Fundamental Report
Supply-Side Takeaway:
Imports and domestic production both unexpectedly increased this month. While this is likely temporary, given that planned outages and recent poor import price dynamics suggest lower levels, the upside potential for a sustained rally in the physical market will be limited until these factors fully materialize.
Imports and the Domestic – Global HRC price differential expanded further. The move was the result of the domestic spot price remaining unchanged, while the global average price continued to slip. On the imports side, August arrivals preliminary data indicates a continued increase from July’s rebound. Finally, domestic production jumped up, reaching highest level since August 2023 and the highest utility rate since February 2023.
HRC Spot Prices – US Domestic & Global
- The global HRC spot price declined to $652 from $661. This dip was mainly due to a -$35 in Russia, and a -$28 in Korea, while Turkey went up $9 and Europe +$4.
- The Domestic – Global HRC spread expanded further, widening from $19.45 to $28.31. marking the fifth consecutive week of increases.
Total Sheet Imports (s.ton)
- This week’s imports estimated sheet arrivals for August indicate an increase from July’s rebounding, rising to 956k tons from July’s preliminary estimated figure of 888k.
- Given the current negative differential, it is highly unlikely that we would see another surge in arrivals for the remainder of the year. That said, we do anticipate some volatility in these figures as we push below the longer run “neutral level”.
Domestic Production (s.ton)
- For the week ending on August 17th, capacity utilization rose by 9% to 79.0% and domestic raw steel production climbed to 1.754m from 1.735m/tpw. This is the highest level for each in over 1 year.
- This brings the year-to-date production to 55.910m, operating at a rate of 6%, -2.0% below this point last year.