US HRC prices continue climbing; record new all-time highs

US hot-rolled coil prices marched higher on Jan. 14 as more spot transactions at the $1,100/st band were reported at a tightly supplied market.

The daily Platts TSI US HRC index rose by $4.75 to $1,094.50/st. After hitting an all-time high on Jan. 13, the index continued to move higher as mills were still able to sell their spot availability for higher prices and saw little resistance by some buyers who were trying to cover their short positions.

The majority of the market expected prices to test new highs but they were unsure about the timing or level of peak pricing and the slope of correction from there.

There were still various supply and demand factors that were making it more difficult for buyers to make predictions about the market outlook.

A Midwest service center source cited strong business activity in his processing facility that has been keeping them busy even in the weekends. “The demand is not showing much weakness, remaining steady,” he said, a little surprised by that activity level despite record-high prices.

Without any major changes in the supply side, prices would maintain current levels or above, according to the service center source. He, however, shared concerns about potential pressure related to credit line restrictions in trade volumes with current price levels.

Another Midwest service center source thought the current supply tightness was unlike any other that he has experienced before. Having experienced the supply issues in 2003 and 2004, he said he was not only concerned about finding steel during the current cycle.

Multiple suppliers were running behind by at least a couple of months which was pressuring their stocks further and a Midwest mini-mill, meanwhile, quoted a 200 st inquiry at $1,200/st, remaining firm at that price, according to the second source.

“I don’t see how – it would take something that crazy – for this thing to stop in the first half,” he added.

The second source thought there will be a point where service centers cannot take any more risk and “put a top to this, not that this is going down.”

A third service center source reported a transaction at $1,100/st from mini-mill in the South with a mid-March lead time.

The combined Platts TSI price index uses a volume-weighted-average calculation – according to TSI’s standard – to determine value on an ex-works Indiana basis.

— Ali Oktay