Crowded marketplace puts pressure on US flats prices

Friday, 15 April 2011 03:26:16 (GMT+2)   -  


With additional capacity only weeks away from entering the US flats market, buyers have reduced purchasing activity, keeping flats spot prices soft.

Domestic demand for flat-rolled steel continues to be steady, and even strong in some cases, however buyers are growing more cautious of additional capacity entering the US market from the newly formed RG Steel mills, which are expected to be taking orders for June delivery in early May. The additional capacity in what appears to be an already oversaturated market could be the tipping point that will send flats prices tumbling in May (June deliveries)-along with typically slower summer demand levels and heavily discounted import offers.

Because inventories are low, and there are still buyers who need to consistently buy steel, order activity has been stable, but buyers have been making smaller orders than they have in the past few weeks.  When buyers are placing spot market orders, they are doing so in the range of $42.00-$44.00 cwt. ($926-$970/mt or $840-$880/nt) ex-Midwest mill for hot rolled coil (HRC), down $1.00 cwt. ($22/mt or $20/nt) since our last report a week ago. Cold rolled coil (CRC) spot prices are still hanging in at $48.00-$49.00 cwt. ($1,058-$1,080/mt or $960-$980/nt) ex-Midwest mill, but deals closer to $47.00 cwt. ($1,036/mt or $940/nt) ex-Midwest mill may be possible by late April.

Offshore, some import offers have become more negotiable over the past week, and traders report a flurry of inquiries from US buyers looking to compare falling import offers to US prices. Actual booking activity has not risen dramatically however, as falling US and import prices have made US buyers reluctant to book just yet.

Russian offers of HRC to the US have dropped approximately $0.50 cwt. ($11/mt or $10/nt) in the past week and now range from $37.50-$39.50 cwt. ($827-$871/mt or $750-$790/nt) duty-paid FOB loaded truck in US Gulf ports. Mexican HRC offers are unchanged from last week at $39.00-$41.00 cwt. ($860-$904/mt or $780-$820/nt) FOB loaded truck delivered into Houston. However, while sources tell SteelOrbisthat Mexican CRC offers to the US are still officially in the range of $44.00-$45.00 cwt. ($970-$992/mt or $880-$900/nt) FOB loaded truck delivered into Houston, it has not been difficult to find offers as much as$1.00 cwt. under the low end of the range.

 Cwt.Metric Ton (mt)Net ton (nt)Change from last week
US domestic    
HRC$42.00-$44.00$925-$970$840-$880↓ $1.00 cwt on low end
CRC$48.00-$49.00$1,058-$1,080$960-$980neutral
     
Mexican*    
HRC$39.00-$41.00$860-$904$780-$820neutral
CRC$44.00-$45.00$970-$992$880-$900neutral
     
Russian**    
HRC$37.50-$39.50$827-$871$750-$790↓ $0.50 cwt on low end
     
Chinese**    
CRC$44.00-$46.00$970-$1,014$880- $920neutral
*FOB loaded truck delivered into Houston

**Duty-paid FOB loaded truck delivered into US Gulf ports

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