Category

Countries

US Hot Rolled Coil Faces Price Rise in the Second Half of October Amidst Tight Supply
US Hot Rolled Coil Faces Price Rise in the Second Half of October Amidst Tight Supply

US Hot Rolled Coil Faces Price Rise in the Second Half of October Amidst Tight Supply

  • 27-Oct-2023 4:27 PM
  • Journalist: Jacob Kutchner

The price of Hot Rolled Coil in the US spot market rushed northward as the domestic inventory level was reduced and the production rate slowed down. The mills could increase their price as lowering availability and extending lead time benefited the major manufacturers in achieving their price targets. The upcoming winter conditions will further lower the manufacturing activity, inciting the mills to push the price for the last quarter of 2023. Meanwhile, the growth in the US economy, as it hiked by 5% in the past third quarter, has largely backed the growth in demand from the domestic downstream industries.

The growth of the US economy, which saw a significant 5% increase in the past third quarter, has played a crucial role in driving Hot Rolled Coil demand from domestic downstream industries. This increased demand has paved the way for major manufacturers such as Nucor Steel and Cleaveland Cliffs to announce price hikes for Hot Rolled Coil in the year's final quarter. The repercussions of these price increases are already being felt, with delivery times from factories expanding from 6.9 to 8 weeks, with the expectation that these extended lead times will persist until mid-December. Service centers have reported that this development has affected certain customers. Steel mills remain confident in their ability to fulfill Hot Rolled Coil orders by the end of the year, citing limited supply as a key factor driving these price hikes. In a related development, an ongoing strike by the United Auto Workers (UAW) union against major automakers such as Ford, General Motors (GM), and Stellantis has not significantly impacted the demand for steel. The strike has expanded to include larger automaker plants, with seven plants currently affected. However, the impact on Hot Rolled Coil demand remains limited despite the strike's disruption to production.

Importantly, the supply of Hot Rolled Coil from international sources is facing challenges. The delivery time for Hot Rolled Coil imports from South Korea is stretching into January-February 2024, causing concerns among buyers. Additionally, supplies from Brazil are constrained due to tariff quotas, further contributing to a limited supply of Hot Rolled Coil in the US spot market. On a positive note, local mills and furnaces in the US have recently completed renovation and infrastructural upgrade programs. These facilities are expected to resume production in the upcoming month, which should help stabilize the supply-demand gap. The rising price of electricity has been a major concern for the US steel mills using electric arc furnaces and has further resulted in a reduced production rate of Hot Rolled Coils across the USA. This has increased the production cost and reduced the output in the domestic market.

According to ChemAnalyst, the price of Hot Rolled Coil is expected to continue its upward trajectory as demand from downstream buyers increases. The combination of extended lead times and the arrival of the holiday season, which typically leads to a slowdown in manufacturing activity, will likely prompt further price increases from steel mills. As the supply of Hot Rolled Coil from domestic mills tightens, the US steel market is poised to experience further price surges, indicating a bullish outlook for the industry.

Related News

European and Chinese HRC Markets Navigate through Regulatory Realities in May 2024
  • 06-Jun-2024 6:15 PM
  • Journalist: Li Hua
HRC Market Faces Price Decline as Subdued Demand Shapes Challenging Outlook
  • 31-May-2024 4:41 PM
  • Journalist: Stella Fernandes
German Hot-Rolled Coil Market Shows Stability Amid Industry Challenges in Early May
  • 21-May-2024 5:01 PM
  • Journalist: Harold Finch
Supply Dynamics Shift as US Hot-Rolled Coil Prices Resurge, Setting Trends in Metal Industry
  • 03-May-2024 3:57 PM
  • Journalist: Li Hua