Back in early March, the price of hot roll coil was at approximately $855 per ton in the US. In the period of 70 days since then, the market price decreased $80 per ton, rose $90 per ton, and then again declined by $50. It’s evident this market lacks a clear direction. Depending on the index referenced, the current market price for hot roll coil is reported at about $805 per ton. Many buyers are increasingly cautious, waiting for clear direction in the market and are buying only as needed for known projects.
NEW MILL PRICING PUBLICATIONS
There is a new dynamic in the marketplace. Stating a goal of market transparency, Nucor has begun publishing a weekly spot buy price. In response, Cliffs has begun publishing a monthly spot price that they reserve the right to modify more frequently, pending market events. Both of these spot numbers are openly published on their respective websites. Neither publishes a methodology, but they both suggest it represents market activity and is a price they are willing to support for customers buying mill direct spot orders. While established indices generally lag the market by 1-3 weeks due to vetting methodologies, these mill sponsored values represent a price valid for immediate order and delivery within the mill’s lead time. Recently, mill lead times have decreased slightly and are in the range of 3 to 5 weeks.
During the first weeks Nucor started published their number, it was well aligned with existing market indices. There was quite a bit of discussion on whether their publication had significance and whether it would endure. Given it was established as a monthly spot price, Cliffs’ price has been fairly steady and generally lagged behind the perceived volatile market. This matches their suggested publication goal of reducing volatility.
Recent Nucor Publication
After a few weeks of relative parity between Nucor’s number and established indices, the Nucor weekly spot price of $760 per ton that was published on May 6, 2024 has received quite a bit of attention. This was a $65 per ton drop from their previous weekly value and noticeable lower than the weekly values from the more established indices.
Influence
The impact on the market of Nucor’s publication has been noticeable this week. Buyer hesitancy has risen, leading to more price inquiries without necessarily an increase in a commitment of orders. The CME Futures for June and July dropped approximately $30 per ton within 48 hours of Nucor’s publication and offers for imported steel came to a grinding halt. Clearly, the drive for transparency has also influenced the market.
Buyers appear to be requesting quotes simply trying to determine market price. Futures do as they always do and are reflecting forward market emotion. It could be argued that the previous up and down market was seeking a balance between supply and demand and that this Nucor move demonstrates demand was not firmly supporting the current supply, which is at 77% of rated capacity. It could also be argued that Nucor’s move has supported their strong commitment to domestic steel by limiting import interest.
One thing is clear, Nucor’s weekly publication has significance in the market.
