U.S. sheet prices have begun to fall again after finding some stability in late June through July. While some deals for high-volume, low-priced deals did create fluctuations during that time on a weekly basis, the question at hand was would these deals be enough to extend mill lead times and fill in order books. Judging by the most recent lead time data available, it appears that they have not. 

For August, our second weekly assessment for HR coil came in at $812 /s.ton, down by $54 /s.ton w/w and by $73 /s.ton m/m. CR coil was relatively more stable w/w with a price fall of $12 /s.ton but declined $62 /s.ton m/m, similar to HR coil. HDG coil base prices were lower than CR coil prices, falling by $32 /s.ton w/w to $992 /s.ton (-$8 /s.ton m/m). However, this is largely because declines for HDG coil prices occurred earlier than those of CR coil. In fact, since the beginning of May, weekly average price falls for each product have been relatively similar, with HR coil and HDG coil prices falling by $24 /s.ton on average w/w, while CR coil prices have declined by an average of $22 /s.ton w/w.

U.S. mill lead times have not meaningfully extended following a spate of low-priced, high-volume deals done during in July. This was a key indicator we were watching and appears to be a driver of the current price falls and a harbinger of more to come. From a buyer perspective, market participants report that some mills still have availability for August shipment for certain grades. Further out, market participants are preparing for the possibility of an automotive worker strike by the United Auto Workers union, which poses a large downside risk to demand if it lasts long enough. In our view, the risk of a strike is more elevated than usual given recent management changes and large asks from the union in terms of increased wages and reduced working hours.

Lead times have failed to respond to large-volume, low-priced deals
HR coil lead times, weeks
*Only one data point available for August 2023, all others are monthly averages

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Prices of the CME Group’s HR coil futures contracts have fallen alongside lower physical prices. At CRU, we continue to watch futures in 2023 Q4 as weaker seasonal and structural demand may start to be seen.

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Prices on CME Group’s HR coil forward curve fell at a rapid rate alongside lower physical HR coil prices over the past four weeks. CRU’s physical price assessment for 8 August was $812 /s.ton, a m/m decline of $73 /s.ton while the futures price for August fell by $126 /s.ton from $930 /s.ton on 10 July to $804 /s.ton to $804 /s.ton on 7 August. Futures contracts for August through December fell to an average of $761 /s.ton, a m/m decline of $101 /s.ton.

Looking ahead, we continue to watch futures for 2023 Q4. Currently these are priced at an average of $752 /s.ton, which is somewhat close to physical prices, suggesting we are now close to the bottom. However, futures prices are not a forecast, and we anticipate that lower prices may emerge if current demand trends continue. These trends include the continued contraction of PMI data alongside normal seasonal weakness in overall sheet demand in Q4.

One potential disruption we are watching closely is how negotiations proceed between the automakers and their labour union. Any work stoppage will quickly affect steel demand, production, and costs of steelmaking raw materials. Looking further ahead to 2024, HR Coil futures had priced the year in at $784 /s.ton while futures of #1 Busheling were near $450 /s.ton, leaving a spread of $334 /s.ton. These price levels may now be attractive for steel producers or steel consumers to hedge costs or sales for the coming year.

HR Coil futures values fall sharply from early July

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