Texas (USA): The U.S. Hot Rolled Coil (HRC) market has undergone significant shifts, featuring domestic prices that have surpassed offshore prices, resulting in a renewed premium for domestic products over imports. Notably, in successive weeks, U.S. HRC prices have maintained relative stability, while domestic HRC has seen a considerable 13.3% price premium over imports, up from 4.9% a month prior highlighting the changing dynamics of HRC market.

Data from the American Iron and Steel Institute (AISI) has revealed nuanced current supply dynamics, with a 1.0% decrease in domestic raw steel production and a 2.4% reduction in capacity utilization. The significant week of the starting month of April witnessed increasing demand for HRC in the U.S. automobile market. This demand surge followed Cleveland-Cliffs Inc.'s pivotal announcement in late March regarding substantial price increases for carbon hot-rolled, cold-rolled, and coated steel products.

Meanwhile, the U.S. manufacturing sector has experienced expansion, with output increases and accommodating inputs further underlining the demand outlook. In mid-April, weekly raw steel output in the U.S. observed a slightly decline of 2.40% compared to the corresponding week the previous year. Additionally, the U.S. produced 1.726 million net tons of raw steel, with a domestic mill capacity utilization of 77.7%. This slight decrease in production has been consistent, contributing to an adjusted year-to-date production decline of 2.40%.

By the third week of April, the bullish trend of the U.S. HRC market continued and the prices of HRC increased. The fringes of the Tube & Wire trade fair in Dusseldorf witnessed U.S. Steel Kosice (USSK) prolonging downtime at one of its blast furnaces due to sluggish steel demand across Europe, reflecting the broader impact of market conditions on industry operations. Furthermore, U.S. crude steel production depicted a 0.6% decrease from the previous week and a 3% reduction from the prior year. These figures, alongside a declining capacity utilization rate, have led to a total adjusted crude steel production decrease of 2.5% annually.

The HRC market stability persisted through the last week of April, with minimal price fluctuations and a 0.2% change observed, reiterating the liquid nature of the market. AISI's data for the week ending April 27, 2024, indicated a 0.9% decrease from the prior week's production, underscoring the necessity to maintain a robust domestic supply chain for steel products. While the immediate market outlook appears stable, ongoing global geopolitical tensions and external economic factors continue to influence market dynamics. The various fluctuations and market dynamics in the U.S. HRC market emphasize the need for agile responses and policy measures.

Looking ahead, close monitoring of market trends, strategic policymaking, as well as fostering strong domestic production networks, will be crucial to navigating the evolving landscape of the U.S. HRC market. The developments from recent weeks provide a comprehensive insight into the fluid nature of the U.S. HRC market, shedding light on the myriad factors shaping market conditions and projections for the future.