As US scrap prices have continued to weaken this month, US flat rolled prices are coming right down with them.
With US busheling prices down by about $35 /long ton in April from last month and flat rolled demand remaining weak, offers from US mills for most hot dip galvanized (HDG) products have weakened by about $2.00 cwt. ($44 /mt or $40 /nt) in the last couple weeks, with base prices falling to a range of $24.00 cwt. to $26.00 cwt. ($529 /mt to $573 /mt or $480 /nt to $520 /nt) ex-Midwest mills, which is also the same price that domestic cold rolled is offered at.
Scrap-based domestic minimills like Nucor, SDI and Severstal are said to be offering the most aggressively, with the rest of the US mills following their lead, tailing slightly behind the minimill decreases. As long as demand remains weak, it seems that all domestic flat rolled mills will continue to offer aggressively, particularly for coated products, in order to deter imports. Although booking volumes are still low, it seems that the domestic strategy is indeed working, in that they are not losing business to imports. With demand being sluggish at best, prices continuing to fall, and customers not wanting to build inventory, most US flat rolled buyers are sticking to domestic mills because of their competitive prices and quick deliveries.
Along with the decrease in base prices, domestic offers for 0.019" x 48" G90 (0.48 mm x 1.219 m) and 0.012" x 40.875" G30 (0.30 mm x 1.04 m) have come down by the same degree. Offers for 0.019" G90 now range from $33.00 cwt. to $35.00 cwt. ($728 /mt to $772 /mt or $660 /nt to $700 /nt) ex-mill and offers for 0.012" G30 range from $35.00 cwt. to $37.00 cwt. ($772 /mt to $816 /mt or $700 /nt to $740 /nt). Domestic galvalume base prices and offers for 0.019 x 41.5625" Gr80/AZ55 have also come down by $2.00 cwt. over the last couple weeks, with galvalume base prices now ranging from $25.00 cwt. to $27.00 cwt. ($551 /mt to $595 /mt or $500 /nt to $540 /nt) and AZ55 now offered at a range of $34.00 cwt. to $36.00 cwt. ($750 /mt to $794 /mt or $680 /nt to $720 /nt) ex-mill.
Imports are doing their best to keep up with the softening domestic prices, with South Korea being the most aggressive. However, as mentioned above, there is little US interest because of the longer lead times. In the last couple weeks, import HDG offers from Mexico, Taiwan and South Korea have all headed south by about $1.00 cwt. to $2.00 cwt. Taiwan and South Korea are now offering 0.019" G90 at a range of $35.00 cwt. to $37.00 cwt. duty-paid, FOB loaded truck in US West Coast ports. India continues to offer the same material at $34.00 cwt. to $36.00 cwt. on the Gulf Coast.
Import offers of 0.012" G30 from South Korea now range from $33.00 cwt. to $35.00 cwt. on the West Coast while Mexican offers of the same material are offered at the same price at the border crossing. Taiwanese offers also moved down in the last couple weeks, but to a lesser degree ($1.00 cwt.) and remain slightly higher than Mexican and South Korean offerings at a range of $35.00 cwt. to $37.00 cwt. on the West Coast. Indian offers of the same material are still found at $35.00 cwt. to $37.00 cwt. on the Gulf Coast.
Galvalume offers from foreign mills have also declined, with Taiwanese and Mexican offers of 0.019" Gr80/AZ55 falling by about $1.00 cwt. over the last couple weeks to a range of $35.00 cwt. to $37.00 on the West Coast for Taiwanese material and at the same range from Mexico at the border crossing. South Korean offers weakened by $2.00 cwt. in the last two weeks, with mills offfering at a more aggressive range of $33.00 cwt. to $35.00 cwt. on the West Coast.
With domestic mills continuing to chase down prices and offering unbeatable lead times, flat rolled imports, particularly for HDG, will continue to struggle in this market until demand improves. As one flat rolled trader told SteelOrbis this week, 'I'm not sure I ever remember a period where booking imports was more difficult than what we are seeing right now."
Meanwhile, China continues to be quiet on the HDG side, despite the reduction of the VAT rebate for CRC and HDG products from 13 to five percent, which is likely to lead to more aggressive Chinese import offers of these products going forward. There is a good chance that HDG offers from China will appear at levels similar to other import sources in the coming weeks, and competitive CRC offers from China are already appearing in the market.