sense of sharply lower base price offers from producing mills, while not-so-low-but-lower price levels continued to be touted in daily spot markets.
Weekly price declines follow mixed pricing this past week, when late-week trading saw lower levels 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.
Lower flat steel assessments also follow sideways to lower US scrap assessments during the May scrap buy cycle, though all regional price levels had yet to settle as of report writing. However, US Ohio Valley busheling scrap is likely to trend sideways, remaining at $415-$422/gt.
On May 6, Nucor reduced its Consumer Spot Price (CSP) for HRC to $38.00 cwt. ($838/mt or $760/nt) FOB mill from a previous $41.25 cwt. ($909/mt or $825/nt) FOB mill level, a nearly 8% weekly decline. Nucor explained the lower pricing as its attempt to remain competitive amid an environment of “recent limited spot order activity not reflective of underlying demand, due to a variety of competitive factors, including what appears to be increasing volumes of speculative purchases of additional tons through contract mechanisms at discounted prices.”
Sources told SteelOrbis the move is to aim the spot market to transact at “levels more reflective of real-time demand.”
“I got a strong suspicion that the markets are going to come down to Nucor (price levels) in a hurry, because demand just isn't that great anywhere” one source told SteelOrbis. “Other than aerospace, there is just not another market in the US or for that matter, the world, where current steel demand would justify a price increase.”
US domestic spot HRC prices are now assessed at $38.00-$40.50 cwt. ($838-$893/mt or $760-$810/nt) FOB Mill, against last week’s $40.25-$41.50 cwt. ($887-$915/mt or $805-$830/nt) FOB mill levels. Lead times for HRC are last discussed at about 4 weeks. Spot contracts for CRC and HDG products require 4-8 weeks, down from earlier late-April 6-10-week assessments, sources said.
CRC and HDG spot markets are discussed at $55.80 cwt. ($1,230/mt or $1,116/nt) and $55.95 cwt. ($1,233/mt or $1,119/nt), FOB mill, respectively, though some sources suspected that might be the top of the current market, based on substantial weekly declines in HRC and a continuing “troublesome” premium for CRC over HRC that had recently approached $20.00 cwt. ($441/mt or $400/nt).
“The premium of CRC over HRC (since 2020) had been about $170-$200/nt,” said one SteelOrbis contact. “I would expect cold rolled steel prices to drop at least $100/nt. Right now the market is in dysfunction.” The source added that the only reason CRC is priced so much higher than HRC is because of the lingering effects of the September 15, 2023 United Autoworkers strike which settled on October 30.
“After the auto strike settled, many assumed that the price of CRC would spike, but in the end, the strike really wasn’t much of a strike at all, because output still remains about at 2019 levels in the automotive sector,” he said. “We’re just kinda getting back to (2019) baseline levels in automotive, which doesn’t really give any boost to steel production based on demand.” CRC is used to make automotive body panels as well as other more finished steel applications requiring higher tensile strength than HRC.