Lowering Inflation Rate and Limited Supply Drives Cold Rolled Coil Prices in the US Market

In the second week of October, the price of Cold Rolled Coil increased in the US spot market as the supply rate plunged, coupled with the lowering inflation rate. The inflation rate in the US spot market was reduced in September end, increasing the consumer price rate in the local market. Furthermore, the supply of Cold Rolled Coil shows a downward trend, resulting in increased lead time by the domestic manufacturers. Additionally, the demand from the downstream automotive industry surged as the UAW and the big three automobile industries, i.e., Ford, Stellantis, and General Motors, came forward to settle the dispute, raising hopes for the US automotive sector to grow in the second half of October.

The domestic Cold Rolled Coil manufacturers observed that the Increased lead times benefit the Cold Rolled Coil mills, as they have now extended to 9.4 weeks from the previous 8.5 weeks. The domestic manufacturers across the US spot market indicate limited availability throughout the remainder of 2023, but order backlogs may ease once contract volumes are secured in the coming months. The constrained supply of Cold Rolled Coil products has also enabled the product to maintain a premium price for a second consecutive week. This situation of prolonged lead times and limited supply represents a significant shift in the Cold Rolled Coil market from just a few weeks ago when lead times were below 8 weeks from mid-April through mid-September.

In September, consumer prices in the United States increased by 3.7 percent annually for the second consecutive month, supporting the rising consumption rate of Cold Rolled Coil in the USA. However, during the same period, core inflation decelerated to its lowest level in two years, rising at a rate of 4.1 percent, down from the 4.3 percent rate observed in August. The US Federal Reserve has also indicated its intention to implement another quarter-point rate hike this year, even though the fed funds futures markets do not suggest further hikes for the remainder of the year. Every month, the inflation rate slowed down from 0.6 percent in August to 0.4 percent in September. This has raised hopes and provoked the domestic and overseas market players to place large orders for Cold Rolled Coil as the US market turns bullish.

The downstream demand for Cold Rolled Coil anticipated a rising trend after a Canadian Union Unifor strike at General Motors (GM) facilities in Canada reached a final agreement. Before this, Unifor had already approved a contract with Ford on September 24th, with 54% of its members supporting it. The tentative agreement with GM includes key provisions, such as a nearly 20% wage increase, cost of living allowances, converting full-time temporary employees with one year of seniority to permanent status, and other concessions.

According to ChemAnalyst, the price of Cold Rolled Coil will show an increasing price trend in the US spot market for the forthcoming weeks. Meanwhile, the demand from the downstream automotive industries shows a rising trend as the UAW gets to finalize the deal with the major automotive manufacturers in the US spot market. The market players anticipate a rising consumption rate for Cold Rolled Coil in the forthcoming month as the market and economic situation recover.