US Hot-Rolled Coil Market Gains Momentum in August, Boosted by Steel Production and Price Hikes

The US hot-rolled coil (HRC) market is displaying signs of recovery as it enters mid-August, with prices gaining momentum despite ongoing challenges in the broader manufacturing sector. The steel industry has seen a series of positive developments, particularly in HRC pricing and production, which are providing a faint sign of hope for market participants.

In first half of August, HRC prices in the US spot market surged by 1.2%, and as mid-August approached, HRC prices gained an additional 1.3%, marking a notable shift in market dynamics. This uptick was further reinforced by Nucor's decision to raise its consumer spot price (CSP) for hot-rolled coil for the second consecutive week. The price hike also affected Nucor's California sheet subsidiary, CSI, indicating a widespread trend across different regions. The steady rise in US HRC prices has notably narrowed the price gap with offshore material on a landed basis, although domestic HRC remains marginally cheaper.

The narrowing price differential between domestic and imported HRC is a significant development. Currently, domestic HRC is only 2.3% cheaper than imports, a stark contrast to the 6% difference observed just a week prior. This shift underscores the evolving dynamics in the US HRC market and suggests improving competitiveness of domestic producers.

Supporting this price trend, raw steel production in the US has shown promising signs. According to the American Iron and Steel Institute (AISI), domestic steel mill output increased for the second consecutive week, reaching 1,754,000 short tons - the highest weekly output this year. The mill capability utilization rate climbed to 79%, the highest since February 18, 2023, indicating improved efficiency in steel production.

However, the HRC market's recovery is occurring against a backdrop of mixed economic signals. The New York Federal Reserve's Empire State Manufacturing Survey revealed that while manufacturing activity in New York state saw a modest improvement in August, it remained in contraction territory. The General Business Conditions Index rose slightly to -4.7, continuing a nine-month streak of negative readings.

Despite these challenges, there's a sense of cautious optimism in the industry. Around 45% of respondents in the Empire State Manufacturing Survey expressed positive expectations for future business conditions. This sentiment, coupled with the recent price gains and increased production, suggests a potential turning point for the US HRC market.

Looking ahead, as per ChemAnalyst, the US HRC price trend could continue its upward trajectory in the short term, supported by improved production levels and the narrowing price gap with imports. However, the sustainability of this trend will largely depend on broader economic factors, including construction sector performance and overall manufacturing activity. While the current momentum is encouraging, market participants remain vigilant, aware that actual transaction volumes are still limited, and that the industry continues to navigate a complex economic landscape.