Steel Products
SMU Fair Value Model Has HRC Spot Pricing Below Fair Value for 3rd Week
Written by John Packard
February 4, 2013
This week, the SMU Fair Value HRC (hot rolled coil) Model has spot HRC pricing below Fair Value for the third week in a row after nine consecutive weeks of higher HRC prices. This is due to the SMU average spot HRC index remaining the same at $610 per ton and scrap inputs remaining the same over last week’s figures. The Fair Value model now shows HRC prices $13 below the estimated Fair Value price.
Scrap prices will be negotiated for the month of February in the coming days. At this moment the expectation is for price movements to potentially vary by product and by region. Our sources are reporting the best case scenario for the Midwest to be a flat or sideways move while there are those who believe prices could drop as much as $20 per gross ton. A sideways move on scrap inputs would keep our model at $13 below the estimated Fair Value price (assuming no change in HRC price assessment). If scrap drops as much as $20 that would have a positive impact on our Fair Value model and put HRC prices above Fair Value (assuming no change in the HRC price).
As a reminder, the Fair Value HRC Model below came from the SMU acquisition of Steel Reality. The graph below demonstrates the relationship between scraps inputs creating an estimated “Fair Value” for HRC versus the actual spot price.
John Packard
Read more from John PackardLatest in Steel Products
Market says cutting interest rates will spur stalled domestic plate demand
Market sources say demand for domestic plate refuses to budge despite stagnating prices.
U.S. Steel to halt slab conversion at Granite City Works
U.S. Steel said it plans to reduce slab consumption at its Granite City Works near St. Louis, a company spokesperson said on Monday. The Pittsburgh-based steelmaker will shift the production and processing of steel slabs to its Mon Valley Works near Pittsburgh and its Gary Works near Chicago. Citing a United Steelworkers (USW) union memo, […]
SMU Week in Review: September 1-5
Here are highlights of what’s happened this past week and a few upcoming things to keep an eye on.
HR Futures: Market finds footing on supply-side mechanics
As Labor Day marks the transition into fall, the steel market enters September with a similar sense of change. Supply-side fundamentals are beginning to show signs of restraint: imports are limited, outages loom, and production is capped, setting the stage for a market that feels steady on the surface but still unsettled underneath.
Beige Book: US markets remain cautious amidst volatile pricing environment
Sluggish economic activity across the US was largely attributed to uncertainty caused by tariff policies and growing cost pressures, according to the US Federal Reserve’s (The Fed) latest Beige Book report. The Fed’s latest economic report, posted on Sept. 3, consists of economic findings from the six weeks preceding Aug. 25 throughout 12 districts. Economic […]