Following Nucor’s decision today to increase prices $40 per mt on hot rolled, cold rolled and coat steel sheet, Jefferies anticipates that other US mills will follow. This is the first formal price hike since the first quarter; US hot rolled prices are now around $825 per ton after a July peak of around $920.
The move follows a price up in October scrap prices which Jefferies said will last through the end of the year.
US imports of hot rolled steel were up 13% MoM in September.
Jefferies said: “We were surprised by this uptick in light of the recent sharp contraction in import arbitrage. As of late September, the US HRC premium relative to a global basket, inclusive of the 25% Section 232 duty, was $119/t, down -$13/t MoM. And, the $119/t premium is now only marginally above the historical pre-232 average of ~$115/t and is down -$66/t from the July peak. Continued retrenchment of the US steel price premium relative to global trends makes imports decreasingly attractive and should reduce supply-side import pressure for the balance of 2018 and into early 2019. In addition, domestic consumers are less prone to import as the proximity to year-end narrows and US mill lead times are sufficiently short (~4 weeks) to more quickly meet customer needs.”