US steel prices continue to rise due to supply shortages
US Hot Rolled Coil (HRC) prices continue to climb amid further declines in supply, and futures prices, indicating the direction of the price trend, have exceeded current spot prices.
The US Weekly Domestic Hot Coil Price Index tracked by Argus rose to $ 1,280 ex-factory in the Midwest this week. Lead times for rental orders increased to 7-8 weeks from 6-8 weeks.
Last week, the HRC futures market rallied sharply, indicating contango over the next few months. For April deliveries, prices rose $ 55 to $ 1,320 per tonne, while May futures prices jumped $ 124 to $ 1,295 per tonne. June and July contracts are priced by brokers at $ 1,300 and $ 1,280 per ton, August futures prices have risen to $ 1,200 per ton.
Higher prices in the futures market can encourage importers to hedge their purchases more effectively.
The shortage of semiconductors that has led to a decline in auto production in North America has not yet resulted in mills cutting down on steel for automakers.
The US steel supply deficit is likely to persist as steelmaker US Steel will shutdown blast furnace # 1 at its Mont Valley plant, south of Pittsburgh, for 25 days in May. Other manufacturers may also try to extend production containment to support prices.