US hot-rolled prices continue to drop, floor uncertain

US hot-rolled coil’s precipitous price decline from last September’s all-time high continued on Jan. 14 as any talk of a pricing floor appeared to be more of a trap door.

The daily Platts TSI US HRC index fell by $40/st to $1,400/st on an ex-works Indiana basis. Prices are now down nearly 29% from Sept. 2021’s peak.

Most market participants were not even attempting to put a number on where prices could bottom out as steelmakers remain extremely profitable given input costs as finished steel prices decline. In addition, there remained an uncertainty from both buyers and sellers about what price level would even generate buying activity given the existing margins for steelmakers and potential for further declines.

One mini-mill source said sellers were basically competing against themselves if they started approaching customers with lower numbers. Even if a mill was to lower pricing it was unlikely to generate any new orders, added the source.

“Something has got to give,” said the mill source, as buyers were still shedding higher-priced inventory and reluctant to place new orders.

A Midwest service center source said his contacts at a Midwest mini-mill maintained prices were still at a minimum of $1,400/st. Still, the buyer was skeptical the mill had booked much of anything during the week. There were still “massive inventories in spots,” according to the source.

Even if mills lowered numbers significantly it was no guarantee of an order. A service center source reported an offer from an established domestic mill at a value closer to new import offers but still did not buy. “We are over-inventoried,” said the source.

A Midwest mill was still able to sell small commodity orders at $1,500/st but admitted there were not many transactions or large-tonnage orders over the past week. He expected larger buyers to start negotiating tons next week.

— Michael Fitzgerald