At the End of Q4 2022, U.S. Stainless Steel Hot-Rolled Coil Prices Continue to Decline

Stainless Steel Hot-Rolled (HR) Coil prices have fallen in the U.S. market during the week ending December 23 due to a lower demand outlook ahead of the Christmas holidays. According to manufacturers, this is the second week when Stainless Steel HR Coil prices have remained in this range. Prices for flat products were erratic during the first quarter of 2022 but have steadily declined since April. Participants in the U.S. Stainless Steel HR Coil market expect low demand to persist during the first quarter of 2023 as market players carry excess scrap inventory and consumer order books continue to indicate more preliminary inquiries. However, downstream demand for Stainless Steel HR Coil at most manufacturers appears weak for the first quarter of 2023—and potentially into the second quarter of 2023—due to higher finished inventory readily available in the U.S. market.

According to our sources, finished Stainless Steel flat-rolled product imports have undercut the domestic market for most U.S. Stainless-Steel HR Coil producers. According to U.S. Commerce Department data, flat-roll product imports increased 58% compared to last year. As a result of higher inventory levels, finished inventory is expected to normalize during Q2 2023, potentially bringing back Stainless-Steel HR Coil buyers. End-user demand is off in the spot market, but this could be attributed to customers buying more than usual earlier in the cycle due to supply chain constraints, resulting in higher inventories of Stainless-Steel HR Coil.

However, market fundamentals in the U.S. appear to be strong from major end-user markets. Stainless Steel HR Coil scrap prices are typically determined by the Nickel market, accounting for approximately 70% of the value of 304 stainless steel. Nickel has been particularly volatile this year, adding to price uncertainty for Stainless Steel HR Coil.

Furthermore, U.S. Stainless Steel HR Coil mills have maintained the same prices to attract new buyers. Most specialty stainless steel producers, including Universal Stainless & Alloy Products and Carpenter Technology, raised their base prices for Stainless Steel HR Coil several times this year to keep up with inflationary pressure. According to domestic manufacturers, early 2023 melting schedules will be unusual because order books will be low due to excess inventories, particularly for flat-rolled products. As a result of higher stockpiled raw materials and a limited downstream demand outlook, market players expect Stainless Steel HR Coil prices to remain stable in the coming weeks.