For many buyers, resistance to high prices proved to be futile and over the last several weeks, many skeptics finally had to accept the upward momentum of the US flat rolled market.
Since last week, spot market prices for US hot rolled coil (HRC) and cold rolled coil (CRC) offers have restarted their climb as recently announced mill price increases are beginning to make their way through the marketplace.
Most domestic HRC spot offers have increased approximately $1.00 cwt. ($22/mt to $20/nt) since our report last week and now range from approximately $32.00 cwt. to $33.00 cwt. ($705/mt to $728/mt or $640/nt to $660/nt) ex-Midwest mills. However, while spot prices are rising, HRC may have lost its title as being the clear-cut strongest flat rolled product. The better faring US pipe and tube market has helped support HRC but interest in the product is slowing as more inventories are being delivered to warehouses and more production is on the horizon.
Meanwhile, CRC spot prices have also increased from last week and CRC has begun to emerge as the new leader in the flats market. Cold rolled inventory levels were critically low and perhaps that’s the reason for a sharper rise in CRC prices since last week. Most CRC offers have increased approximately $2.00 cwt. ($44/mt or $40/nt) since last week with most offers now being seen from around $38.00.cwt. to $39.00 cwt. ($838/mt to $860/mt or $760/nt to $780/nt) ex-Midwest mills. While there still may be some offers available in the $37.00 cwt. to $38.00 cwt. ($816/mt to $838/mt or $740/nt to $760/nt) range, ex-Midwest mills, these offers are fading fast and probably will not be around by next week.
With the leaps and bounds being taken in price announcements for raw materials, domestic mills will continue to remain in the drivers’ seat of what is being described as a somehow irrational market. While the automotive sector is holding steady at a slightly higher level than expected, car and truck production alone does not warrant the consistent uptick in prices for flat rolled. Furthermore, there is a growing concern over how much impact the anticipated production from the anticipated restart of blast furnaces will have on the market next month. Yet to the same token, inventories are still relatively low and many buyers caught being too conservative are forced to place orders just to keep some steel in their warehouses. The market still resembles a seller’s market and it is anticipated this trend will continue through mid summer, until inventories are healthy. Many buyers see the parallel to this market to the great rise and fall of the flat rolled market in 2008.
In terms of imports, HRC and CRC offers are still relatively quiet. Mexico continues to be a minor factor offering HRC at about $32.50 cwt. to $33.50 cwt. ($717/mt to $739/mt or $650/nt to $670/nt) delivered to customers in Texas. And although there have been Russian CRC offers seen around $40.00 cwt. to $41.00 cwt. ($882 to $904/mt or $800/nt to $820/nt), FOB loaded truck in US Gulf ports, their pricing is not attractive enough to traders to entice a move. The lead times for imports is well in to third quarter and for many traders, domestic flat rolled prices cannot be trusted for such a long period.
