U.S. Steel Supply Tightens as Nickel Rebounds Above $16,000

U.S. steel buyers are facing tighter spot availability, longer mill lead times and rising hot-rolled coil prices as fourth-quarter maintenance removes supply from the market. Nickel has also rebounded sharply, climbing back above $16,000 per tonne as major Chinese producers discuss coordinated output cuts at Indonesian processing plants.

MONTREAL (Scrap Monster): The U.S. steel market is tightening as mills gain greater control over spot pricing and available volumes, while nickel prices have staged a sharp rebound following renewed discussion of production cuts in Indonesia.

The two markets are being driven by different forces, but both reflect a shift in near-term supply expectations. U.S. steel buyers are dealing with lean inventories and scheduled mill outages, while nickel traders are assessing whether producers will finally respond to weak margins by curbing output.

Nickel Rebounds After Nine-Month Low

Nickel has moved higher for several consecutive sessions after reaching a nine-month low last week.

By October 21, LME three-month nickel had moved back above $16,000 per tonne, while the most-active Shanghai nickel contract also posted strong gains.

Shanghai Metals Market data showed SHFE nickel up more than 3% during the October 21 session, while LME nickel also traded higher.

The rebound follows a prolonged period of pressure caused by abundant Indonesian supply and weak producer margins.

Chinese Producers Discuss Indonesian HPAL Cuts

The latest catalyst is renewed discussion among major Chinese nickel producers about coordinated production reductions at their Indonesian high-pressure acid leaching operations.

Companies involved reportedly include Tsingshan Holding Group, GEM, Lygend Resources & Technology and Zhejiang Huayou Cobalt.

The plants produce mixed hydroxide precipitate, or MHP, an intermediate material used in battery-grade nickel production.

A reduction of roughly 30% per producer has been discussed, although no final agreement has been confirmed.

The companies held similar discussions in August without reaching a deal, so the proposed cuts should still be viewed as under consideration rather than committed production reductions.

Producer margins have been pressured by weak nickel prices, higher operating costs and tighter raw-material and utility conditions in Indonesia.

U.S. Steel Buyers Face a Seller's Market

Conditions in U.S. steel are moving in the opposite direction, with buyers facing tightening supply rather than chronic oversupply.

Steel Dynamics said demand remains healthy, customer inventories are near the lower end of historical ranges and spot availability across flat-rolled and long products has tightened.

Lead times have extended, with some order books reaching into 2027.

That combination is giving mills greater leverage over both price and available volume.

Q4 Maintenance Could Remove Up to 1.2 Million Tons

Steel Dynamics estimates that the broader U.S. steel industry operated at approximately 80% capacity utilization during the third quarter.

The company's own steel mills operated at a significantly higher rate of approximately 92%.

Looking ahead, planned fourth-quarter maintenance outages are expected to remove roughly 1.0–1.2 million tons of steel capacity from the market.

Those outages come at a time when customer inventories are already lean, limiting the amount of readily available spot material.

Cleveland-Cliffs also continues to keep the steelmaking portion of its Dearborn Works operation idled, including the blast furnace and basic oxygen furnace facilities.

Hot-Rolled Coil Prices Move Higher

SteelNews.biz, citing Kallanish, reported U.S. hot-rolled coil at approximately $1,215 per short ton at the beginning of October, roughly 40% above the year-earlier level.

Nucor's weekly Consumer Spot Price was subsequently reported at approximately $1,240 per short ton.

Steel Dynamics management has also indicated that pricing momentum remains positive as supply tightens and demand holds.

The company's third-quarter average external steel selling price reached approximately $1,400 per ton, up from $1,119 a year earlier.

Contract Prices Are Resetting Higher for 2027

The stronger spot environment is also feeding into negotiations for 2027 contracts.

Cleveland-Cliffs said recently signed customer agreements and current steel-price forecasts have materially improved its outlook for next year.

The company now expects 2027 adjusted EBITDA to exceed $4 billion.

Steel Dynamics has similarly indicated that a large share of its flat-rolled portfolio is linked to contract pricing that adjusts with a lag, allowing stronger current steel prices to continue feeding into results into 2027.

Steel Dynamics Sees Room to Raise Sinton Output

Higher prices are encouraging producers to push existing capacity harder, although major new supply cannot arrive immediately.

Steel Dynamics said its Sinton, Texas mill is currently producing roughly 210,000–220,000 tons per month and has room to increase output to 250,000 tons per month or more.

The facility has annual steelmaking capacity of approximately 3 million tons.

Nucor is also developing its new West Virginia sheet mill, which is designed for approximately 3 million tons of annual capacity. The project remains under construction, with operational ramp-up expected in the 2027 timeframe.

Courtesy: SteelNews.biz