Final Thoughts

We saw Nucor come out of the gate first with a $50-per-ton ($2.50/cwt) increase and a new base price for hot band of $900 per ton. The move was followed in short order by Cleveland-Cliffs with its own $50 per ton increase on sheet products, also targeting the $900 per ton mark. And then US Steel joined the fun.

It didn’t stop there. NLMK USA was the next in line, followed by ArcelorMittal, both with price hikes of $50 per ton hike on sheet products.

In theory, the highest published mill price now comes from NLMK USA, whose $50-per-ton increase piggybacked on its own early February price hike that targeted $875 per ton for hot band. Monday’s increase by the steelmaker would put its hot-rolled coil base price at $925 per ton.

But going back to my opening statement – is this the new normal? Will US mills continue to announce multiple rapid-fire price hikes, almost willing tags higher one announcement at a time?

Price announcements are not new. It’s the pace of these latest notices that’s remarkable. It was just a few hours between when Nucor announced and when Cliffs and US Steel jumped in. ArcelorMittal followed the next day, which was – crazy as this sounds – slow by comparison.

We have now seen 26 price increase announcements for flat rolled steel from domestic mills since tags hit the most recent low of $615 per ton back in Nov. 22, 2022, according to SMU’s interacting pricing tool. By comparison, there were a total of 20 price hike notices on flat rolled steel for all of 2022.

Market reaction to the increases is mixed, especially given that many of the sources we contacted had sharply different views on demand.

Recall that the most recent round of increases came less than two weeks after mills announced a wave of price hikes in early February. Many were caught by surprise on Monday.

Some of the talk around the market is that a slower than-expected-ramp up at one US mill, and production issues at a mill in Mexico, are pushing new business to others mills, who are as a result seeing stronger-than-expected order entry. Strong automotive demand, meanwhile, means some mills have little spot availability.

Another thing to consider: Mills’ continued expansion downstream could mean that the spot market is significantly smaller than it used to be.

But will this trend of higher prices last? Some suggest it will and could carry on through the first half of the year. Others believe mills are capitalizing on a momentary supply-side issue that will fade away because it is not demand driven.

“I have no idea how they are justifying it,” said a source. “Maybe they’re trying to get the last bit of blood out of the rock before prices correct.”

Cleveland-Cliffs chairman, president, and CEO Lourenco Goncalves said on an earnings conference call with analysts that the company was already selling HRC at $850 per ton, and that $900 per ton was in the cards.

His sentiment was echoed by others in the market, some of whom noted how insulated the domestic steel market is from imports.

Another unanswered question is whether service centers can pass along sheet prices of $850-900 per ton. The quick word on the street is that they’re hard pressed to find willing buyers at those levels. But that could change if mills continue to press higher.

Whether $900 per ton is in the cards or not, lead times at first glance appear to have extended. Sources told SMU that many mills will be quoting early April deliveries for HRC before the week is over.

Steel Market Update’s hot-rolled coil price currently stands at $825 per ton, up roughly 19% from $695 per ton at the beginning of the year and up 34% from a 2022 low of $615 per ton recorded in November.

The coming weeks should tell whether $900-per-ton HRC has the staying power or whether buyers will dig in against the rally extending that far.

By David Schollaert, david@steelmarketupdate.com