US steel plate prices have re-established a premium to domestic hot-rolled coil prices, creating the widest spread between the two products in three and a half years.
The daily Platts TSI plate assessment was calculated at $998.25/st on a delivered Midwest basis on Friday, while the daily Platts TSI hot-rolled coil price was at $800/st. The current spread of $198.25/st is at its widest level since April 2015.
Plate prices have struggled to maintain a premium to HRC following the oil price decline in 2014 to 2015. Both products hit multi-year pricing lows in late 2015 with plate unable to re-establish a noticeable premium to HRC as end-use markets remained depressed. Plate traded above a $100/st premium to HRC for a brief period in the second quarter of 2017. However, since late 2015, it’s traded close to or below US HRC at multiple times in 2016 and 2017.
Typically, the hot-rolled coil market leads the plate market in pricing direction, but since July, the two products have followed separate paths. The Platts TSI US HRC price has fallen by 13%, or $120/st, since hitting a peak of $920/st in July, while the Platts TSI plate assessment has increased by $35.50/st to nearly eclipse the $1,000/st level for the third time in a price cycle ever.
The different markets are being influenced by different dynamics, leaving many to expect plate prices to be maintained as HRC remains under pressure. The US sheet market is in the midst of significant amounts of capacity coming back online, which includes the two blast furnaces at US Steel’s Granite City mill in Illinois and JSW Steel in Ohio, as well as mills coming off routine fourth-quarter maintenance. Additional capacity coupled with still-high prices is leaving most buyers of US sheet to try and drive down prices by avoiding placing orders or committing to 2019 contracts.
Meanwhile, plate supply has been reduced with the closure of ArcelorMittal Conshohocken earlier in the year and a dearth of import options. Through the first nine months of 2018, the imports of cut-to-length plate have dropped by 20% from the same period in 2017 and plummeted 60% from peaks of 1.15 million mt in 2014 and 2015, according to US Census data via the S&P Global Platts Steel Data and Analysis tool.
Imports of hot-rolled sheets through the first nine months of 2018 were up by 21% to 1.78 million mt compared with the first nine months of 2017. Still, hot-rolled sheet imports were down by approximately 1 million mt from peaks in 2014 and 2015.
The deal market for sheet products, like hot-rolled coil, remains open as mills attempt to fill 2018 order books.
However, the prospects of year-end deals in the plate market have likely passed, with the major mills already in the process of filling January order books.
Yaang Pipe Industry Co., Limited (www.yaang.com)