After a rapid recovery over the past three months, the US hot rolled coil price hit $ 700 per tonne by mid-November, more than 50 percent above its August low. It is reported that several manufacturers in the US are already offering rolls for $ 840 - $ 850. So what's behind this staggering price hike?
The imbalance between supply and demand is, without a doubt, the main driver of US steel prices. With limited access, the scales tilt decisively in favor of the steel mills.
Steelworkers have drastically cut production amid the Covid-19 pandemic, and both distributors and end users have allowed their stocks to decline. As demand has begun to rebound, many steel buyers need to replenish stocks, but find that the factories simply do not have material to sell, as evidenced by the ever-increasing delivery times.
Capacity utilization in the US continues to grow - currently at 71.5 percent - but much lower than in the same period last year. Until steelmakers increase production to match current demand, prices are likely to continue to rise.
The cost of scrap metal and other materials for steel production in recent months has risen in price only slightly. In addition, the traditional slowdown in market activity can be expected at this time of year.
However, it is clear that the base steel cost in the US is currently unrelated to raw material costs or seasonality, the two factors that typically most affect steel product prices.
