US sheet buyers are accepting higher prices for hot-rolled coil, but market participants said mills will have problems narrowing the spread between HRC and cold-rolled coil.
With market sources reporting prices below $380/st were no longer available, Platts raised its daily HRC assessment Wednesday to $380-$400/st. The cold-rolled coil assessment held at $520-$530/st. Both are normalized to a Midwest (Indiana) ex-works basis.
Market sources have reported $130-$150/st spreads between hot-rolled coil and cold-rolled coil prices, largely because of relative strength in the cold-rolled coil market.
"Their lead times [for CRC] are out into March and I think that's not so much demand driven but cutting back into manufacturing availability," a service center source said.
Cold-rolled coil prices are about $540/st ex-works, the source said, adding that he sees HRC at about $390/st. That's a $150 spread, though the spread typically is $100/st.
Seeing more upside potential than down, the buyer said he made some imported and domestic commitments into April.
Another service center source said HRC prices have been quoted around $390/st from minimills and as high as $420/st from integrated mills. Cold-rolled coil prices stand at $520-$540/st, he said.
Hot-rolled coil prices need to rise, he said because mills are not profitable at these levels, but the way prices need to go up is for mills to take outages.
Buyers are still leery of building inventory because of macroeconomic factors, he said, and they want to make sure the price increases stick.
A third service center source said he last purchased HRC at $380/st and expects prices to be about there still. Hot-rolled coil is still a weak spot for some domestic mills, though he expects mills will try to raise prices soon.
The upside potential for domestic sheet mills is "very limited," he said, citing the negative US and Canadian purchasing managers' indexes.
