Low service center stocks pressure declining US HRC prices

Persistent reluctance among service centers to build inventory amid uncertain near-term demand has added to the pressure on hot-rolled coil prices in the US Midwest, several market participants told Fastmarkets.Fastmarkets’ daily steel hot-rolled coil index, fob mill US Midwest was calculated at $49.08 per hundredweight ($981.60 per short ton) on Friday June 2, falling by 3.69% from $50.96 per cwt one week earlier.

A sub $1,000 per short ton base price is a far cry from the $1,300 per short ton minimum base price some domestic steelmakers were attempting to establish in April this year.

Domestic flat-rolled sheet producers have tried pushing through 10 price increases since November 2022, totaling $660 per short ton, but the last few price increases simply did not stick due to buyer reluctance.

The Midwest HRC index hit a recent high of $59.48 per cwt on March 23, which was up by 84.26% from $32.28 per cwt on November 28, when Cleveland-Cliffs first increased base prices for all carbon hot-rolled, cold-rolled and coated steel products by $60 per ton.

A distributor said his company was not placing prime flat-rolled steel orders and instead was “reducing inventory as quickly as we can.”

“We are expecting pricing to continue to drop through the summer,” the distributor said.

A second distributor similarly said: “We believe in mid-June the [hot band price] will start to fall quickly as things have slowed down overall.”

A third distributor also noted that end demand had also slowed, which is adding to service center apathy for spot market purchases.

“My enquiries and transactions are down as well,” the third distributor said, but was cautious about the current trend of minimal spot buying.

“Buyers, original equipment manufacturers, service centers and definitely mills are talking about inventories being low. Maybe not historically low, but relatively low,” the third distributor added.

The third distributor told Fastmarkets that, “Buyers seem comfortable doing that. With the idea that they can wait things out, delaying their purchases by a couple of weeks. They might be right until they’re not.”

“But hot-rolled coil is still relatively tight,” the third distributor noted. “It is available, but not available everywhere, and lead times are relatively good at five weeks.”

A trader also said end demand concerns were adding to the illiquidity of the hot-rolled coil spot market.

“There is expectation of a big economic headwind coming up,” the trader said. “No one is speculating and taking large inventory, as people are buying smaller quantities and preferring to exercise caution.”

The erosion in domestic prices has attracted overseas material into the country, but even with cheaper overseas material, buyers are hesitant to commit to large quantities given the long lead times.

Prices for flat-rolled steel imported into the US decreased in May, in response to the slide in domestic hot band prices and continued buyer reluctance.

Fastmarkets’ fortnightly assessment for steel hot-rolled coil, import, ddp Houston decreased 6.21% to $780-880 per short ton ($39-44 per hundredweight) on May 24, from $850-920 per ton two weeks earlier.

Published by: Rijuta Dey Bera

EC applies safeguards to all-origin auto-grade HDG

The European Commission’s steel import safeguard measures will now apply to all-origin automotive-grade hot-dipped galvanised (HDG) coils, falling under the 4B category, a document obtained by Argus shows. The commission has also extended the safeguards until 30 June 2024.

The commission launched a review into the safeguards to determine if they should be terminated early, which concluded that “an increase in the volume of imports… could undermine significantly any meaningful economic recovery and the efforts being made by the Union steel industry in its process of adjustment to a higher level of imports”.

The commission also concluded that there was no shortage of steel in the bloc as a result of the safeguards, adding that any recent changes to the Section 232 tariffs did not alter the risk of trade diversion to the EU.

The commission noted that it analysed a “rather gloomy forecast for the global steel sector, including the Union market, for 2023-24”, which was underpinned by high uncertainty associated with the war in Ukraine, inflation, increased energy prices and an economic slowdown.

The commission has decided to tweak the developing list of countries to which the measures apply — Brazil has been added to the safeguards for hot-rolled coils (HRC) and cold-rolled coils (CRC), whereas most developing countries are now exempt of the non-auto-grade HDG quotas. The quotas for the 4A product category still apply for key suppliers Vietnam, Turkey and India, while the auto-grade 4B measures are applicable for all-origin HDG.

The EU automotive sector has continued to struggle with recovery this year, despite a few months of increasing passenger car registrations.

By Lora Stoyanova

US contractor implements autonomous rebar-tying

US construction contractor MKE Iron Erectors has utilised automated rebar-tying technology to help boost productivity and improve workers’ safety during the completion of a structural bridge project located near Waukesha, Wisconsin. 

The IH-39 Structure B-11-166 bridge in Columbia County had 17,823 rebar ties completed by the TyBOT machine, designed by the Pittsburgh, Pennsylvania-based construction equipment provider Advanced Construction Robotics, over a two-shift period in late April.

“Resilience is one of our core values, so we are excited to be the first contractor in Wisconsin to deploy this innovative tool. Having TyBOT on our job site was a major asset to our crew as they finished the project on time and on budget. Just as importantly, TyBOT will provide health and safety benefits for our union ironworkers,” explains MKE Iron Erectors’ president Barb Sheedy.

Advanced Construction Robotics’ TyBOT has now completed 3.5 million ties on over 40 projects in 12 different states, including Pennsylvania, Florida and Wisconsin, since its introduction in 2018. Kallanish understands that TyBOT ties rebar at a rate of over 1,100 ties per hour, as compared to construction contractors’ pace of 150-250 ties per hour. The machine is compatible with rebar products in sizes of up to #8 and #9.

“MKE Iron serves as a great example of an innovative contractor that has taken the first step on the path to creating a modern workforce by seeing firsthand how technology can impact their projects,” says Advanced Construction Robotics’ ceo Danielle Proctor.

Zach Johnson USA

EU confirms safeguard measures for another year

The European Commission (EC) issued a statement to the WTO at the end of last week confirming its decision to extend steel safeguard measures until the end of June 2024, Kallanish notes.

A review of the measures was initiated at the end of 2022.

After careful consideration, the EC noted the safeguard measures continue to be justified, for example by the existence of Section 232 in the US. It added that the gloomy outlook for the European steel sector did not justify a termination of the measures.

From July, the level of available tariff-free quotas for importers will increase a further 4%, continuing the original liberalisation rate of the safeguard measures of 4%.

As a result of the review, the EC also confirms Malaysia will be assigned in July 2023-June 2024 a specific country rate quota for imports of hot rolled coil. The probe also reviewed the list of developing countries to which safeguards measures apply; all developed countries will now be subject to measures related to imports of hot-dip galvanized coil for automotive use (group 4b), as well as organic coated sheet (group 5) and large welded tube (group 25b).

A source at a major southern European service centre says the decision is not set to alter the European market. The usage of safeguard quotas has been relatively minor in recent quarters. In recent months, service centres and steel users have called for the European Commission to terminate the safeguard measures at the end of June.

Emanuele Norsa Italy

EU will extend safeguards for one year

Europe will extend the existing safeguard measures on certain steel products for another year, the European Commission said in a notice to the World Trade Organization (WTO) on Friday June 2.The annual liberalization rate will change to 4% from 3%, with certain adjustments, effective July 1, with the new measures remaining in place until June 30, 2024.

The existing measures have been in place since 2018 to protect EU steelmakers from a potential surge in imports.

The latest decision to extend the measures follows a review that began in December 2022.

The Commission set the annual quota level of liberalization at 4% for the period from July 1, 2023 to June 30, 2024. This is an increase from the current liberalization rate of 3%.

The proposed date for the entry into force of the adjustments to the measures is July 1, 2023.

Member states will vote for the document next week, sources said.

The Commission pointed out that the volume of steel imports into the EU remained high, especially in light of deteriorating consumption.

Notably, in 2022, total steel imports to the region totaled 31.1 million tonnes, down by 8% from 33.8 million tonnes the previous year. Meanwhile, steel consumption in the EU dropped by 11%, or 21.3 million tonnes, year on year to around 140 million tonnes in 2022.

Adjustments proposed

In the review, Malaysia qualified for a country-specific tariff rate quota (TRQ) in category 9 (stainless cold-rolled sheet and strip), with an allocated volume of 13,172 tonnes per quarter in the third and fourth quarters of 2023, and 13,029 tonnes per quarter in the first and second quarters of 2024.

“Since Malaysia qualified for a country-specific TRQ in this category due to its historical imports in the reference period of the definitive measure, the volume of residual TRQ is reduced by the amount of the country-specific TRQ allocated to Malaysia,” the WTO document said.

Brazil has been added to the list of developing countries to which the definitive measures apply for two sheet categories: 1 (hot-rolled coil) and 2 (cold-rolled coil). As a result, Brazil will be included in other countries’ quotas for these two categories.

Last year, the nation exported 442,813 tonnes of hot-rolled flat steel products to the EU, sharply up from 121,882 tonnes in 2021.

CRC deliveries from Brazil to the EU also increased to 107,858 tonnes in 2022 from 37,750 tonnes in 2021.

For automotive-grade hot-dipped galvanized steel under category 4B, imports of all origins will be subject to safeguard measures. For metallic coated sheet category 4A, measures will only be applied to India, Turkey and Vietnam.

Published by: Julia Bolotova