Downtrend quickens in US flats market

US domestic flat rolled spot prices have begun to rapidly erode after declining at a more measured pace in early October.

US domestic flats prices were easing lower in early October only to slip $1.00 cwt. ($22/mt or $20/nt) last week and fall significantly again this week. Domestic hot rolled coil (HRC) spot prices have fallen $1.00 cwt. ($22/mt or $20/nt) on the low end in the last week to about $31.00-$33.00 cwt. ($683-$728/mt or $620-$660/nt) ex-Midwest mill after a $1.00 cwt. drop a week ago. And considering mills' desperation for orders and lead times that are under two weeks, spot prices are likely to fall as much as $1.00 cwt. by early November. Domestic cold rolled coil (CRC) spot prices are lower than they were a week ago as well, now in the range of $37.00-$38.00 cwt. ($816-$838/mt or $740-$760/nt) ex-Midwest mill, a $1.00 cwt. decline on the high end of the range; rumblings of sub-$37.00 cwt. deals being made have emerged in just the last few days, and CRC spot prices will also likely drop in the next couple weeks.

Overproduction, the main cause of price softening in the Midwest, isn't a major factor in the West Coast flats market, although with Midwest prices falling at such a rapid rate, West Coast mills have been cutting their prices as well in order to stave off customers turning to Midwest mills for their flat rolled steel needs. HRC spot prices are currently about $36.00-$38.00 cwt. ($794-$838/mt or $720-$760/nt) ex-West Coast mill, while CRC spot prices are between $42.00-$43.00 cwt. ($926-$948/mt or $840-$860/nt) ex-West Coast mill. But considering that Midwest prices are falling at a quickening pace and the gap between West Coast and Midwest prices is about $5.00 cwt. ($110/mt or $100/nt), West Coast spot prices will all but certainly fall in the coming weeks as well.

Import offer prices to the US are also on a downtrend, largely because of a weakening euro which in turn has resulted in lower global iron ore, scrap and steel prices too. Russian HRC offer prices to the US have fallen $1.00 cwt. in the last week, as have Chinese CRC offer prices, but remain too high for those on the East Coast and Midwest to take interest. Chinese CRC offers on the West Coast, however, are garnering some activity in the range of $39.00-$40.00 cwt. ($860-$882/mt or $780-$800/nt) DDP loaded truck in US West Coast ports, because of the now $3.00 cwt. ($66/mt or $60/nt) spread between imports and US domestic prices.

*DDP loaded truck in US Gulf ports