The US hot-rolled coil market had healthy demand in most sectors for December, sources said Thursday; however, the major decline in the energy sector and oversupply have been catalysts for bearish market sentiment.
As buyers continued to express uncertainty over first-quarter outlook, many noted that market activity has yet to get back to normal following the Christmas and New Year’s holidays.
A service center executive said that as of today, “people are still coming back. They are here physically but I can’t say mentally.”
“No one wants to buy, they are still nervous,” one Midwest service center source said. He added that with both holidays falling on Thursdays, most of the market was not around for more than two weeks.
However, the service center source said with the exception of the OCTG market downturn, the majority of other demand sectors remains strong. Despite the relatively healthy demand in the other sectors, he said lead times remain very short.
“The short lead times are just a killer for the reversal of [recent] trends,” the service center source said. He said that if recent conditions don’t change soon, “people will start to pull back production.”
A second service center source echoed the sentiment, saying that December activity was “strong for most people” when compared with the slowness historically associated with the month.
He did note that mills do not want to be selling HRC at prices around $560/st, as an anecdotal number, due to it hampering top-line revenues. In addition, he agreed that no producer wants to be the first to limit production, “but they all know it is the right thing to do,” as oversupply is an issue with the energy sector faltering and import levels remaining high.
That maintained its HRC and cold-rolled coil assessments at $590-$600/st and $720-$730/st, respectively. All prices are normalized to a Midwest (Indiana), ex-works basis.
Zhejiang Yaang Pipe Industry Co., Limited