Although spot pricing for hot rolled coil (HRC) and cold rolled coil (CRC) has exhibited signs of softening for the past two weeks, the slightly downward trend for HRC, at least, looks to have taken a breather.
Current domestic spot pricing for HRC has remained neutral since our last report a week ago and continues to be reported in the approximate range of $32.00 cwt. to $34.00 cwt. ($705/mt to $750/mt or $640/nt to $680/nt) ex-Midwest mills. Transaction pricing for CRC, however, has softened by another $1.00 cwt. ($22/mt or $20/nt) and is now being reported in the approximate range of $37.00 cwt. to $39.00 cwt. ($816/mt to $860/mt or $740/nt to $780/nt) ex-Midwest mills.
Many buyers are questioning how much further HRC and CRC spot prices will tick down prior to stabilizing (or resuming an upswing), and this lingering uncertainty has begun to impact willingness to place orders. Some are equating the current market to a "big waiting game", with mills and service centers trying to wait each other out, each side wondering if the other will blink first. The good news, however, is that mills have seemingly started to push back. Even AK Steel, which previously allowed for aggressive deals on a number of their products, has started to reaffirm a stronghold on pricing levels, falling back in line with average transaction ranges seen within the domestic market.
It should be kept in mind, though, that this is not 2008. Demand is improving, and all signs continue to point toward economic recovery. The biggest challenge for the domestic flats market seems to be an overshooting in production levels by US mills, because while demand is ticking upward, it has not yet reached a level which coincides with the tonnage now being produced.
For now, though, the pricing trend for HRC and CRC is neutral to slightly down, with a strong possibility of transaction price stabilization by the end of the second quarter.
South of the border, Mexico is offering HRC into the US at approximately $33.00 cwt. to $34.00 cwt. ($728/mt to $750/mt or $660/nt to $680/nt) delivered to customers in US border states. Looking overseas, China continues to offer CRC into the US, at $41.00 cwt. to $42.00 cwt. ($904/mt to $926/mt or $820/nt to $840/nt), FOB loaded truck US Gulf ports, although interest in offshore offers remains weak. It should be noted, though, that there are reports that the CRC market within the Chinese domestic market has begun to exhibit signs of firming; however, exports to the US, in the short term at least, are still anticipated to remain soft.