US hot-rolled coil prices continue their upward march as sources increasingly debate not whether the trend is sustainable into 2021 but for how long into next year current price levels might hold.
Fastmarkets' daily steel hot-rolled coil index, fob mill US was calculated at $33.66 per hundredweight ($673.20 per ton) on Thursday October 22, up by 0.3% from $33.57 per cwt on October 21 and 2.9% from $32.72 per cwt on October 15.
Heard in the market
Inputs were received across all three sub-indices - producer, distributor and consumer - in a range of $32-35 per cwt.
Larger deals, in some instances for thousands of tons, were at the lower end of that range. Smaller deals, multiple truckloads to several hundred tons, were at the higher end of the range.
Lead times at several mills are into December, and into late December in some instances. And some producers have closed out 2020 and not yet opened order books for January 2021 spot orders, market participants said.
US HRC prices continue to gain ground as a result of such long lead times, customer inventories being at their lowest in perhaps a decade and stronger-than-anticipated end-use demand, sources said.
With buyer inventories so low, restocking could take longer than anticipated, something that is happening against a backdrop of original equipment manufacturers (OEMs) continuing to consume more steel than they forecast, sources said.
The result: Producers and consumers are increasingly bullish on the market having legs beyond the typically slower year-end holiday period, into the first quarter and perhaps as far as the second quarter, sources said.
Evidence of this optimism can be found in service centers finally raising resale prices to match replacement costs, some said. But others, while in agreement that prices will continue to go up in the short term, remain concerned that prices could reverse course rapidly in the first quarter. These sources noted that steel prices rarely rise or fall gradually.
Quote of the day
"The OEMs keep wanting more, so every extra ton they want tightens spot availability further," one mill source said.
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