Mills Raise Flat Rolled by Another $40 Per Ton

In addition to a comparable $40 increase on hot rolled, cold rolled and coated products, ArcelorMittal USA’s notice to customers said its hot rolled order book for February acceptance is closed at AMUSA and AM/NS Calvert.

“Due to extending lead times and strong order placement, NLMK USA is increasing base prices by a minimum of $40 per ton on all products,” said that mill’s notice to customers on Wednesday.

Likewise, California Steel Industries informed customers Wednesday that it has opened its March flat rolled order book while raising spot prices on hot rolled, P&O, cold rolled and galvanized products by $40 per ton.

Other flat rolled mills announcing a comparable $40 increase this week include USS-POSCO Industries (UPI) and Algoma Steel.

To date, by Steel Market Update estimates, flat rolled steelmakers have managed to collect roughly $120 of the $190 in increases. SMU’s latest market survey puts the benchmark price for hot rolled steel at $590 per ton, up from $470 per ton in late October.

What the Market is Saying

One manufacturing executive in the Midwest senses a positive shift in the market. “Two weeks ago, my sentiment was negative, but things have changed and I feel the mills have some momentum to move prices higher in Q1.” He expects the CRU price to hit $600 per ton by end of this month and stay there or higher well into March. “With scrap moving higher by upwards of $30 a ton and capacity utilization staying near 82 percent, the mills are feeling confident,” he said.

Demand at his company is picking up. Spring buys are starting in the agricultural market, unlike in January 2019 when tariffs and bad weather contributed to a poor spring. Other business sectors such as automotive, energy, fabricators and stampers, and trailer manufacturers are reporting similar bumps in demand.

“Our mood has turned from sour to relieved within the past two weeks due to feedback from our customers. Sentiment is improving as many ignore the political climate and get on with business. Our expectation is for a solid spring in 2020, similar to 2018 levels. Truly a welcomed change.”

“The latest price increase will pretty much guarantee we see $600 HR before the end of the month,” added another service center executive. “As of today, I can still buy HR for sub-$600 and I expect that will be true next week, as well. Lead times are the key indicator. Thus far I don’t think anyone has a pressing need to buy steel. Most service centers are very comfortable with their inventory levels and can afford to sit on the sidelines for at least another 30 days.”

When scrap prices stall or fall (February or March?), that will signal the beginning of the next down cycle, he predicts. “Based on reduced mill capacity, I don’t see the down cycle pricing being as deep as in 2019. We hope to see a $620-640 peak in Q1, and then a gradual slip toward $550-$575 by the end of Q2.”

Added another service center exec: “I believe this latest increase was meant to coincide with the scrap settlements occurring this week. I think that given the current elements in place, the upside for HR is around $640 per ton near term, with a mid-February peak as the timeframe. Scrap prices are expected to stabilize in February and then correct. By mid-February, buyers will have covered themselves into April and thus the momentum is likely to stabilize and then reverse. Any further unplanned lost production at the mills could extend this upward market, however.”