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Fundamental Report

Supply-Side Takeaway:

Additional data suggest that Imports have reverted to their downtrend while domestic production surges ahead of planned outages.

Domestic HRC prices continued to slowly grind higher as we exit the seasonal summer slowdown.

Imports and the Domestic – Global HRC price differential expanded further. The move was the result of the domestic spot price rising, while the global average price was relatively unchanged. On the imports side, August arrivals preliminary data this week indicates a decline from July’s rebound, coming in line with our expectations. Census data for July imports showed an increase to a level above 900k. Finally, domestic production continued to surge, rising to the highest level since April 2022 and capacity utilization ticking up to its highest rate since February 2023.

HRC Spot Prices – US Domestic & Global

  • The global HRC spot price was flat at $652, as the only moves this week were from China, +$2, and Europe, +$1.
  • The Domestic – Global HRC spread expanded further, widening from $28.31 to $37.82, marking the sixth consecutive week of increases.

Total Sheet Imports (s.ton)

  • This week’s imports estimated sheet arrivals for August indicate a decline from July’s rebounding, falling to 897k tons from July’s census data figure of 931k.
  • 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 24th, capacity utilization rose by 2% to 80.2% and domestic raw steel production climbed to 1.782m from 1.754m/tpw. This is the highest level since April 2022.
  • This brings the year-to-date production to 57.692m, operating at a rate of 7%, -1.9% below this point last year.