Comparison Price Indices: HRC Heading Lower Still...

The average of the SMU, CRU and Platts HRC pricing comes to $573 per ton. Platts and SMU were both down $20 per ton this past week while CRU declined by $13 per ton.

Flat rolled steel prices are dropping at an ever-increasing pace having already declined by $30 per ton since the end of December based on the SMU average for HRC. The industry is now close to the $565 number last seen on May 21, 2013. If HRC passes through $565 we will be in pricing territory not seen since November 2010 (HRC bottomed at $535 on November 2, 2010).

Other products are following hot rolled’s lead (albeit kicking and screaming) as the market searches for a bottom.

We will go back to a note that one steel service center executive who told SMU about a week ago: “The old adage “the only cure for low prices is low prices”, certainly applies now. Ironically, the mills would be better served by a more intense and quicker fall in prices, so that the imports quit getting booked. This will at least set the stage for a revival in the springtime. At the same time, they need to pull back production – now, if they hope to stem the fall in prices sooner vs. later. I think the market ought to forget using $600/ton HR as a sort of desired floor, a level which has been relative until now, based on the past input costs. We are in the midst of a mill cost re-set which will likely be sustained in 2015 and beyond….”

FOB Points for each index:

SMU: Domestic Mill, East of the Rockies.
CRU: Midwest Mill, East of the Rockies.
SteelBenchmarker: Domestic Mill, East of the Mississippi.
Platts: Northern Indiana Domestic Mill.