Steel Blog

Hot Rolled Futures: Modest Retreat

Thursday, 12 October 2017 10:58

The following article on the hot rolled coil (HRC) steel and financial futures markets was written by Jack Marshall of Crunch Risk LLC. Here is how Jack saw trading over the past week:



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The following calculation is used by Steel Market Update to identify the theoretical spread between foreign hot rolled steel import prices (delivered to USA ports) and domestic (USA) hot rolled coil prices (FOB Domestic mills). We want our readers to be aware that this is only a "theoretical" calculation as freight costs, trader margin and other costs can fluctuate, ultimately influencing the true market spread.

Our primary numbers for this analysis are from Platts as we compare European HRC export pricing (FOB Ruhr), Turkey HRC export pricing (FOB Turkey) and Chinese HRC export pricing (FOB Chinese port). Be aware that Chinese hot rolled pricing is not available to the U.S. market, so the Chinese spread is nothing more than an exercise in "what if." SteelBenchmarker is the secondary data provider of foreign hot rolled coil prices and is noted further down in this article.



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Some key price levels have been left in the dust when it comes to flat rolled and plate prices. On Friday of this past week, Steel Market Update (SMU) reduced the lower end of the range on hot rolled and our average dropped below $600 per ton. This week our HRC took a hit on the upper end of the range and our benchmark average is now $587.50 ($588).



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Steel mills are even more open to price discussions than they were a couple weeks ago, which may be a reflection of weakening prices, say steel buyers who replied to Steel Market Update’s latest flat rolled market trends questionnaire. More than 100 executives responded to this week’s questionnaire. Steel buyers’ perceptions of their suppliers’ attitudes offer a snapshot of how steel mills are currently handling price negotiations.

Nearly 70 percent of respondents agreed that mill order books are weaker than expected and suppliers are open to price discussions. The percentage indicating mills are willing to negotiate is double what it was six weeks ago.



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SMU Price Ranges & Indices: Prices Drifting

Tuesday, 03 October 2017 18:08

Flat rolled steel prices continue to "drift," with some items drifting lower, some staying the same and cold rolled actually increasing by $5 per ton. One commercial officer at a steel mill told SMU that in his view the range has shrunk for the products they produce. Even so, "We are finding business, and it seems inventories are being drawn down...but not in balance yet."

SMU has found, in some products, that the spread between the lowest base available and the highest has widened. This could be for geographical reasons where prices in the Midwest are different than those found in the Southwest or Southeast.



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Hot Rolled Futures: Reaching New Near-Term Lows

Thursday, 28 September 2017 13:49

The following article on the hot rolled coil (HRC) steel and financial futures markets was written by Jack Marshall of Crunch Risk LLC. Here is how Jack saw trading over the past week:



ALREADY A SMU MEMBER? SIGN IN BELOW:

*Note: If you see your subscription information above, please renew or upgrade your membership to read the full article.

The following calculation is used by Steel Market Update to identify the theoretical spread between foreign hot rolled steel import prices (delivered to USA ports) and domestic (USA) hot rolled coil prices (FOB Domestic mills). We want our readers to be aware that this is only a "theoretical" calculation as freight costs, trader margin and other costs can fluctuate, ultimately influencing the true market spread.

Our primary numbers for this analysis are from Platts as we compare European HRC export pricing (FOB Ruhr), Turkey HRC export pricing (FOB Turkey) and Chinese HRC export pricing (FOB Chinese port). Be aware that Chinese hot rolled pricing is not available to the U.S. market, so the Chinese spread is nothing more than an exercise in "what if." SteelBenchmarker is the secondary data provider of foreign hot rolled coil prices and is noted further down in this article.



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When asked to comment on spot flat rolled steel prices this week, the president of a medium-sized service center told SMU, "Drifting. Demand seems down." He went on to report that even with AK Steel and ArcelorMittal reporting extending lead times, the market "feels soft." Other steel buyers reported that their perception of the market depended on which steel mills they were speaking with. As we canvassed service centers and manufacturing steel buyers, we found a slight dip in the hot rolled numbers ($5/ton) and a little larger dip in cold rolled and coated steel numbers. Only steel plate was spared this week.



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On Friday, Steel Market Update (SMU) adjusted our Price Momentum Indicator to Lower from Neutral. It is our opinion that flat rolled steel prices will move lower over the next 30 days for the following 10 reasons:



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Flat rolled steel prices have begun to uniformly move lower based on what we have been collecting for steel price averages from ours and other steel indexes. Both Platts and Steel Market Update (SMU) had benchmark hot rolled as moving lower by $10 per ton this past week. Cold rolled prices were $10 lower on our steel index, while Platts remained the same. SMU also saw galvanized and Galvalume prices as $10 and $5 per ton lower, respectively. SMU also saw a large drop in steel plate prices last week.



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