US steel prices
Steel prices are a key driver of steel companies’ earnings. As a result, it’s important for investors in steel companies like U.S. Steel Corporation (X) and ArcelorMittal (MT) to keep track of steel prices. However, there are several steel grades whose prices can diverge from each other. In this part, we’ll see how flat-rolled steel prices have played out this year. Specifically, we’ll look at HRC (hot-rolled coil) and CRC (cold-rolled coil) prices.
Prices have risen
There has been a broad-based upswing in US steel prices this year. However, some of the biggest gains have come in the HRC space. According to Platts, spot HRC was ~$850 per ton last week. Prices have risen ~$200 per ton this year. The increase in CRC prices has been lower. Platts accessed US spot CRC prices at $971 per ton last week. Prices have risen ~$150 per ton this year.
There has been some divergence in HRC and CRC prices this year. The divergence isn’t difficult to comprehend. In the past few years, we’ve seen US HRC-CRC spreads, which have historically been in the ballpark of $100 per ton—almost double. The record spreads were driven by higher lead times in CRC and a better demand environment for CRC—compared to HRC. Higher US CRC prices led to higher spreads between US and international CRC prices.
With a flat tariff on imports, we’ve seen a higher increase in some steel products where spreads between US and international prices were lower. Nucor (NUE) has a higher share of HRC in its flat-rolled product mix. AK Steel (AKS) has a high proportion of CRC and galvanized steel products (STLD).
Next, we’ll look at the recent trend in Chinese steel prices.