HRC Spot Prices and Scrap-Buy Outlook: A Story of Fire and Ice
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The USA spot market for hot-rolled coil (HRC) continues to heat up and mills keep firing off modest price increases, which — along with a prolonged deep freeze in much of the country limiting scrap movement — could help fuel higher ferrous scrap prices for February. Market participants tell WSD that scrap could see a $30 per gross ton increase this month across most grades, as the buying period gets underway.
“HRC spot prices continue to climb, and rebar and other long product prices are also buoyant,” a Midwest service center buyer said. “And with snow covering much of a frozen northern US, scrap supply will be limited this month,” he added.
“I wouldn’t say HRC prices are on fire,” a steel trader told WSD, “because mills have been doing a slow burn with their offers. But it’s definitely a hot stove.”
Reflecting the current market environment, Nucor on Monday lifted its HRC Consumer Spot Price (CSP) another $5 to $970 per ton. And its West Coast CSI price was increased to $1,020 per ton, also up another $5/ton.
“It’s tough to find any mill selling below $960 per ton,” said a small steel distributor in the Midwest.
“Mill order books remain heavily booked, resulting in extended lead times,” wrote Jason Miller, vice president – purchasing/cost planning at Worthington Steel on a LinkedIn post. “With outages starting to get announced for the second quarter, one would question how prices could soften anytime soon.”
He also acknowledged that winter weather is creating issues with shipments, which could lead to the higher (up $20- $40/gt) scrap prices in February.
HRC futures settlements on the CME show a slight contango market through April. The most active month is March, which settled at $980 per ton on Monday.
WSD Take: The US HRC market continues to increase steadily as we enter February, with mills increasing utilization to take advantage of limited imports entering the country, but fundamental demand remaining relatively stagnant absent of inventory bolstering.
WSD continues to believe that the market is still driven by tight-supply conditions despite the absence of robust demand. Based on the latest import licensing data, December steel sheet import volumes were approximately 5.1 million tons on an annualized basis, down more than 50% versus December 2024 trade volumes.
In the immediate term, the outlook for demand remains murky, which may lead to a temporary pull-back in steel pricing in the coming month. Should this occur, this is expected to be short-lived, however, as a combination of a typical upturn in seasonal steel demand in the spring combined with the prospect of more sustained steel demand growth in the second half could provide upward momentum for HRC prices into the summer. WSD does not expect much supply relief from imports through at least the first half of the year. As written about extensively, Canadian imports have been the hardest hit by tariffs, and we do not expect any possibility of historical normalization until USMCA re-negotiations occur this summer.
The combination of low imports, limited inventories, and improved demand conditions could result in Midwest and Southern HRC prices exceeding $1,000 per ton by mid-year, West Coast prices are currently surpassing $1,000 per ton.
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