<article><p class="lead">US hot rolled coil pricing continued to weaken today based on deals done in previous weeks, with mills looking to fill typical holes in fourth-quarter rolling programs. </p><p>The weekly <i>Argus</i> US domestic HRC index tumbled by $36.25/st to $784/st based on three deals and indications from seven buy- and sell-side sources.</p><p>Traders have been aggressively marketing toll-processed HRC through one re-roller with a small presence in the spot market. Sources said sales have been made as low as $720/st ex-works. </p><p>Other re-rollers have been competing to capture business at such levels, though overall activity remained quiet as buyers whittle down inventories and some large customers such as tube mills retreat ahead of the year end and given 2019 contractual talks.</p><p>There remains a wide disparity between large- and small-tonnage deals, with prices for retail customers still at $800/st and above from certain mills.</p><p>The softening in reported physical pricing led to a weaker Chicago Mercantile Exchange forward curve in recent days. December was trading at $768/st today, down by $7/st from yesterday's settle, while January was $3/st lower, at the same level. </p><p>Rising supply has been a primary driver of the softening, as well as buy-side reticence given the uncertain outlook. </p><p>A mill restart in the Ohio Valley previously re-rolling slabs aggressively sought to book orders from its own melting activity, which is expected to begin soon. </p><p>Stainless and alloys producer Allegheny Technologies (ATI) has also begun rolling slabs from Russian producer NLMK into HRC at its stainless and specialty flat-rolled mill outside of Pittsburgh, boosting supply in partnership with NLMK's nearby rolling facility.</p><p>The restart of two blast furnaces at US Steel's Granite City, Illinois, sheet mill has also lifted production. The furnaces were idled in late 2015.</p><p>Sluggish order activity and falling domestic prices are weighing on imports. </p><p>"Imports are close to non-existent in this kind of market as it's hard to put a price tag on the future", one trader said. </p><p><i>Argus</i>' DDP Houston assessment shed $20/st to $710/st today. Bids for Egyptian material are around $700-710/st, and one trader said $710/st was achievable.</p><p>Hot-rolled tonnage licensed for November import rose by 45,785t to 87,582t through 13 November from the prior week. </p><p>The 6,737t/day licensed for November is down seasonally from the 7,129t/day licensed in October but higher than the 5,076t/day imported in the same month a year earlier.</p><p>South Korea is the largest supplier on the month at 22,838t, followed by Japan at 15,158t and the Netherlands at 14,697t. </p><p>Domestic sellers alluded to a potential reduction in import volumes as a driver of a snapback. </p><p>Mills were less inclined to cut prices further ahead of Thanksgiving, as it is unlikely to stimulate further sales in a quiet market.</p><p>There was also talk of domestic mills contemplating production restrictions to stem the price decline given ongoing contractual talks, and inventories reducing after service center de-stocking.</p><p>One service center that had been sitting on a short-sale order it does not need until the first quarter said it had reconciled himself to the fact the market would not fall as far as he expected – just a week ago it was confident of securing its targeted price-point.</p><h2><b>Summary of activity heard by </b><b>Argus</b><b>:</b></h2><ul><li>HRC-US: EAF-based seller estimates tradable value at $810/st ex-works Midwest</li><li>HRC-US: Buyer said EAF-based seller quoted $800/st ex-works Indiana for 250t order</li><li>HRC-US: Buyer paid $800/st ex-works Midwest for 40t</li><li>HRC-US: Re-roller sold 2,000t at $720/st ex-works Midwest</li><li>HRC-US: Re-roller sold 500t at $800/st ex-works Midwest</li><li>HRC-US: Re-roller sold 1,000t at $760/st ex-works Midwest</li><li>HRC-US: Large buyer estimated tradable value at $820/st ex-works Midwest</li><li>HRC-US: Trader heard re-roller selling at $730/st ex-works Midwest</li><li>HRC-US: Trader estimated tradable value at $820/st ex-works Midwest for retail buyers</li><li>HRC-US: Buyer estimated tradable value at $795/st for truckload to 500t</li><li>HRC-US: Integrated seller estimates tradable value $750-799/st ex-works Midwest for large quantities</li><li>HRC-US import: Trader heard bids at $700-710/st for Egyptian material</li><li>HRC-US import: Trader estimated tradable value at $710/st</li><li>HDG-US: Buyer saw offer at $860/st </li><li>HDG-US: Buyer estimated tradable value at $860/st</li></ul></article>
