Current reports indicate that several steel mills in the U.S. have lowered their hot-rolled coil (HRC) prices, with factory prices now ranging from $715 to $720/short ton, a decrease of $10 from previous levels. Some mills in the southern region have noted that prices for over 10,000 short tons could be around $700, but there have been no transactions due to the sluggish market conditions. The reduction in prices is primarily attributed to the ongoing Columbus Day holiday in the U.S. and the impact of a major hurricane in regions like Florida, which has put pressure on demand.

Market Challenges

The U.S. steel market continues to face challenges of oversupply, largely influenced by high interest rates and inflation, which have hampered steel consumption. However, following the Federal Reserve’s decision to lower interest rates by 50 basis points in September, recent economic indicators show signs of recovery. For instance, September’s CPI unexpectedly exceeded market expectations, non-farm payroll data marked the largest increase since March, and the PPI data remained flat, below the anticipated slight increase of 0.1%. These developments suggest a potential easing of inflation in the U.S.

Economic Outlook

The expectation of further interest rate cuts by the Federal Reserve, possibly 1-2 times within the year, could stimulate economic growth and alleviate employment pressures, thereby impacting inflation levels. This, in turn, is expected to boost steel consumption and enhance market sentiment within the U.S. steel sector.

In the near term, however, the demand for steel in the U.S. still faces significant pressures, and uncertainties regarding the future economic outlook necessitate close monitoring of employment market data.