Steel Insights, produced by CRU Group

Weak demand and elevated inventories have prevented HRC prices in the U.S. from rising in October. HR coil futures have shown limited movement over the past four weeks. However, open interest has risen, particularly for the December 2024 contract. This contract is worth watching, particularly as maintenance outages end and new capacity continues to ramp‌ up.

U.S. sheet prices were relatively unchanged in October from the prior month. Although several mills continued to take planned maintenance outages, demand weakness in tandem with elevated inventory levels prevented the market from tightening to a point where sellers could push for price increases. In Brazil, prices were also stable m/m as the strength in the domestic demand was offset by a high level of imports.

U.S. Midwest HR coil prices were little changed m/m, with our second weekly price for October coming in at $696 /s.ton, down by $2 /s.ton m/m. CR coil prices were up by $5 /s.ton to $952 /s.ton, while HDG coil base prices rose by $9 /s.ton to $875 /s.ton.

Like last month, demand weakness has remained a barrier to price increases during a period of planned maintenance outages. Across most key end-use sectors, we have seen declines in growth nearly every month so far in 2024 (see chart). Market participants continued to report in some cases that end-use demand is off by anywhere from 20-40% y/y, and that end-users are not willing to entertain buys until at least Q1 2025. Highlighting demand-side weakness is the limited impact on the market from a trade case launched against many coated sheet importers, which so far has yet to boost HDG coil prices or meaningfully tighten the market.

Compounding this demand-side pressure is inventory levels, which remain elevated relative to demand and have caused the market to remain heavy on the supply side. Lead times now extend past this period of planned outages, so those are not really a factor any longer in the market. According to data collected by Steel Market Update, lead times were stuck around 4.8 weeks for HR coil for most of September compared to a peak of 5.2 weeks reached in late August. Market participants also said that some mills are flexible on November contract volumes, indicating that there is still ample supply to pull from if needed.

  Back to Top

HR Coil futures have shown limited movement over the past four weeks. However, open interest has risen, particularly for the December 2024 contract. This contract is worth watching, particularly as maintenance outages end and new capacity continues to ramp up.

Price changes in the HR Coil futures market have been minimal in the past month with values recorded this past Monday near steady with our September 9 analysis. This lack of change in the futures market is not surprising given relatively stability in physical prices over the past four weeks.

What has changed in the futures market has been a 10% rise in open interest, with a substantial increase in the December 2024 contract. Open interest is the number of 20 s.ton contracts active in the market, representing both a buyer and seller. As of this past Monday, there were just over 24,000 contracts, representing nearly 500,000 s.tons of volume. The December contract alone stood at 7,375 contracts or just over 30% of all open interest. In reviewing this futures data over the past several years, the most visible increase of open interest has come at times before futures prices associated with this volume fell.

As of this past Monday, the December contract was priced at $772 /s.ton, nearly steady with the price in early August. However, open interest has jumped by 72%. While mills continue to target prices near the mid-$750 /s.ton level, we have recently seen a return of competition in the physical market, likely due to the temporary outages ending while new capacity continues to ramp up. The value associated with the December contract bears watching as does the full 2025 forward curve, particularly as the upcoming U.S. election unfolds over the next four weeks.  

  Back to Top