Deep discounts disappear from US flat rolled market

While many are still not confident that the recent round of US flat rolled price increases can be fully absorbed, most mills are firmly quoting higher prices. Sources tell SteelOrbis that the $2.00 cwt. ($44/mt or $40/nt) increase on spots was likely a preemptive strike against the expected decline in scrap prices this month and successfully prevented flat rolled prices from sliding further. Many mills are trying to at least get a portion of the increase, and are now quoting approximately $31.00 cwt. ($683/mt or $620/nt) ex-Midwest mill for hot rolled coil (HRC) on new orders. But while smaller buyers have been forced to pay at least a portion of the increase, pushing HRC spot prices into the wider range of $29.00-$31.00 cwt. ($639-$683/mt or $580-$620/nt) ex-Midwest mill, up $1.00 cwt. ($22/mt or $20/nt) on the high end, buyers with more negotiating power are still able to place order at sub-$30.00 cwt. ($661/mt or $600.nt) ex-mill levels. However, deals under $29.00 cwt., which had been increasingly prevalent over the last few weeks, have dissipated.

Nonetheless, at least one mill has unofficially backed off the increase, according to service center sources, as a result of the larger than expected drop in scrap prices in July. However, rumblings of a second increase to seal in the first--as is often the case in the US flats market--have already been heard. But, if scrap prices reverse course next month, mills may have a chance of fully pushing though the initial $2.00 cwt. Until then, buyers are in a holding pattern and are not yet confident enough to restock inventories or make hedge buys, which is also keeping import activity in the US quiet this past week. However, as usual, Mexican mills have been making deals in order to steadily receive orders from the US.

**DDP loaded truck delivered into Houston