Uncertainty, Transport Challenges Helping USA HRC Spot Price Rally
Flat-rolled steel buyers in the US market have maintained since the beginning of the year that hot-rolled coil supply is tight, owing mainly to low import levels and domestic mills filling their books with steady contract orders. Overall demand is good, most everyone agrees. Given such factors, service centers and steel distributors have either been unable or unwilling to splurge on inventory.
“Businesses are still facing a lot of uncertainty,” a service center buyer in the southern US told WSD. “The prolonged impact of the war—especially on shipping costs and energy, for example. And now it looks like the tariff situation is changing once again.” (See related story below)
“Nobody wants to carry too much inventory, as geopolitical and policy uncertainty are keeping folks cautious, but demand is decent, and in fact improving as we get past the winter months,” a domestic mill sales rep told WSD.
He explained, as one would expect, that those tempted to buy steel from offshore face the “uncertainty of when it actually arrives (if at all).” And the rep pointed to a recent wrinkle stemming from current geopolitics:
“Nobody is able to lock in ocean transport costs right now.” Against such a backdrop, does the HRC spot price rally continue or start to subside?
“I do not believe US producers want to push prices significantly higher from here, but I can see a future where $1,100 HRC is sold,” the mill rep said. “Buyers seem more than willing to just stay domestic and keep buying what they need within domestic lead times.”
In early futures trading Thursday, the HRC May contract on the CME saw a high bid of $1,082. “The financial market is nearing that $1,100 threshold,” observed a steel distributor in the Midwest. “I would not be surprised if we do see a physical-market transaction at $1,100—maybe late April, early May—but I think that’s the top.”