US Scrap Pricing Moves Sideways; HRC Strength Continues
The March buying period for ferrous scrap in the US settled sideways by Monday for prime and almost all other grades, across most regions, market players told WSD. With mills getting good prices for hot-rolled coil (HRC), plate, beam, rebar and other products, mini-mills moved quickly to satisfy their projected raw material needs. Meanwhile, HRC spot prices continue to move higher, market participants said.
“Beyond elevated oil prices, the Middle East war is driving all freight rates higher,” a steel trader told WSD. “This will mean more costly imported pig iron and other metallics coming from offshore.”
The same trader pointed out that any escalation in freight rates means higher landed costs at US ports for semi- and finished-steel products, as well. “With domestic HRC prices rising fairly rapidly, imported material—even with the tariffs and duties paid—were possibly poised to emerge as a supply option,” he said. “But higher freight rates may delay that from happening soon.”
Overall sentiment in the domestic HRC market remains positive, according to a steel service center buyer in the Midwest. “Activity is good in several end markets,” he said. “Lead times are at around eight weeks for spot HRC, 10 weeks at some mills, because all continue to prioritize their contract orders.”
This week’s HRC spot “bottom is maybe $1,000 per ton,” said a big steel distributor, who noted however, that’s more wishful thinking than the reality. He explained, “There aren’t many rolling opportunities for a heavy-volume HRC spot order. So, with limited (spot) availability, typical transactions are now between $1,010-$1,025 per ton.”
Nucor raised its Consumer Spot Price (CSP) for HRC by another $5 on Monday to $1,010 per ton. Having risen eight straight weeks now since January 12th, the CSP is up $60 from its $950 level in late-December to early January.
HRC futures on the CME, meanwhile, continue to show a healthy contango forward curve with a high mid-morning Tuesday bid of $1,046 for the May contract. “I’m sure the near-term positions shaping the upward slope of the curve reflect mill maintenance outages, most of which begin in April,” the steel distributor observed. US Steel had announced late last year that the biggest blast furnace at its Gary Works, No. 14, would be relined starting this spring. The company’s Granite City blast furnace should be restarted next month, according to the local union. US Steel has said it will be able to supply customers without interruption once Gary’s BF goes idle.
So, what’s the peak spot price in the physical market? “HRC is already knocking on the door of $1,050 per ton,” he said. “I don’t see it getting to $1,075-$1,100 before it eases — but it also wouldn’t shock me. Weirder things have happened.”