HRC steel futures on CME surged 6.52% to $1,193/st, marking the most significant single-day rally in six months. The move was triggered by a combination of supply-side disruptions and stronger-than-expected demand, catching many market participants offside.
Three US mills announced unplanned outages totaling 450,000 tons of capacity, reducing hot-rolled availability in an already-tight market. The outages compounded existing supply constraints from reduced import volumes, as Section 232 tariffs continue to limit foreign steel inflows.
Buyer panic set in as mill lead times extended to seven weeks, up from five weeks in May. Several service centers reported allocations being reduced, forcing end-users to compete for spot cargoes at escalating prices.
The demand picture has improved across multiple sectors. Automotive purchases of HRC increased 8% month-on-month in May, while construction demand, particularly non-residential, has shown resilience despite elevated interest rates.
The SHFE HRC contract rose a more modest 0.34% to CNY 3,497/mt, as Chinese steel markets remain subdued on weak property sector demand. The divergence between US and Chinese steel prices has widened the US premium to approximately $400/st over Chinese export prices.
The 6.5% surge signals a rapidly tightening market. Buyers with unhedged near-term requirements should act immediately to secure Q3 volumes. Consider fixing 60–70% of requirements at current levels, as further mill outages or import delays could push prices above $1,250.