Steel industry reacts to Nucor’s new weekly published HRC price

Steel prices in the U.S. have been on a wild ride over the past several months, but with Nucor now announcing hot-rolled coil spot prices on a weekly basis, some industry observers think steel prices just might stabilize. Ekkaluck/iStock/Getty Images Plus

Nucor made waves in the sheet market when it announced in early April that it would begin publishing a weekly hot-rolled coil (HRC) price.

The Charlotte, N.C.-based steelmaker arguably made even bigger waves on April 8 when it posted its first weekly HRC number: $830/ton. That was $70/ton lower than the $900/ton HR price Cliffs announced in late March. It was also lower than prices in the mid-$800s that other mills were (less publicly) seeking.

Recall that Nucor already publishes prices for other products such as plate, merchant bar, and SBQ (special bar quality, types of steel bars used in the manufacturing of components that require a superior surface). So, it was not as if the move was unprecedented for Nucor, but it was unprecedented for the U.S. sheet market, which typically announces only price increases—and effectively acts as if decreases never occur.

What was the impact on steel markets? A look at the Chicago Mercantile Exchange futures on the afternoon of April 8 reveals HRC prices trending downward soon after Nucor’s new weekly HRC price announcement.

At times in early/mid-April, it felt like Nucor’s announcement had totally eclipsed just about all other steel news. Chatter and speculation about the move pinged across offices, social media, and was even a big topic of discussion at the Boy Scouts of America Metals Industry Dinner on April 11.

The consensus had been that HRC prices would continue to inch upward in the spring on steady demand, a raft of mill outages, and additional mill price announcements, even if the gains wouldn’t be as steep as some predicted in March.

Nucor on April 15 posted its second weekly HR price: $835/ton, a gain of only $5/ton and definitely not the sizeable gain that some might have been hoping for. That sparked chatter that Nucor’s published price was aimed at promoting stability in U.S. HRC prices.

It’s not an exaggeration to say that U.S. spot HRC prices have been about as volatile as cryptocurrencies in recent years. But the stability might be well received by manufacturers who could benefit from less volatility in raw material costs.

But what about other U.S. mills and service centers? Some had been looking to continue to increase sheet prices this month on the heels of gains in March. Nucor’s weekly spot HRC price almost immediately stopped their ability to continue to raise prices. That reflected the SMU’s steel market surveys that were conducted the week Nucor rolled out its published HR price.

Thirty-six percent of service centers had been raising prices in tandem with certain mills. The gains followed a trend of declining spot prices throughout much of January and February, and it looked like we were on the cusp in March of seeing another upswing in prices. Nucor publishing a price lower than some expected immediately stopped that upward trend.

To be fair, the market had been coping with extreme volatility in some potentially risky ways. Some larger steel buyers, those capable of placing tens of thousands of tons, have been buying months’ worth of steel when they decide that the market is at or near a low point. We saw this last fall, for example, ahead of the UAW strike, and we saw it again in March, albeit perhaps to a lesser extent. That might be a smart move for individual companies. But when a lot of them behave that way, it can create some problems. Prices might spike shortly after such flurries of buying activity. They might then fall when mills are starved for spot business afterward.

So all told, what has the reaction to Nucor’s move been? Steel Market Update polled steel market participants too. Most (56%) are neutral about the development. Approximately 28% are in favor of it, and 16% are against it.

Here is what some of them had to say:

• “We believe that this move is mutually beneficial and will help many others.”
• “I like that a mill is going to publish their general spot number.”
• “Should bring more transparency to the market.”
• “It will depend on how honest they will be in publishing pricing. It takes a few cycles of publishing to realize if the rates are genuine.”
• “Skeptical. Is there any longevity in a falling market?”
• “Too soon to tell. The bottom line is the deal we make, not the published number.”
• “I think it will create more speculation.”
• “The mills haven’t made much of a secret that they don’t care for indices.”
• “Let the indices do that.”

My take: I think bringing more transparency to the sheet market is a laudable goal, and I think Nucor’s price will become a key reference point, as its published plate price is now for that market.

But how should we think of spot cold-rolled and coated base prices? Are they $200/ton more than the published spot HR prices? That’s been the norm since the pandemic. That said, that spread has been more like $300/ton to $350/ton for much of 2024.

Some transparency there might be welcome too.