Sheet prices were down slightly in the U.S. and Mexican markets, although compared to recent volatility the past few years these moves were relatively small. U.S. mills have started to push back on price levels as they start to bump up against costs even though ongoing demand weakness has prevented any significant bump in prices so far. Demand weakness also pressured prices in Mexico. Brazil ran counter to this trend, with prices rising again m/m due to stable demand and production levels at a time when importers are hesitant to pull material from China.  

Our second weekly HR coil assessment for August was down by $9 /s.ton m/m at $658 /s.ton. HDG coil base prices were down by a similar amount after falling by $15 /s.ton m/m to $868 /s.ton, while CR coil prices were down by much more after falling by $60 /s.ton to $932 /s.ton. This week, the price range of HR coil transactions contracted from the prior week on both the high and low ends, while volumes were down.

Although mills have announced price increases and achieved some limited buying activity at these levels, we continue to see transactions take place below their targets. Some large deals have been done at much lower price levels, however, these have not yet been enough to expand lead times in recent weeks. Many market participants report that demand is down across nearly every end-use sector (see chart) and that buyers are heavily limiting purchase activity as a result. This drop off in demand has also resulted in bloated service center inventory levels, which means there has been no sudden, meaningful need for restocking, yet some stock building has come about with heavily discounted prices in late July.

Still, mills are running up against costs and with scrap prices unchanged m/m in August there has been greater motivation to push back on falling prices. There may be some support to be had as import levels continue to drop off from those seen earlier in the year and as mills undergo planned maintenance outages in September and October. For nowHR coil prices have continued to skip along a bottom reached about five weeks ago. Market participants report that availability for HR coil and HDG coil remain quite high, although CR coil remains scarcer.

Demand for many key end-use sectors in the U.S. has been down for much of this year

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HR Coil futures prices through the end of the year have fallen back even as mills raised prices. While physical prices have so far struggled to rise, futures prices in Q1 2025 are now an average of $806 /s.ton. 

Over the past five weeks, physical HR coil prices in the U.S. Midwest market have been unusually steady at an average of $657 /s.ton. Recently, mills have attempted to raise prices, and while some higher prices have started to come through, we have not yet seen discounted prices disappear. This lack of a visible upturn in transaction prices has led to lower prices in the futures market.

As of market close on August 12, HR Coil futures contracts at CME Group show prices for September through December down 4.6% from our last review on July 8, or from an average of $779 /s.ton to $743 /s.ton. For 2024 as a whole, these recent levels price in HR coil at an average of $787 /s.ton versus $901 /s.ton for 2023. This virtually locks in our continued expectation that HR coil prices would fall for a third consecutive year in 2024.

Futures prices for Q1 2025 were at an average of $806 /s.ton. This remains an opportunity for both buyers and sellers to lock in a known price at what can be a volatile time of the year. We do expect demand to rise at that point, in line with somewhat stronger industrial activity. However, rising mill production from new and ramped up EAF mills may very well remain a headwind. 

The futures market continues to price in a weaker end of year

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