Is a third round of price hikes looming for the US domestic flats market?

As US domestic flat-rolled spot prices continue to inch up, mills may already be planning to raise prices yet again.

With demand in the US domestic flat-rolled market remaining steady, and most buyers keeping inventories low--thus forcing them to make smaller purchases often--mills are able to collect more and more of their $5.00 cwt. ($110/mt or $100/nt) in announced increases in the last month. But while domestic hot and cold rolled coil (HRC and CRC) spot prices are up $1.00 cwt. ($22/mt or $20/nt) on the high end in the last week to $33.00-$35.00 cwt. ($728-$772/mt or $660-$700/nt) and $39.00-$41.00 cwt. ($860-$904/mt or $780-$820/nt), respectively, both ex-Midwest mill, spot prices are still about $2.00 cwt. ($44/mt or $40/nt) shy of mill asking prices. Additionally, larger HRC deals have been heard at prices as much as $2.00 cwt. under the above range.

As a result, domestic flat-rolled mills are already discussing yet another price increase in order to solidify their previous increase announcements and push spot market prices higher. But even if a third round of prices hikes since mid-August materializes, it isn't likely to spur added buying activity, which sources tell SteelOrbis continues to be extremely cautious and on an as-needed basis, as few are confident that the boost in spot prices over the last month will be sustainable for much longer--especially through the typically slow late fall/early winter months--and may be destined for a correction not too far down the road.

One thing that is helping US domestic flats mills raise prices at the moment is no real competition from imports. Mexican HRC offer prices to the US have remained stagnant for over a month now, but Mexican mills have been heard making deals about $1.00 cwt. under the current price range of $34.00-$35.00 cwt. ($750-$772/mt or $680-$700/nt) DDP loaded truck delivered into Houston. Mexican mills are also still not actively offering CRC to the US, as trader sources have indicated that any CRC being produced south of the border is being utilized by the Mexican domestic market, or sent downstream for hot dipped galvanized (HDG) coil production.

*DDP loaded truck delivered into Houston
**DDP loaded truck in US Gulf ports