NEW YORK (Scrap Register): US hot-rolled coil steel prices increased in March, supported by a rise in scrap prices and low service center inventories, according to the Steel Index.
Although many anticipated price gains after a soft February, a spike in scrap prices at the beginning of the month gave the price in HRC a larger fillip than originally forecasted. The US domestic HRC index gained $40 a short ton in March.
The daily US HRC benchmark gained $40/short ton over a four week period to close at US$660/s. ton at the end of March. Apart from a small dip in prices in February, the price of US HRC has consistently climbed since November.
The price of US HRC began the month with a boost from the increase in scrap prices, as well as from expectations that low inventory levels will prompt service centres to increase their purchases. The value of TSI’s monthly US shredded scrap 10-day average index jumped by 15.3% to 324/long ton in March, providing the platform for the $30/s. ton increase in the price of HRC announced by the mills mid-month.
HRC delivery lead-times (DLT) increased slightly in March. At the start of March they stood at 4.5 weeks and ended the month at 4.9 weeks according to TSI data.
HR sheet imports increased to their highest level since December 2016 at 145kt in March. Total steel imports jumped from 2.4 million tonnes in February to almost 3 million tonnes in March, according to preliminary licensing data from the US Census Bureau.
Mill capacity utilization rate decreased in March, starting the month at 74.7% and ending at 71.4% on April 1st, according to American Iron and Steel Institute (AISI) data. This dip in capacity utilization is surprising, given the strong end user markets and lower service center inventories.
Steel service center inventory levels in February were down by 6.4% y-o-y at 7.3 million short tons, according to data from the Metals Service Center Institute. The decline was particularly steep in the HR steel category, with inventories down by 17.4% y-o-y at 2.94 million short tons.
Rig count climbed to 824 in March, up from 683 in January. The tally is viewed as an indicator of the strength of oil markets.
Despite campaign promises from President Trump that all pipelines in the US would be made of steel melted and finished domestically, it was recently announced that because the project was started previously, the Keystone XL pipeline would not apply to those rules. Additionally some have questioned the legality of the mandate under WTO rules.