With mill production levels continuing to overshoot current market demand, US domestic flats products have ticked down yet another notch since our last report a week ago, with buyers reporting that mills will do just about anything to secure orders.
The downward pricing momentum has nothing to do with demand, say service centers. It's all about oversupply.
"The market is totally oversaturated," commented a buyer in the Southeast, indicating that mills have become desperate for orders. "We're seeing sales people come out of the woodwork. We're having people knock on our door that we haven't seen in years."
Lead times for HRC and CRC have also shortened, now both at about two to three weeks for both products. Yet it's also been reported that in some cases, HRC and be booked and delivered in as soon as one week.
This definitely has an impact on order placement; many buyers intend to take inventories as tight as possible before making a buy, and they're taking a gamble as to when prices might hit their low-point before resuming an upward swing.
For now, the trend for US domestic HRC and CRC will continue to point in a downward direction, with the anticipation that a reversal won't take place until later in the fourth quarter. Although the ranges listed below represent the most commonly reported transaction pricing, reports that only buyers waving very significant tonnage have been able to book at or close to the lower end. When it comes to getting sub $27.00 cwt. pricing, he said, "Size does matter".
Also of interest is the October 14 announcement put out by Nucor's Sheet Mill Group, announcing a $11.00 cwt. ($242/mt or $220/nt) raw materials surcharge (RMS) on all products with a delivery date ending November 6 through November 27. This reflects a marked decrease from the $2.00 cwt. ($44/mt or $40/nt) RMS announced for orders shipped during October.
As far as imports go- while numbers out of China and Brazil are still valid, they're not being seen as competitive. The most interesting thing that's going on in terms of offers coming in from outside the US is from Mexico, who has moved to mimic US domestic transaction ranges in order to be seen as equally aggressive with their pricing.
Cwt. Metric Ton (mt) Net ton (nt) Change from last week US domestic HRC $26.50-$27.50 $573- $595 $530-$550 ↓ $0.50 cwt. CRC $32-$33 $706 - $728 $680-$700 ↓ $1.00 cwt. Mexican HRC $26.50-$27.50 $573- $595 $530-$550 ↓ $0.50 cwt. CRC $32-$33 $706 - $728 $680-$700 ↓ $1.00 cwt. Chinese CRC $37-39 $816 - $860 $740-$780 neutral Brazilian CRC $34.50-$35.50 $761-$783 $690-$710 neutral
*Mexican offers are FOB loaded truck US border states.
**Chinese and Brazilian offerings are duty-paid FOB loaded truck, US Gulf ports