US price spread between plate, HRC widening toward all-time highs

The rift between US hot-rolled coil and plate prices continued to widen on June 17 as plate prices have remained remarkably stable while HRC sinks.

The plate premium to HRC was at $830/st, its highest level since early March. The spread between the two products hit an all-time high on March 7 of $870/st.

Following Russia's invasion of the Ukraine which prompted a raw material cost push on HRC prices, the gap had started to shrink to $450/st spread in April 2022. Since the gap has widened with HRC prices on a consistent decline after a near-term peak in pricing following the start of the war.

The daily Platts TSI US HRC index was at $1,070/st on an ex-works Indiana basis on June 17, according to S&P Global Commodity Insights data. Market sources anticipated further declines in HRC prices as chatter continued to swirl around deals around the $1,000/st mark or lower.

However, the US plate market has charted a different trajectory, with pricing staying range bound nearer to the all-time high of $1,975/st on a delivered Midwest basis. The daily Platts TSI US plate index was assessed at $1,900/st on a delivered basis June 17.

Plate prices have been unchanged for the last two weeks and have not traded more than 4% above or below $1,900/st since Oct. 19, 2021.

Although market sources have noted the significance of the growing rift between the two products, they don't expect the current slide in HRC pricing to bleed over into plate.

According to one service center source, he was surprised the differential in pricing was as huge as it is. However, he expected pricing to hold as "there are only three major mills" noting they can maintain pricing while running capacity at 60% if they wish.

Similarly, another service center source said the plate market was "completely flat," adding that the gap to HRC was "getting obscene." Still, he didn't expect pricing to change based on his discussions with mills who reported demand being high enough to maintain pricing.

A source from a third service center juxtaposed the current trend in products to where they were when HRC was at an all-time high, saying, "I do know that when HRC was pushing $2,000/st, the plate mills were trying to catch up to the same price level. Now that HRC has dropped to its current level and expected to go lower, the plate mills are in no hurry to do the same."

Plate has traded at a premium to HRC since mid-November 2021. Prior to this, the products were reversed for roughly a year with HRC at a premium to plate starting in early October of 2020.