Despite some hopeful indications seen recently that the US flat rolled market is firming up and close to the bottom, optimism has waned as domestic prices have yet to rebound and, in fact, are still trending downward.
After a couple weeks of managing to keep flat rolled prices relatively stable, some domestic mills have begun to loosen their grip on prices again. While most domestic hot rolled coil (HRC) offers remain in the range of $20.00 cwt. to $22.00 cwt. ($441 /mt to $485 /mt or $400 /nt to $440 /nt) ex-mill in the Midwest, for the first time in several years, some HRC orders, most notably from minimills such as Nucor, have slipped below the $20.00 cwt. ($444 /mt or $400 /nt) threshold. As scrap costs are low enough for efficient producers such as Nucor and SDI to make money even at these lower flat rolled prices, both mills are trying to grab market share from each other. Integrated mills, too, feel the need to protect their customer base and in many cases match the low numbers that the minimills are quoting. Even with significantly reduced production, too many mills are chasing too few orders and inevitably prices continue to trend downwards.
Meanwhile, the domestic cold rolled coil (CRC) offer range did not change this week from last, and most offers continue to range from $24.00 cwt. to $26.00 cwt. ($529 /mt to $573 /mt or $480 /nt to $520 /nt) ex-mill in the Midwest. With imports slowly disappearing and not constituting a real threat, domestic mills have demonstrated a lack of willingness to continue to offer discounts and negotiate with potential customers; however, in light of the recent HRC downtrend, CRC offers may continue softening as well, especially on sizable orders.
Overall, while service center flat rolled inventory overhang has shrunk from about 3.2 months in February to 2.8 months in March, according to the most recent Metal Service Center Institute (MSCI) monthly shipment and inventory report, the domestic flat rolled market is still flooded with inventory in comparison to the level of demand. In order for domestic mills to begin firming up prices, they need to start filling orders for June shipments; however, they are still mostly working getting on May orders.
On the import side, most foreign offers have remained the same this week; Traders are also careful about taking orders as they are battling with more than just getting competitive prices from foreign sources; long import lead times and the lack of availability of cargo vessels continue to be ongoing hindrances. Also, the possibility of an imminent antidumping investigation for cold rolled and galvanized coils, most likely for China and others, could cause orders to be canceled later on. Therefore, traders have started to shy away from certain sources already.
Mexico continues to be the primary source offering HRC to the US; however, their order books have been filing up and mills are therefore backing off a little and are not being as aggressive or as willing to negotiate, leaving most US HRC business to the US domestic mills. Buoyed by decent domestic demand within Mexico, one major Mexican supplier has reportedly filled its order books until the end of June and is currently not offering. Nonetheless, the other Mexican HRC offers remain at approximately $20.00 cwt. to $22.00 cwt. ($441 /mt to $485 /mt or $400 /nt to $440 /nt) delivered to the US at the border crossing.
Meanwhile, the primary CRC importers remain Mexico, Argentina and Brazil. Mexico and Argentina are offering CRC to the US in the general range of $24.00 cwt. to $26.00 cwt. ($529 /mt to $573 /mt or $480 /nt to $520 /nt). Mexican offers are delivered to the US at the border crossing, and in some cases, delivered to major cities in Texas and beyond, while Argentinean offers are duty-paid, FOB loaded truck in US Gulf ports. Brazilian mills may be willing to negotiate to compete with Mexican and Argentinean offers depending on order size and specifics, but for the most part, they offer CRC to the US at a slightly higher range of about $25.00 cwt. to $27.00 cwt. ($551 /mt to $595 /mt or $500 /nt to $540 /nt) duty-paid, FOB loaded truck in US Gulf ports.
China and India are both finding themselves on the outside looking in on the CRC import market. Both are offering CRC to the US for around $26.00 cwt. to $28.00 cwt. ($573 /mt to $617 /mt or $520 /nt to $560 /nt) duty-paid, FOB loaded truck in US Gulf ports; however, China has become somewhat bullish and is reluctant to budge on prices, perhaps in efforts to lower its profile prior to the potential antidumping filing.
According to licensing data from the US Steel Import Monitoring and Analysis System (SIMA), the top three importers of hot rolled sheets to the US in March, were Canada, at 70,746 mt; Korea, at 27,108 mt; and Mexico, at 17,965 mt. Meanwhile, Turkey, which imported 14,873 mt in February, only imported 105 mt in March. The top three importers of cold rolled sheets in March were Canada, at 29,048 mt, Brazil, at 16,364 mt; and Mexico, at 10,595 mt.